Missing the Economic Big Picture

Even If Trump and the Trumpists Were to Try to Be Honest, We Would Be in Big Trouble...

Preview of Even If Trump and the Trumpists Were to Try to Be Honest We Would Be in Big Trouble

Understanding Trump: Even the Good Scenario Is Bad: Q: Are we in Europe misunderstanding Trump?

A: The non-legislative powers of the president are extremely large. Thus the risks of disaster-from-incompetence are quite high--even leaving to one side the chance of a Berlusconi bunga-bunga governance kleptocratic orgy...

Some people do have a more positive view of Reagan than I do. But when I look at Reagan I see:

  • inconsistent campaign promises,
  • random choice among them,
  • the disaster for national savings and also for fiscal space reserved for the future that was the 1980s debt explosion,
  • the disaster for midwestern manufacturing--both employment and the maintenance and nurturing of communities of engineering practice--that was the 1980s dollar cycle,
  • the encouragement of the destabilizing of central America,
  • the Falklands War as an unintended consequence,
  • the arms-for-hostages deals,
  • the strange alien-invasion-Star-Wars saga, as reported by Colin Powell and others.

The guy was marginal in his ability to do the real job, as opposed to acting like a president. And he was really never the same after the assassination attempt by John Hinckley. The example that comes to mind is his being convinced by one of his advisors to fire his ambassador to El Salvador, forgetting he had done so, and then wondering and regretting in his private diary why his ambassador to El Salvador was resigning. And then the Alzheimers began to take hold. Policies were random--and the United States was very lucky that the Soviet Union was itself suffering from very large fundamental problems, was no longer adversarial, and underwent its collapse. Thus even bad and confused policies were sufficient.

When I look at George W. Bush, I also see somebody who was just not up to the job. He was supposed to be guided by expert adults--Colin Powell at State, Paul O'Neill at Treasury, Alan Greenspan at the Fed, plus Gerald Ford's extremely competent and extremely reality-based chiefs of staff, Dick Cheney and Donald Rumsfeld. But it's hard to think of a presidency since James Buchanan's that was more of a disaster. From the initial tax cut that, once again, consumed fiscal space that would be badly needed later, though the step back from regulation in finance that produced 2008, to the disastrous decision to respond to 911 by attacking Saddam Hussein, who hated and was hated by Osama bin Laden almost as much as we. These were not the wisest of policy choices. How it was that the network of expert adults who were supposed to surround and guide George W. Bush collapsed--that story has never been convincingly told. When I talk to people, the only even half-plausible story I hear is that George W. Bush wanted to bond with people who seemed crude and tough, that Cheney and Rumsfeld both seemed crude and tough, but they both suffered badly from diminished blood flow to the brain relative to the people they had been in the 1970s. I find this incredible. But I am not offered plausible alternative stories.

Yes, the chances of some kind of disaster are high. We gotta pray for lots of luck. No one in 1981 expected the dollar cycle and the hit on manufacturing. No one expected arms-for-hostages. No one in 2001 expected financial deregulation to produce the extraordinary vulnerabilities that led to 2008. No one in 2001 expected that we would react to a horrific terrorist attack by a non-state actor by attacking an uninvolved country and so diving into a quagmire.

Competence is underrated: The watchword of the Obama administration was "don't do stupid stuff". You have to think that a Trump administration will have a very hard time even figuring out what is and what is not potentially stupid. You really cannot be optimistic here. There is always hope at the bottom of Pandora's Box. But the thing to focus on is that we have opened the really big box.