How Trump Happened

Source: RSN

Author: Joseph E. Stiglitz, Project Syndicate

Emphasis Mine

As I have traveled around the world in recent weeks, I am repeatedly asked two questions: Is it conceivable that Donald Trump could win the US presidency? And how did his candidacy get this far in the first place?

As for the first question, though political forecasting is even more difficult than economic forecasting, the odds are strongly in favor of Hillary Clinton. Still, the closeness of the race (at least until very recently) has been a mystery: Clinton is one of the most qualified and well prepared presidential candidates that the United States has had, while Trump is one of the least qualified and worst prepared. Moreover, Trump’s campaign has survived behavior by him that would have ended a candidate’s chances in the past.

So why would Americans be playing Russian roulette (for that is what even a one-in-six chance of a Trump victory means)? Those outside the US want to know the answer, because the outcome affects them, too, though they have no influence over it.

And that brings us to the second question: why did the US Republican Party nominate a candidate that even its leaders rejected?

Obviously, many factors helped Trump beat 16 Republican primary challengers to get this far. Personalities matter, and some people do seem to warm to Trump’s reality-TV persona.

But several underlying factors also appear to have contributed to the closeness of the race. For starters, many Americans are economically worse off than they were a quarter-century ago. The median income of full-time male employees is lower than it was 42 years ago, and it is increasingly difficult for those with limited education to get a full-time job that pays decent wages.

Indeed, real (inflation-adjusted) wages at the bottom of the income distribution are roughly where they were 60 years ago. So it is no surprise that Trump finds a large, receptive audience when he says the state of the economy is rotten. But Trump is wrong both about the diagnosis and the prescription. The US economy as a whole has done well for the last six decades: GDP has increased nearly six-fold. But the fruits of that growth have gone to a relatively few at the top – people like Trump, owing partly to massive tax cuts that he would extend and deepen.

At the same time, reforms that political leaders promised would ensure prosperity for all – such as trade and financial liberalization – have not delivered. Far from it. And those whose standard of living has stagnated or declined have reached a simple conclusion: America’s political leaders either didn’t know what they were talking about or were lying (or both).

Trump wants to blame all of America’s problems on trade and immigration. He’s wrong. The US would have faced deindustrialization even without freer trade: global employment in manufacturing has been declining, with productivity gains exceeding demand growth.

Where the trade agreements failed, it was not because the US was outsmarted by its trading partners; it was because the US trade agenda was shaped by corporate interests. America’s companies have done well, and it is the Republicans who have blocked efforts to ensure that Americans made worse off by trade agreements would share the benefits.

Thus, many Americans feel buffeted by forces outside their control, leading to outcomes that are distinctly unfair. Long-standing assumptions – that America is a land of opportunity and that each generation will be better off than the last – have been called into question. The global financial crisis may have represented a turning point for many voters: their government saved the rich bankers who had brought the US to the brink of ruin, while seemingly doing almost nothing for the millions of ordinary Americans who lost their jobs and homes. The system not only produced unfair results, but seemed rigged to do so.

Support for Trump is based, at least partly, on the widespread anger stemming from that loss of trust in government. But Trump’s proposed policies would make a bad situation much worse. Surely, another dose of trickle-down economics of the kind he promises, with tax cuts aimed almost entirely at rich Americans and corporations, would produce results no better than the last time they were tried.

In fact, launching a trade war with China, Mexico, and other US trading partners, as Trump promises, would make all Americans poorer and create new impediments to the global cooperation needed to address critical global problems like the Islamic State, global terrorism, and climate change. Using money that could be invested in technology, education, or infrastructure to build a wall between the US and Mexico is a twofer in terms of wasting resources.

There are two messages US political elites should be hearing. The simplistic neo-liberal market-fundamentalist theories that have shaped so much economic policy during the last four decades are badly misleading, with GDP growth coming at the price of soaring inequality. Trickle-down economics hasn’t and won’t work. Markets don’t exist in a vacuum. The Thatcher-Reagan “revolution,” which rewrote the rules and restructured markets for the benefit of those at the top, succeeded all too well in increasing inequality, but utterly failed in its mission to increase growth.

This leads to the second message: we need to rewrite the rules of the economy once again, this time to ensure that ordinary citizens benefit. Politicians in the US and elsewhere who ignore this lesson will be held accountable. Change entails risk. But the Trump phenomenon – and more than a few similar political developments in Europe – has revealed the far greater risks entailed by failing to heed this message: societies divided, democracies undermined, and economies weakened.


Why Trump’s Feverish Doom-Talk Makes Literally Zero Sense

The GOP frontrunner is lying to his fans about the state of the economy, something Obama pointed out in his State of the Union address.

