Trump's Potemkin Economy

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: July 1, 2018 at 00:05:53 GMT+9
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] Trump's Potemkin Economy
> Reply-To: dewayne-net () warpspeed com
>
> [Note:  This item comes from friend Ed DeWath.  DLH]
>
> Trump’s 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 Great’s 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 isn’t much if any truth to the story – among other things, Catherine was too smart and tough-minded to 
> be that easily deceived — 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 “news” 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 
> Obama’s first term. Those of us who thought the economy would be hurt by political uncertainty have been wrong so far.
>
> But Trump’s actual policy initiatives aren’t doing so well. His tax cut isn’t 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 “good, and easy to win” isn’t generating the kinds of 
> headlines Trump wanted. Instead, we’re hearing about production shifting overseas to escape both U.S. tariffs on 
> imported inputs and foreign retaliation against U.S. products. It’s really worth reading the submission by General 
> Motors to the Commerce Department, urging a reconsideration of a tariff policy that “risks undermining GM’s 
> competitiveness against foreign auto producers” and “will be detrimental to the future industrial strength and 
> readiness of manufacturing operations in the United States.” In other words, “Don’t you understand global supply 
> chains, you idiot?”
>
> Actually, I’m 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. We’re talking about an administration 
> that’s taking children away from their parents and putting them in cages in response to a wave of violent immigrant 
> crime that doesn’t, 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 – tariffs that, like the immigrant crime wave, don’t actually exist.
>
> But these are negative fictions, tales of wrongdoing by others. When it comes to Trump’s own economic policies, by 
> contrast, it’s all puppies and rainbows – 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 isn’t, 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, they’re true. But meanwhile Hassett is declaring that last year’s 
> corporate tax cut has led to a “massive amount of activity coming home” – 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 administration’s top 
> economic official, that the budget deficit is “coming down rapidly” as “those revenues come rolling in.”
>
> [snip]
>
> Dewayne-Net RSS Feed: http://dewaynenet.wordpress.com/feed/
> Twitter: https://twitter.com/wa8dzp



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