From xxxxxx <[email protected]>
Subject The Truth About the Trump Economy
Date January 18, 2020 4:51 AM
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[It is becoming conventional wisdom that US President Donald Trump
will be tough to beat in November, because, whatever reservations
about him voters may have, he has been good for the American economy.
Nothing could be further from the truth.] [[link removed]]

THE TRUTH ABOUT THE TRUMP ECONOMY  
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Joseph E. Stiglitz
January 17, 2020
Project Syndicate
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_ It is becoming conventional wisdom that US President Donald Trump
will be tough to beat in November, because, whatever reservations
about him voters may have, he has been good for the American economy.
Nothing could be further from the truth. _

,

 

NEW YORK – As the world’s business elites trek to Davos for their
annual gathering, people should be asking a simple question: Have they
overcome their infatuation with US President Donald Trump?

Two years ago, a few rare corporate leaders were concerned about
climate change, or upset at Trump’s misogyny and bigotry. Most,
however, were celebrating the president’s tax cuts for billionaires
and corporations and looking forward to his efforts to deregulate the
economy. That would allow businesses to pollute the air more, get more
Americans hooked on opioids, entice more children to eat their
diabetes-inducing foods, and engage in the sort of financial
shenanigans that brought on the 2008 crisis.

Today, many corporate bosses are still talking about the continued GDP
growth and record stock prices. But neither GDP nor the Dow is a good
measure of economic performance. Neither tells us what’s happening
to ordinary citizens’ living standards or anything about
sustainability. In fact, US economic performance over the past four
years is Exhibit A in the indictment against relying on these
indicators.

To get a good reading on a country’s economic health, start by
looking at the health of its citizens. If they are happy and
prosperous, they will be healthy and live longer. Among developed
countries, America sits at the bottom in this regard. US life
expectancy, already relatively low, fell in each of the first two
years of Trump’s presidency, and in 2017, midlife mortality reached
its highest rate since World War II. This is not a surprise, because
no president has worked harder to make sure that more Americans lack
health insurance. Millions have lost their coverage, and the uninsured
rate has risen, in just two years, from 10.9% to 13.7%
[[link removed]].

One reason for declining life expectancy in America is what Anne Case
and Nobel laureate economist Angus Deaton
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deaths of despair, caused by alcohol, drug overdoses, and suicide. In
2017 (the most recent year for which good data are available), such
deaths stood at almost four times their 1999 level
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The only time I have seen anything like these declines in health –
outside of war or epidemics – was when I was chief economist of the
World Bank and found out that mortality and morbidity data confirmed
what our economic indicators suggested about the dismal state of the
post-Soviet Russian economy.

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Trump may be a good president for the top 1% – and especially for
the top 0.1% – but he has not been good for everyone else. If fully
implemented, the 2017 tax cut will result in tax _increases_ for
most households in the second, third, and fourth income quintiles.

Given tax cuts that disproportionately benefit the ultrarich and
corporations, it should come as no surprise that there was no
significant change
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the median US household’s disposable income between 2017 and 2018
(again, the most recent year with good data). The lion’s share of
the increase in GDP is also going to those at the top. Real
median weekly earnings
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their level when Trump took office. And these increases have not
offset long periods of wage stagnation. For example, the median wage
of a full-time male worker (and those with full-time jobs are the
lucky ones) is still more than 3% below what it was 40 years ago
[[link removed]]. Nor has there
been much progress on reducing racial disparities: in the third
quarter of 2019, median weekly earnings for black men working
full-time were less than three-quarters
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men.

Making matters worse, the growth that has occurred is not
environmentally sustainable – and even less so thanks to the Trump
administration’s gutting of regulations that have passed stringent
cost-benefit analyses. The air will be less breathable, the water less
drinkable, and the planet more subject to climate change. In fact,
losses related to climate change have already reached new highs in the
US, which has suffered more property damage than any other country –
reaching some 1.5% of GDP
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2017. 

The tax cuts were supposed to spur a new wave of investment. Instead,
they triggered an all-time record binge of share buybacks
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some $800 billion in 2018 – by some of America’s most profitable
companies, and led to record peacetime deficits
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$1 trillion in fiscal 2019) in a country supposedly near full
employment. And even with weak investment, the US had to borrow
massively abroad: the most recent data show foreign borrowing
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$500 billion a year, with an increase of more than 10% in America’s
net indebtedness position _in one year alone_.

Likewise, Trump’s trade wars, for all their sound and fury, have not
reduced the US trade deficit, which was one-quarter higher in 2018
than it was in 2016. The 2018 goods deficit was the largest on record
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Even the deficit in trade with China was up almost a quarter
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2016. The US did get a new North American trade agreement, without the
investment agreement provisions that the Business Roundtable wanted,
without the provisions raising drug prices that the pharmaceutical
companies wanted, and with better labor and environmental provisions.
Trump, a self-proclaimed master deal maker, lost on almost every front
in his negotiations with congressional Democrats, resulting in a
slightly improved trade arrangement.

And despite Trump’s vaunted promises to bring manufacturing jobs
back to the US, the increase in manufacturing employment is still
lower than it was under his predecessor, Barack Obama, once the
post-2008 recovery set in, and is still markedly below its pre-crisis
level. Even the unemployment rate, at a 50-year low, masks economic
fragility. The _employment_ rate for working-age males and females,
while rising, has increased less than during the Obama recovery, and
is still significantly below
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of other developed countries. The pace of job creation is also
markedly slower than it was under Obama.

Again, the low employment rate is not a surprise, not least because
unhealthy people can’t work. Moreover, those on disability benefits,
in prison – the US incarceration rate
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than sixfold since 1970, with some two million people
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bars – or so discouraged that they are not actively seeking jobs are
not counted as “unemployed.” But, of course, they are not
employed. Nor is it a surprise that a country that doesn’t provide
affordable childcare or guarantee family leave would have lower female
employment – adjusted for population, more than ten percentage
points lower – than other developed countries.

Even judging by GDP, the Trump economy falls short. Last quarter’s
growth was just 2.1%, far less than the 4%, 5%, or even 6%
Trump promised
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deliver, and even less than the 2.4% average of Obama’s second term.
That is a remarkably poor performance considering the stimulus
provided by the $1 trillion deficit and ultra-low interest rates. This
is not an accident, or just a matter of bad luck: Trump’s brand is
uncertainty, volatility, and prevarication, whereas trust, stability,
and confidence are essential for growth. So is equality
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according to the International Monetary Fund.

So, Trump deserves failing grades not just on essential tasks like
upholding democracy and preserving our planet. He should not get a
pass on the economy, either.

_Joseph E. Stiglitz, a Nobel laureate in economics, is University
Professor at Columbia University and Chief Economist at the Roosevelt
Institute. His most recent book is People, Power, and Profits:
Progressive Capitalism for an Age of Discontent
[[link removed]]. _

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