Source: AlterNet

Author:Bob Cesca/Salon

Emphasis Mine

The Republicans, and especially the frontrunners for the GOP nomination, really want the economy to suck.  After all, if the economy is strong then all of Donald Trump’s demagoguing about “making America great again” begins to feel a tad unnecessary.

During his final State of the Union address, President Obama made sure to hammer the Republicans on this very point. Said Obama: “The United States of America, right now, has the strongest, most durable economy in the world.” Also: “Anyone claiming that America’s economy is in decline is peddling fiction.”

That second one is especially accurate, as illustrated by a sampling of quotes from one of the recent Republican presidential debates:

Ted Cruz: “From 2008 to today, our economy has grown 1.2 percent a year on average. The Obama economy is a disaster…”

Marco Rubio: “I mean, this economy is nothing like what it was like five years ago, not to mention 15 or 20 years ago.”

Jeb Bush: “My worry is that the real economy has been hurt by the vast overreach of the Obama administration.”

And then there’s serial fiction-peddler Donald Trump, who told CNN:

“We have to take our country back. We’ve lost our jobs, we’ve lost our money. We’re a third world nation and we’re a debtor nation at the same time, you need somebody with the kind of thinking — I built a great company. I have some of the great assets of the world. And I talk about only form- not bragging- I talk about it because that’s the kind of mentality that this country needs. We need that mentality now and we need it fast.”


“A lot of people up there can’t get jobs. They can’t get jobs. Because there are no jobs.”


“Last quarter, it was just announced, our gross domestic product -– a sign of strength, right? But not for us. It was below zero. Who ever heard of this? It’s never below zero.” Before we continue, let’s correct the record about, “It’s never below zero.” Whopper lie. Economic growth has dipped below zero many, many times! 42 times since 1946. But Trump is counting on his supporters not paying very close attention to such things.

Finally, here’s Trump on the labor participation rate:

“I saw a chart the other day, our real unemployment — because you have ninety million people that aren’t working. Ninety-three million to be exact.”

It’s all fiction. The reason we know this is because numbers don’t lie. But Trump and the Republicans clearly do.

Let’s take a look by starting with that last quote first, regarding the labor participation rate, which Trump was hamfistedly referencing here. This is an often cited statistic that Obama critics like to wheel out in order to undermine the reality that unemployment has been cut in half under Obama, from more than 10 percent to exactly five percent today. The participation rate measures the number of people who’ve dropped out of the workforce, and the Republicans suggest it’s because they simply can’t find work in Obama’s allegedly disastrous economy.

They’re lying.

Here’s the truth. The labor participation rate has indeed dropped under Obama. Bad news, right? Well, only if you believe what Trump says, and why the hell would you do that? Yes, the number has descended from 65.7 in 2009 to 62 percent today. But let’s suppose it was a larger five percent drop, or a 10 percent drop. Does it matter in terms of evaluating the Obama economy? Not a chance. released the site’s most recent scorecard for the Obama’s presidency and noted the following on the labor participation rate:

Contrary to many of Obama’s critics, however, that decline is due mostly to factors outside the control of any president — factors such as the post-World War II baby boomers reaching retirement age. Survey data published by the Bureau of Labor Statistics in December show that those outside the labor force in 2014 said their reasons for not working were retirement (44 percent), illness or disability (19 percent), school attendance (18 percent) or home responsibilities (15 percent). Only 3 percent said they couldn’t find a job, or gave some other reason.

So, sure, Trump might be able to blame three percent of a total 3.7 percent decline in the rate as maybe Obama’s fault. But most of the workers who’ve dropped out of the labor force have done so for reasons other than the state of the economy. Do the math.

Along those lines, Trump also said the “real” unemployment rate is 42 percent with 93 million workers unable to find a job. Again, fiction.

Per the Washington Post:

Trump may have seen a chart, but he misread it. Yes, the BLS shows that there are 93.7 million people “not in the work force,” but the vast majority of those people do not want to work. Most are retired or simply are not interested in working, such as stay-at-home parents.

Here’s more bad news for the Republicans. According to, the Obama economy has added 9.2 million jobs. For the sake of reference, the Reagan economy added 16 million jobs, but job growth during Obama’s second term, which was more or less untethered from the Great Recession, exceeded Reagan’s first term job growth. Furthermore, the unemployment rate under Obama has declined more rapidly to a lower level than the rate under Reagan. Either way, it’s not the unmitigated disaster Trump’s talking about by any stretch of his bewigged imagination.

