Donald J. Trump is positioned to achieve the most radical reshaping of economic policy since Ronald Reagan. Even under Reagan, Republicans never controlled both houses of Congress.
.. if he follows through on his ideas, we could face higher prices on imported goods, rising interest rates, substantial inflation and a further shift of wealth to the upper classes.
.. Lower-income Americans — including Mr. Trump’s core supporters — would be hurt the most because they disproportionately buy less expensive imported items.
.. While some manufacturing jobs might come back as a result of the tariffs, a greater number of domestic jobs would most likely be lost because Americans would have less spending power.
.. rather than bringing jobs back to the United States, Mr. Trump’s tariffs could result in a trade war that would cost our economy five million jobs and possibly lead to a recession.
.. As soon as Mr. Trump’s ascendancy became clear on Tuesday night, interest rates on Treasuries began to rise. Usually, an unexpected event causes a flight to the safety of government debt, pushing yields down. That the opposite occurred reflects fears that the deficit might balloon out of control.
.. As a fiscal conservative, Mr. Ryan is unlikely to accept large tax cuts unaccompanied by major spending reductions. That could lead to the evisceration of many of the discretionary federal programs — think education or research and development — critical to putting our economy on a stronger footing.
.. As a fiscal conservative, Mr. Ryan is unlikely to accept large tax cuts unaccompanied by major spending reductions. That could lead to the evisceration of many of the discretionary federal programs — think education or research and development — critical to putting our economy on a stronger footing.
.. If Mr. Trump sticks to his pledge, it will be open season on regulations, as businesses go after their most disliked provisions and agencies. Industrial companies will take aim at the Environmental Protection Agency. Financial institutions, including the big banks, will push to repeal Dodd-Frank. That’s just for starters.
.. Some of the efforts at dismantling government may face hurdles in the Senate, where 60 votes are required to break filibusters, more than the Republicans will have. But under a process known as “reconciliation,” matters relating to taxes and spending — and potentially the repeal of Obamacare — can be passed by a simple majority of 51.
.. The conservative American Action Forum calculated that his deportation plan would cost $400 billion to $600 billion and, because there are not enough citizens and legal residents to fill the demand, the plan would shrink the labor force and reduce gross domestic product by $1.6 trillion.
.. Mr. Trump’s proposals would confer vast monetary gains on wealthy Americans while leaving middle- and working-class Americans — his electoral base — further behind. For his supporters, the irony of a Trump victory is that they may end up even less well off.
More Jobs, A Stronger Economy and a Threat to Institutions
A hundred and sixty-one thousand new jobs were created in October, the unemployment rate fell to 4.9 per cent, and wages grew faster than at any point since the financial crisis. Combined with last week’s report of strong G.D.P. growth, this is evidence that our economy is healthy and growing—and that growth is being reasonably widely shared. While this doesn’t mean that America’s growth is as robust as we might wish, or that we don’t face deep challenges, these numbers are incompatible with a view that America is in a profound economic crisis. Yet many people believe it is.
.. Every four years, Republicans argue that they, alone, can help the economy grow, while Democrats argue that they will make sure that economic growth doesn’t just help the rich.
.. Growth is actually notably higher during Democratic Administrations. The graph of economic performance since the Second World War shows growth averaging 4.33 per cent a year under Democratic Presidencies, while growing at 2.54 per cent under Republican ones.
.. Kevin Hassett, of the American Enterprise Institute, who advised every Republican Presidential candidate between 2000 and 2012, sees the cause and effect differently: American voters choose Democrats when they believe the economy is about to take off, because they want the government to spend a lot of money; then, when Democrats damage the economy and things turn south, voters choose Republicans to sort out the mess.
.. What matters most are those things that endure for decades and centuries: democracy, rule of law, a civilian-led military, political stability, and freedom of speech and movement. America is a rich country not because of what the Democrats or the Republicans did separately. It is successful because of those things that the parties share, national values and institutions.
.. Institutions are significant to economists, who have come to see that countries become prosperous not because they have bounteous natural resources or an educated population or the most advanced technology but because they have good institutions.
.. The societies with the most robust systems for forcing the powerful to accommodate some of the needs of the powerless became wealthier and more peaceful. Good rules persuaded people with ambition and ideas to invest in the future, trusting that stability and rule of law would protect them. Most nations without institutions to check the worst impulses of the rich and powerful stay stuck in poverty and dysfunction.
.. This explains why America’s quadrennial fights over tax rates and government spending are meaningful in the short term and to many individuals, but, over a longer arc, it’s the institutions we’ve built and respect that allow for a trajectory of growth.
.. No economist, save one, supports Donald J. Trump’s stated economic plans, but an even larger concern is that, were he elected, Trump would attack the very institutions that have provided our economic stability. In his campaign, Trump has shown outright contempt for courts, free speech, international treaties, and many other pillars of the American way of life.
.. Sulla, a wealthy and powerful élitist, was able to take advantage of anger among the less privileged to suggest that existing societal rules were keeping Rome from reclaiming its greatness. He steadily eroded custom, by, for example, encouraging soldiers to pledge allegiance to him rather than to the state, and to suggest that the Senate was sclerotic and corrupt.
