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What if it works for Trump? November 24, 2016

Posted by WorldbyStorm in Uncategorized.
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Listening to Zero Books rather good podcast on Trump one point that was made was that what happens if Trump is successful economically – growth, new jobs.

Oddly enough Barry J Whyte in the SBP made a similar point in a piece on the Trump election.

Talking about how the markets weren’t anywhere near as spooked as might be expected he quoted one commentator as saying…

“What’s happening in the financial markets is they’re looking at the other parts of his programme.” he said.

Infrastructure spending will serve as a major fiscal stimulus to the SU, creating jobs, boosting the covers of US companies and sending the stock markets surging.

“Even Democrats all love infrastructure, and our infrastructure is in woeful condition so that would be a greased goose to the system.”

It’s a thought isn’t it? There’s an assumption that Trump will be a pretty bad President. But perhaps, as in his campaign, it is down to him ‘winning’ in a couple of obvious areas. Mexican Wall redux. Some push on illegal immigration. Jobs aplenty.

How do his opponents counter that? And more to the point what of its broader impacts? A successful Donald Trump could certainly have an influence more broadly, not specifically but perhaps in the shape of right populist politics.

The irony of course being that he is – on the economic front, not implementing left policies, but left-looking policies.

By the way, none of this much helps the global economy according to Whyte’s interlocutor.

For the rest of the world any overspill is unlikely in an era of splendid economic isolation.

Comments»

1. EWI - November 24, 2016

The ‘infrastructure investment’ is likely to actually be PPPs, i.e. the private sector will make out like bandits on a massive Thatcherite transfer of the public infrastructure into their hands.

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WorldbyStorm - November 24, 2016

100% agree, and precisely why j used left looking rather than left, but if people get jobs and others believe there are more jobs, growth increases heir perceptions will be of a Trump ‘success’

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dublinstreams - November 24, 2016

which SSBP article are you quoting? what date? this one its different https://www.businesspost.ie/business/the-triumph-of-trumponomics-370428

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dublinstreams - December 4, 2016

Ourselves Alone: Adjusting to a Trump America https://www.businesspost.ie/business/alone-adjusting-new-america-370051

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2. EWI - November 24, 2016

First, why involve private investors at all? It’s not as if the federal government is having any trouble raising money — in fact, a large part of the justification for infrastructure investment is precisely that the government can borrow so cheaply. Why do we need private equity at all?

One answer might be that this way you avoid incurring additional public debt. But that’s just accounting confusion. Imagine that you’re building a toll road. If the government builds it, it ends up paying interest but gets the future revenue from the tolls. If it turns the project over to private investors, it avoids the interest cost — but also loses the future toll revenue. The government’s future cash flow is no better than it would have been if it borrowed directly, and worse if it strikes a bad deal, say because the investors have political connections.

Second, how is this kind of scheme supposed to finance investment that doesn’t produce a revenue stream? Toll roads are not the main thing we need right now; what about sewage systems, making up for deferred maintenance, and so on? You could bring in private investors by guaranteeing them future government money — say, paying rent in perpetuity for the use of a water system built by a private consortium. But this, even more than having someone else collect tolls, would simply be government borrowing through the back door — with much less transparency, and hence greater opportunities for giveaways to favored interests.

http://mobile.nytimes.com/blogs/krugman/2016/11/19/infrastructure-build-or-privatization-scam/

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Gewerkschaftler - November 24, 2016
EWI - November 24, 2016

If you mean the push for Clinton at all costs, as the supposedly ‘viable’ Democratic candidate, then yes.

That Hillary clearly doesn’t give a shit for the poor was deeply unfortunate, but she was all they thought they had.

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3. sonofstan - November 24, 2016

This something I’ve been trying to think through in the context of Brexit but it probably applies in the Trump era US as well. So: one of the things that has defined UK economic performance over the past decades has been low productivity – relatively high rates of employment, relatively low wages tend to produce this, as it becomes cheaper to simply employ more workers than to invest in tech/ plant/ training to improve performance. Government policy on ‘labour activation’ – and student fees, meaning most students have to work and aren’t in a position to argue for pay, or don’t have the commitment, since they see their retail jobs as temporary -combined with high (though not as high as they think) levels of immigration make it a buyers’ market when it comes to labour power. In the US, much of the immigrant labour is, in addition, undocumented.