Elsewhere, per, since the beginning of his first term when he inherited an economy strangled by an nearly unprecedented recession, the Obama economy has seen the number of long-term unemployed drop by 614,000 workers. Job openings are up 97 percent. The S&P has grown by 139 percent. Weekly earnings are up (though not up enough, admittedly). Crude oil production is up 87 percent and oil imports are down by 62 percent. Alternative energy sources are up by 273 percent. Exports are up by 31 percent. The number of uninsured Americans has dropped by 15 million, due mainly to the dreaded Obamacare. And federal spending is only up by 11 percent, the lowest rate climb of any modern president. The budget deficit has dropped by more than a trillion dollars. And the economy has grown for 79 consecutive months.

Is everything perfect? No way. But, again, we’re only a few years out from an economic disaster of biblical proportions, and it would’ve been foolish to expect rapid economic growth in the wake of a recession that nearly crushed the world economy.

Just as foolish would be to expect that Donald Trump could do any better. Mark Zandi of Moody’s Analytics observed this week,

“If Trump’s policies were enacted it would be some form of disaster for the economy. If you force 11 million undocumented immigrants to leave in a year, you would be looking at a depression. It would not help the people he is talking to, they would be the first to go down.”

That’s reality. And yet too many Americans think he’s going to “make America great again.”


Paul Krugman: 4 Surprising Reasons to be Cheerful at the Close of 2014

Don’t believe the propaganda that good governance can’t deal with big problems

Source: NY Times via AlterNet

Author: Janet Allon

Emphasis Mine

Paul Krugman is feeling a tad optimistic as the year 2014 winds down. In his Friday column, he writes about “Tidings of Comfort,” if not quite tidings of great joy. The reason? Despite all the miserable messages about a world spinning out of control and a government completely not up to the task of confronting tough problems, “a number of major government policies worked just fine,” he writes. “And the biggest successes involved the most derided policies. You’ll never hear this on Fox News, but 2014 was a year in which the federal government, in particular, showed that it can do some important things very well if it wants to.”

Here are the four areas where Krugman posits the government, and in particular, the Obama administration showed its competency:

1. Ebola

Just a month or so ago we were in a full-blown panic about Ebola coming to this country. And the message of many policiticans was that our public health officials were in no way up to the task of dealing with it using conventional methods.” Instead, they insisted, we needed to ban all travel to and from West Africa,” Krguman writes, “imprison anyone who arrived from the wrong place, and  close the border with Mexico. No, I have no idea why anyone thought that last item made sense.”

This was all wrong. It turned out that the epidemiologists at the Centers for Disease Control and Prevention actually knew what they were doing, despite some early mistakes. Ebola is still killing people in Africa, but there was no outbreak here, despite what the fearmongers projected. 

2. The Economy

Yes, the recovery has been painfully and unneccessarily slow, in particular it has been ” held back by unprecedented cuts in public spending and employment,” Krugman writes.

But the story you hear all the time portrays economic policy as an unmitigated disaster, with President Obama’s alleged hostility to business holding back investment and job creation. So it comes as something of a shock when  you look at the actual record and discover that growth and job creation have been substantially faster during the Obama recovery than they were during the Bush recovery last decade (even ignoring the crisis at the end), and that while housing is still depressed,  business investment has been quite strong.

What’s more, recent data suggest that the economy is gathering strength —  5 percent growth in the last quarter! Oh, and not that it matters very much, but there are some people who like to claim that economic success should be judged by the performance of the stock market. And stock prices, which hit a low point in March 2009,  accompanied by declarations from prominent Republican economists that Mr. Obama was killing the market economy,  have tripled since then. Maybe economic management hasn’t been that bad, after all.

Whether the gains in the economy help poor Americans still struggling with low wages, staggering inequality and brutal rises in the cost of living, remains to be seen. But at least by some conservative standards, Obama’s stewardship has been on track. Not that you’ll ever see that acknowledged on Fox or by Republicans.

3. Obamacare Krugman cites one of his favorite topics, “the hidden-in-plain-sight triumph of Obamacare,” at the end of its first full year.  Krugman says he is asked, even by liberal friends, whether the program can be made to work. Apparently, they have not gotten the memo. It is working. 

In fact, Year 1 surpassed expectations on every front. Remember claims that more people would lose insurance than gained it? Well, the number of Americans without insurance  fell by around 10 million; members of the elite who have never been uninsured have no idea just how much positive difference that makes to people’s lives. Remember claims that reform would break the budget? In realitypremiums were far less than predicted, overall health spending is moderating, and  specific cost-control measures are doing very well. And all indications suggest that year two will be marked by further success.

4. Foreign policy This one will be controversial, but Krugman writes that Obama’s foreign policy of containing threats like Putin’s Russia and Islamic State. rather than waging all-out war on them, is “looking pretty good.” The message is that, despite all the right-wing propaganda to the contrary, 2014 shows that the government can be part of the solution, which is not to say that problems have disappeared from the world. Or that Fox News and their flunkies will admit it.