.. Robinson said that it’s easy to imagine a President Trump refusing to heed our own highest court, which, as President Andrew Jackson observed, has no way, other than respect of institutions, to enforce its decisions. No one knows what Trump would do as President, but, based on his statements on the campaign trail, it’s possible to imagine a nation where people have less confidence in the courts, the military, and their rights to free speech and assembly. When this happens, history tells us, people stop dreaming about what they could have if they invest in education, new businesses, and new ideas. They focus, instead, on taking from others and holding tightly to what they’ve already amassed. Those societies, without the institutions that protect us from our worst impulses, become poorer, uglier, more violent. That is how nations fail.
How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More
Can the answer to what ails the global
economy be found in the people in blue
vests at your neighborhood Walmart?What most store employees probably didn’t know was that Mr. McMillon and his executive team, who had been promoted into their jobs a year earlier, were under extraordinary pressure from investors. They needed to reverse a slide in business and fight off threats in all directions — dollar discounters on the low end, Amazon online, direct competitors like Target
.. “Walmart U.S.’s relentless focus on costs does seem to have taken some toll on in-store conditions and stock levels,” they wrote. The analysts wryly added: “If an item is not on the shelf, you cannot sell it.”
.. The company had been busy raising profits by cutting labor costs. The number of employees in the United States fell by 7 percent from early 2008 to early 2013, for example, a span in which the square footage of stores rose 13 percent.
.. Walmart had become viewed as a last-ditch option for employment — not the place that ambitious people might want to work. They were under such pressure to keep labor costs low that the employees they hired showed little loyalty or career-building devotion to their jobs.
.. To macroeconomists, it suggested that a falling unemployment rate was finally creating the response that theory suggests it should: employers raising wages to attract the workers they need.
.. And executives really had concluded that customer service woes and slumping sales were because of underinvestment in employees.
.. And the actions far well short of what Zeynep Ton, an associate professor of operations at the Sloan School of Business at M.I.T., calls a “good jobs strategy,” in which a retailer builds its entire operating philosophy around better-compensated staff members who are empowered to make decisions.
.. An employee making more than the market rate, after all, is likely to work harder and show greater loyalty
.. What is interesting about this is that, if you look at what’s ailing the broader United States economy, it looks a lot like what you would expect if employers were, en masse, failing to understand the possibility of efficiency wages.
.. Individually, employers may think they are making rational decisions to pay people as little as possible. But that may be collectively shortsighted, if the unintended result is less demand for the goods and services they are all trying to sell to these same people.
.. “Out of the gate, they’ve seen some improvement, but I think that’s because they were doing Retail 101 so poorly,” said Brian Yarbrough, a retail analyst at Edward Jones & Company. “The better question is what happens next year and the following year. The low-hanging fruit has been harvested.”
Those Who Don’t Understand Trump Are Doomed to Repeat Him
Conservatives are deeply split over the rise of Donald J. Trump. Some see it as apocalyptic; others as refreshing. But two pieces of conventional wisdom are largely unchallenged by either side.
First, Mr. Trump’s populist takeover of the Republican Party was shocking and unforeseeable. Second, love Trump or hate him, he has revealed important realities about the electorate, and Republicans must move toward more populist positions on issues such as trade and immigration or be left behind.
Both of these beliefs are mistaken
.. Census Bureau data show that from 2009 through 2014, only about the top fifth of the population saw any income growth while the bottom 80 percent have averaged no income growth at all.
.. German economists look at the effect of financial crises on politics, reviewing 800 elections over 140 years across 20 advanced economies. They found that, after a financial crisis, nationalistic populist parties and politicians, using language that often attributes blame to minorities and foreigners, typically increase their vote share by about 30 percent. There is no such effect after ordinary recessions.
.. Swedish voters rewarded a brand-new “New Democracy” party that focused heavily on law and order issues and proposed stringent restrictions on immigration.
.. With no simple solution for reviving equal opportunity, conventional politicians struggle with increasingly angry voters. Into this gap walk populists who specialize in identifying culprits: rich elites who are ripping you off; immigrants who want your job; free trade that’s killing our nation’s competitiveness. Their proposed solutions usually involve some combination of increased redistribution, protectionism and restrictionism.
.. Trade and immigration are the lightning rods, but these issues are not the real triggers of our political moment. The illegal immigrant population was 8 percent lower in 2014 than in 2007, and our trade deficit was lower in 2015 than before the Great Recession.
.. The real issue is weak, unevenly shared growth. If we addressed this issue, and if people felt their lives improving, the appetite for invective on secondary issues such as trade and immigration would dissipate.
.. Conservatives love to emphasize the need for higher economic growth, but have often missed the importance of more widely distributed growth. Leaders should set their focus on a system with more opportunity in the middle and bottom of the economy.
.. Throwing away free enterprise will neither solve our nation’s problems nor create enduring political victories. Only strong growth, evenly distributed, will do the trick.