To see why Trump is gaining on Clinton, despite his numerous flaws as a candidate, just compare their economic policy proposals. With Clinton you get more of the same: more spending (approximately $1.5 trillion over the next decade)—a large proportion of it on infrastructure—paid for by higher taxes on richer households, plus more regulation, especially of banks and pharmaceutical companies. Call it Obama+: the trains go round in circles, the government keeps on growing, but the economy as a whole limps along at 2% a year. By comparison, Trump offers acceleration along a new track, albeit at the risk of derailment. This is true even when he is on his best, scripted behavior, as he was on Thursday at the Economic Club of New York. Much of this speech was red meat for the Republican establishment he needs to keep on board: tax simplification and tax cuts, increased spending on defense and border security and deep cuts in environmental and consumer-protection regulation. Ironically, the Keynesian economists who support Clinton are on the wrong side, because even the Trump campaign admits his tax cuts would cost $4.4 trillion over the decade. He, not Clinton, is the true candidate of stimulus, as his budgets would only come close to balancing if growth went up to 3.5 percent a year. And on top of all that are Trump’s earlier pledges to restrict immigration, free trade and offshoring, pledges that are especially appealing to those Americans who feel most pessimistic about the future.So Clinton’s proposals are going around in circles because they offer fiscal stimulus but Trump’s proposals will accelerate economic growth because they offer fiscal stimulus? In what model do large increases in defense spending lead to more economic growth that increases in infrastructure investment? Or is Niall touting the Laugher Curve nonsense that lower tax rates and deregulation of the financial and other sectors will lead to an economic miracle ala the Cochrane removing the weeds from the garden thesis? Oh wait – Trump is also calling for restrictions on trade and immigration. So is it that some aspects of deregulation promote growth whereas free trade restricts growth? Can we see Niall Ferguson’s economic model that quantifies the economic growth from the Trump proposals?
Thursday, September 22, 2016
How Many Ways Can Niall Ferguson Contradict Himself on Economics?