Dave Farber
2018-07-01 00:23:53 UTC
Date: July 1, 2018 at 00:05:53 GMT+9
Subject: [Dewayne-Net] Trump's Potemkin Economy
[Note: This item comes from friend Ed DeWath. DLH]
Trumpâs Potemkin Economy
By Paul Krugman
Jun 30 2018
<https://www.nytimes.com/2018/06/30/opinion/trumps-potemkin-economy.html>
According to legend, Grigory Potemkin, one of Catherine the Greatâs ministers (and her lover), created a false impression of prosperity when the empress toured Ukraine. He supposedly did this by setting up fake villages, or possibly just facades, along her route, then dismantling them after she passed, and setting them up again further down the road.
There probably isnât much if any truth to the story â among other things, Catherine was too smart and tough-minded to be that easily deceived â but never mind: the legend has become a byword for the general idea of prettifying reality to please a tyrannical ruler. And it seems highly relevant to some of the economic ânewsâ coming out of the Trump administration the past few days.
Just to be clear, the U.S. economy is still doing quite well overall, continuing the long expansion that began during Obamaâs first term. Those of us who thought the economy would be hurt by political uncertainty have been wrong so far.
But Trumpâs actual policy initiatives arenât doing so well. His tax cut isnât producing the promised surge in business investment, let alone the promised wage gains; all it has really done is lead to a lot of stock buybacks. Reflecting this reality, the tax cut is becoming less popular over time.
And the early phase of the trade war that was supposed to be âgood, and easy to winâ isnât generating the kinds of headlines Trump wanted. Instead, weâre hearing about production shifting overseas to escape both U.S. tariffs on imported inputs and foreign retaliation against U.S. products. Itâs really worth reading the submission by General Motors to the Commerce Department, urging a reconsideration of a tariff policy that ârisks undermining GMâs competitiveness against foreign auto producersâ and âwill be detrimental to the future industrial strength and readiness of manufacturing operations in the United States.â In other words, âDonât you understand global supply chains, you idiot?â
Actually, Iâm waiting to hear that GM is really a Democratic company in league with the deep state.
But meanwhile, how is the administration responding? By making stuff up.
Now, making stuff up is actually standard operating procedure for these guys. Weâre talking about an administration thatâs taking children away from their parents and putting them in cages in response to a wave of violent immigrant crime that doesnât, you know, actually exist. Trade policy itself is being driven by claims about the massive tariffs U.S. products face from, say, the European Union â tariffs that, like the immigrant crime wave, donât actually exist.
But these are negative fictions, tales of wrongdoing by others. When it comes to Trumpâs own economic policies, by contrast, itâs all puppies and rainbows â happy stories with no basis in reality.
Some of these come from Trump himself. For example, he declared that the head of U.S. Steel called him to say that the company was opening six new plants. It isnât, and as far as we can tell the phone call never happened.
Meanwhile, reports say that the Council of Economic Advisers did an internal report concluding that Trump trade policy will cost jobs, not create them; Kevin Hassett, the chairman, pressed on these reports, said that he could neither confirm nor deny them; in other words, theyâre true. But meanwhile Hassett is declaring that last yearâs corporate tax cut has led to a âmassive amount of activity coming homeâ â which is just false. Some companies are rearranging their accounting, producing what looks on paper like money coming back to the U.S., but this has no real effect on investment or employment.
But the most Potemkinesque story of the past week was the declaration by Larry Kudlow, the administrationâs top economic official, that the budget deficit is âcoming down rapidlyâ as âthose revenues come rolling in.â
[snip]
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-------------------------------------------Subject: [Dewayne-Net] Trump's Potemkin Economy
[Note: This item comes from friend Ed DeWath. DLH]
Trumpâs Potemkin Economy
By Paul Krugman
Jun 30 2018
<https://www.nytimes.com/2018/06/30/opinion/trumps-potemkin-economy.html>
According to legend, Grigory Potemkin, one of Catherine the Greatâs ministers (and her lover), created a false impression of prosperity when the empress toured Ukraine. He supposedly did this by setting up fake villages, or possibly just facades, along her route, then dismantling them after she passed, and setting them up again further down the road.
There probably isnât much if any truth to the story â among other things, Catherine was too smart and tough-minded to be that easily deceived â but never mind: the legend has become a byword for the general idea of prettifying reality to please a tyrannical ruler. And it seems highly relevant to some of the economic ânewsâ coming out of the Trump administration the past few days.
Just to be clear, the U.S. economy is still doing quite well overall, continuing the long expansion that began during Obamaâs first term. Those of us who thought the economy would be hurt by political uncertainty have been wrong so far.
But Trumpâs actual policy initiatives arenât doing so well. His tax cut isnât producing the promised surge in business investment, let alone the promised wage gains; all it has really done is lead to a lot of stock buybacks. Reflecting this reality, the tax cut is becoming less popular over time.
And the early phase of the trade war that was supposed to be âgood, and easy to winâ isnât generating the kinds of headlines Trump wanted. Instead, weâre hearing about production shifting overseas to escape both U.S. tariffs on imported inputs and foreign retaliation against U.S. products. Itâs really worth reading the submission by General Motors to the Commerce Department, urging a reconsideration of a tariff policy that ârisks undermining GMâs competitiveness against foreign auto producersâ and âwill be detrimental to the future industrial strength and readiness of manufacturing operations in the United States.â In other words, âDonât you understand global supply chains, you idiot?â
Actually, Iâm waiting to hear that GM is really a Democratic company in league with the deep state.
But meanwhile, how is the administration responding? By making stuff up.
Now, making stuff up is actually standard operating procedure for these guys. Weâre talking about an administration thatâs taking children away from their parents and putting them in cages in response to a wave of violent immigrant crime that doesnât, you know, actually exist. Trade policy itself is being driven by claims about the massive tariffs U.S. products face from, say, the European Union â tariffs that, like the immigrant crime wave, donât actually exist.
But these are negative fictions, tales of wrongdoing by others. When it comes to Trumpâs own economic policies, by contrast, itâs all puppies and rainbows â happy stories with no basis in reality.
Some of these come from Trump himself. For example, he declared that the head of U.S. Steel called him to say that the company was opening six new plants. It isnât, and as far as we can tell the phone call never happened.
Meanwhile, reports say that the Council of Economic Advisers did an internal report concluding that Trump trade policy will cost jobs, not create them; Kevin Hassett, the chairman, pressed on these reports, said that he could neither confirm nor deny them; in other words, theyâre true. But meanwhile Hassett is declaring that last yearâs corporate tax cut has led to a âmassive amount of activity coming homeâ â which is just false. Some companies are rearranging their accounting, producing what looks on paper like money coming back to the U.S., but this has no real effect on investment or employment.
But the most Potemkinesque story of the past week was the declaration by Larry Kudlow, the administrationâs top economic official, that the budget deficit is âcoming down rapidlyâ as âthose revenues come rolling in.â
[snip]
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