Understanding Trump’s misunderstanding of the economy
September 30, 2016 Leave a comment
Among the more damning indictments of public opinion and democracy (beyond the fact that Trump is polling over 30%) is the fact that Americans actually believe Trump would be better for the economy than Clinton.
In truth, of course, Trump is an economic disaster. Nothing could be more telling than the fact that not a single former member of the Council of Economic Advisers endorses him for president.
So, why is he so bad? Lots of reasons, but I love this Bill Ayers post that absolutely cuts to the heart of it. In Trump’s deal-making world, it’s always zero-sum. In the real world, economies almost always perform better from mutually beneficial cooperation. Ayers:
In her opening answer to the first [debate] question, Clinton talked about cooperation and sharing – investing in workers, sharing profits, working together. The how wasn’t there, but the basic idea was clear: economic progress comes from cooperation. Wealth is created by working together.
Trump’s answer to the same question was all about competition. He talked about losing, about winning, about fighting. He framed the economy as us (the United States) against them (Mexico, China). He talked about jobs being stolen. In his view, the economy is a zero-sum game: either we win or they win. Whatever they gain, we lose. Jobs are a fixed commodity. [emphases mine]
The thing about this contrast is that it isn’t just a matter of differing philosophies or differing ideologies. Economics may be derided as “the dismal science”, but a social science it is. Questions like, “what generates more wealth – cooperation or zero-sum competition?” are not philosophical quandaries, they are empirical puzzles with real-world answers.
In this case, in the broadest terms, the answer is clear. Zero-sum competition makes everybody poorer, both through lost opportunities (“opportunity costs”, to economists) and through wasted and inefficient efforts. Cooperation, by contrast, generates wealth…
Economists disagree on many things, but this isn’t one of them. There isn’t a single economist anywhere who thinks that an economy based on the competition of all against all is a good idea. Indeed, the very notion of economic growth belies the possibility of zero-sum economics. How can we create new jobs and new wealth if all we’re doing is passing the same jobs and the same wealth around?
On this issue, Trump is not merely misguided on policy, he’s fundamentally wrong. He’s like an astronomer trying to model the solar system with the earth at its center. The world just doesn’t work that way.
This is one dimension of the presidential campaign that has both policy and moral dimensions. Policy driven by zero-sum economics will make everybody poorer. Insisting that the world is a dog-eat-dog place will make us morally poorer as well. Small wonder the world’s markets regard a Trump presidency as a disaster of the first order.