Krugman on economic arrogance

According to press reports, the administration is trump basing his plans on the budget on the notion that the United States economy over the next decade will grow very quickly — in fact, almost two times faster than what the congressional Budget office or the Federal reserve system. As far as we know, the basis of this optimism there is no serious analysis; rather these figures were presented to the fiscal prospects looked better.

In my opinion, this is just what one would expect from a man who continues to insist that crime, which, in fact, at a record low, is at a record high level that millions of illegal ballots deprived him of the votes, and so on — in the world of the trump figures are what you want them to be, and everything else is fake news. However, the truth is that unfounded arrogance about the economy is not some special feature of the trump. On the contrary, it is the modern Republican norm. The question arises why this is so.

Before answering him, a few words about why excessive optimism about growth is unfounded.

Apparently, the tramp assumes growth for the decade in the range of 3% to 3.5%. This option would not be unprecedented — the us economy grew by 3.4% during the Reagan administration, 3.7% under bill Clinton. However, the repetition of such indicators is unlikely.

First of all, in the years of the Reagan children of the boom period of fertility still continued to replenish the workforce. Today they leave it, and the growth of the working age population slowed to the lowest levels. Only this demographic shift, ceteris paribus, decreases by about one percentage point in the growth of the U.S. economy.

Moreover, Reagan, and Clinton inherited a depressed economy, and the unemployment rate was much higher than 7%. This means that there has been a significant economic downturn, however, it is possible to move to a rapid growth when the unemployed return to their jobs. Today, by contrast, the unemployment rate is below 5%, and other indicators indicate that the economy is close to full employment. All this creates significantly less prerequisite for rapid growth.

The only way that would allow us to get a miracle in the form of economic growth, can provide a tremendous productivity growth — output per worker per hour. This, of course, can happen may be a huge amount of flying cars without driver. But such things are unlikely to be included in the baseline forecast.

And, of course, you should not count on this as a result of conservative economic policy. That brings me to the question about the strange arrogance of the right in Economics.

As I said, the belief that cutting taxes and deregulation will in any case provide a huge increase is not a distinctive feature of the administration of tramp-Putin. The same thing we heard from Jeb Bush (who is?); we heard this from Republicans in Congress like Paul Ryan (Paul Ryan), the question Arises why. In the end, there is nothing — nothing — in the history that would justify such a presumption.

Yes, the Reagan years saw a fairly rapid growth. And bill Clinton increased taxes on the wealthy amid confident predictions of right that such measures will lead to economic disaster and led the country into a period of even more significant growth. President Obama ran the country in the period of higher growth in the number of jobs in the private sector than George Bush, even if not to take into account the collapse in 2008. Furthermore, two policies of Obama that caused special hatred of right — the increase in 2013 tax on the rich and the enactment of the Law on affordable care — in no way slowed the growth of jobs.

Meanwhile, the growing polarization of American politics has led us to what can be called experiments in the field of economic policy at the state level. Kansas, where the dominant position was held by conservative true believers, have introduced drastic tax cuts and all this was accompanied by a promise that such a reduction will trigger rapid growth; but there was not a rapid growth, but the budget crisis. Last week, Kansas lawmakers threw in the towel and endorsed a significant increase in taxes.

At the same time when Kansas turned sharply to the right, the newly formed democratic majority in California increased taxes. Conservatives called it “economic suicide” — but in this state, in fact, everything is in order.

Thus, the reality is completely contrary to assertions that tax cuts and deregulation are the drugs that cause an economic miracle. So why is an entire political party continues to insist that they are the answer to all the problems?

It would be nice to pretend that we still have here a serious, honest discussion, but we do not. At the moment we have to be realistic and talk about whose interests are served.

No matter whether it is a good thing for the economy as a whole, tax cuts for billionaires while providing fraudsters and polluters the opportunity to cheat and pollute; it’s obviously good for billionaires, crooks and polluters. Under the existing electoral funds it creates incentives for politicians continued to support a failed doctrine, and research institutions have continued to invent new explanations for this doctrine, and so on.

And in such matters, Donald trump, in fact, not worse than other members of his party. But, unfortunately, he is not better than the rest.