So…. if, in both countries, the tap of immigration is turned off, or at least halted, will this lead to, initially higher wages and investment? or will the labour shortage and the reduction in demand simply lead to a spiralling decline as bad habits, decades of underinvestment, poor infrastructure increase the competitive disadvantage?

Immigrant labour is the economy’s flexible friend; able to plug gaps in skills or mobility that the domestic supply can’t manage. No one here in England appears to have woken up to this yet, but, even if they don’t deport EU citizens already here, the UK, particularly one in a recession of its own making, will be less attractive to new arrivals. More so in the US, where illegals will be less inclined to attract attention by moving jobs, or by ricking arriving in the first place.

The other issue with big economies is that, like big ships, they are difficult to turn around – incentives and government investment can work very quickly in Ireland or in Scandanavia, but much less so here or in the US. he converse being that harsh winds blow more quickly through our ‘small open economy’

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WorldbyStorm - November 24, 2016

IFS report today does not give much cause for optimism. Their take is wages will suffer even more, demand will fall, etc, etc. That though is a good point re difficulties in turning this around. The sheer momentum of the British economy is pushing it forward still but… we’ve seen here how rapidly things can change. Someone suggested to me one big issue is that the British haven’t experienced rupture on the scale say this state did in 2008 onwards – that much of what was done there under the Tories post 2010 was self-inflicted and cushioned by years of better spending under Labour. if that’s accurate they may be in for a real shock psychological as well as economic.

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4. Joe - November 24, 2016

In the end, it is always about the economy, stupid. So unfortunately (!) if Trump’s economy ‘works’, joe and mabel worker in the US will probably think he’s great. And will re-elect him.
It worked for Bertie Ahern here didn’t it? The economy ‘boomed’ when he was in the top job and there were plenty of jobs for everyone and everyone thought things were going well for them – and he got re-elected, twice.
But then it ended over here with a pretty vicious recession. I wonder what would be the fallout in the US from a vicious recession as a result of Trump’s expansionist pump-priming of the economy – after the boom, the crash. Would that lead to even more reaction or would joe and mabel worker over there start looking left for a solution?

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EWI - November 24, 2016

So unfortunately (!) if Trump’s economy ‘works’, joe and mabel worker in the US will probably think he’s great.

Goes well in the same way that selling your house and going wild on the proceeds will let the good times roll for a month! I think the Republican game plan is to be into the second term by the time buyers’ (sellers’) regret becomes apparent.

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5. fergal - November 24, 2016

Trump surely has to do something for those in the heartland, rust belt etc I mean what’s he going to do for the billionaire class- give them another billion in tax cuts- that won’t cut it with working class Trump voters- and truth be told what’s another billion when you’re already a billionaire?
Apart from public works I suspect factories and mines could be reopened- it won’t be cheap but you’d imagine Trump will just print money. The real issue may be when Billy Bob in Alabama goes to his local store to find out that the shirt he got last year for 5 dollars is now 20 dollars. Can Trump square that circle?
Or is Billy Bob so poor that he doesn’t buy many shirts anyway and getting a decent paying job in his local ‘Trump’ factory will offset paying more for his consumer goods?

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6. makedoanmend - November 25, 2016

(I’m being deliberately obtuse and taking the title of the article out of its intended context.)

“What if it works for Trump?”

“It” will work for Trump and cronies. Full stop.

As his cabinet (containing a few Billionaires already and also formed of those with ties to the US oligarchic class) cohere into a clearer picture, I’m sure they will throw a few crumbs to their “constituents” – at the beginning = good optics.

But these ark-capitalists are by nature short term, deal making and deal breaking beings. It is their learnt nature.

I can’t help but think that this will end up badly for the rust-belters and everyone else.

Trump Assoc’s Government Incorp’d won’t be able to help themselves in purloining a few choice morsels from US national assets (under the cute PR name of privitisation).

A few poorly paid jobs whilst daily commodities become more expensive to cover the oligarch’s vig on all human acitivites is a long term loser for the ordinary citizen, imho.

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7. CL - November 25, 2016

“there’s nothing wrong, and a lot right, with deficit spending in the interest of moving the economy the rest of the way toward full employment. But privatizing public infrastructure through a wasteful tax break and re-engaging in the failed trickle-down experiment from the 2000s won’t help either the economy or many of the people in it.”
http://www.politico.com/magazine/story/2016/11/trumps-misguided-flirtation-with-keynesianism-214468

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