Saturday, 20 October 2018

Trump's manufacturing boom

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Good news for the Americans. Manufacturing jobs have increased markedly. This article explains the boom since Trump got in: it's because business knows he is deregulating and cutting taxes, especially corporation tax. I am in favour of that and wish the British misnamed conservatives were.

The U.S. tax cuts are helping the global economy so that is good news for all of us.

I made a somewhat half-hearted attempt to find the reasons why America has boomed since Donald Trump took office (that still sounds odd to write). There is surprisingly little explanation to be found, because most journalists and economists are horrified by him. 


Not that I trust economists. Paul Krugman who won the Nobel Prize in Economics tweeted on election night:
"It really does now look like President Donald J. Trump. And markets are plunging. When might we expect them to recover? A first-pass answer is never."
During the campaign he had said we were "looking at a global recession, with no end in sight” if Donald Trump became president. 

He tweeted on November 25, 2016,
“Nothing policy can do will bring back those lost [manufacturing] jobs. The service sector is the future of work; but nobody wants to hear it.”
Instead, in the first 21 months of the Trump presidency, manufacturing employment grew by 3.1%, reversing the trend under Obama.


Mind you, Paul Krugman wrote that by 2005 it would become clear that the Internet's effect on the economy was no greater than the fax machine's.

His tweets are a syllabus of errors but so are the predictions of almost all economists. He is just much more erroneous than most.

He was right, however, that before the majority of American electors became non-white (something to which he looks forward)  America could expect some big shocks. 

When he said that he was frightened of Ted Cruz. He had not anticipated how big a shock he would have and his tweets were poignantly broken-hearted after the election. He said he was seeking solace in classical music.

The important question is whether the crash which is indeed coming, and which with disarming honesty Donald Trump said in his election campaign was coming, happens before he runs for re-election or after. The answer is that nobody knows because it depends, as all economic events do and all history does, as Tolstoy told us in War and Peace, on the decisions of countless millions of people who possess free will.

Paul Krugman tweeted on New Year's Day this year:
The central fact of U.S. political economy, the source of our exceptionalism, is that lower-income whites vote for politicians who redistribute income upward and weaken the safety net because they think the welfare state is for nonwhites.
There is a fair amount of truth in this. The American melting pot did not melt and white people in America do think welfare is disproportionately used by blacks, as it is. This is the problem all welfare states face in increasingly diverse societies and may spell doom for welfarism. But American exceptionalism is a Marxist phrase to describe the fact that the American working class, unlike the working class in industrialised countries in Europe, has not become socialist. 

Obama and Hillary were in effect social democrats, Sanders an explicit and old-fashioned democratic socialist. We shall see if as America becomes more diverse she becomes more statist. There are signs that this might not happen. For example, in a recent poll 41% of Hispanics thought Trump was doing a good job.

5 comments:

  1. David in Belgrade21 October 2018 at 09:25

    "The only function of economic forecasting is to make astrology look respectable." - John Kenneth Galbraith

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  2. Increased manufacturing is not necessarily good news. We don't see what was sacrificed in order to artificially prop up manufacturing. It's also an indication that the society is preparing for an important war - otherwise I doubt there would be so much emphasis on manufacturing.

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    Replies
    1. You assume it is artificial but it is not, is it?

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  3. it is quite artificial a result of the sanctions boon, but it is not raising exports and domestic consumption is falling. This is sitting on the outer of the branch while you saw.
    Kez

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