But immigration is a subset of a larger global problem. The dominant economic event of our era is the Great Recession, which began in 2007 and ended for the U.S. in 2009. Its status as a “great” economic downturn is attributed to its long aftermath of unemployment and, more important, underemployment.
As the U.S. and European economies failed to achieve pre-recession growth levels, which exacerbated social anxieties, the elites produced an explanation. They called it “the new normal.”
.. The new normal” theory, which in a wink became conventional wisdom among conventional economists and pundits, exists mainly to absolve them—and Barack Obama —of responsibility for weaker growth’s dire effects on national standards of living. What the theory failed to capture is that the new normal creates angry have-nots.
.. Voters everywhere are rebelling against the new normal. They won’t concede its implicit acceptance of flattened opportunities for younger Americans or Europeans still in their prime working years, who don’t have sinecures explaining to everyone else why this is as good as it will ever get. Increasingly, they are voting into office political outliers—from Trump to Macron to Kurz.
.. Mr. Trudeau’s economic plan should be seen as a proxy for what the next Democratic presidential nominee is likely to run on. Influenced by former Obama economic adviser Larry Summers’s theories on “secular stagnation,” Mr. Trudeau is making massive outlays on infrastructure repair and modernization to revive demand inside Canada.
.. Donald Trump is an infrastructure guy, too, but his path out of the new normal’s long-term trap runs mainly through regulatory relief and reforming the U.S. tax system.
.. U.S. firms kept 71% of their foreign-earned profits abroad, “benefiting other nations’ workers.” What would be the effect, Mr. Hassett asked, if for the next eight years, those profits were repatriated and reinvested here through a tax regime designed to promote more capital investment in the domestic economy? Incomes would rise.
Inside the ‘adult day-care center’: How aides try to control and coerce Trump
During the campaign, when President Trump’s advisers wanted him to stop talking about an issue — such as when he attacked a Gold Star military family — they sometimes presented him with polls demonstrating how the controversy was harming his candidacy.
During the transition, when aides needed Trump to decide on a looming issue or appointment, they often limited him to a shortlist of two or three options and urged him to choose one.
And now in the White House, when advisers hope to prevent Trump from making what they think is an unwise decision, they frequently try to delay his final verdict — hoping he may reconsider after having time to calm down.
.. The president is often impulsive, mercurial and difficult to manage, leading those around him to find creative ways to channel his energies.
.. Some Trump aides spend a significant part of their time devising ways to rein in and control the impetuous president, angling to avoid outbursts that might work against him, according to interviews with 18 aides, confidants
.. “I restrict no one, by the way, from going in to see him. But when we go in to see him now, rather than onesies and twosies, we go in and help him collectively understand what he needs to understand to make these vital decisions.”
.. Trump’s penchant for Twitter feuds, name-calling and temperamental outbursts presents a unique challenge.
.. One defining feature of managing Trump is frequent praise, which can leave his team in what seems to be a state of perpetual compliments. The White House pushes out news releases overflowing with top officials heaping flattery on Trump
.. One regular practitioner is Treasury Secretary Steven Mnuchin, who praised Trump’s controversial statements after white supremacists had a violent rally in Charlottesville and also said he agreed with Trump that professional football players should stand during the national anthem.
.. Former treasury secretary Larry Summers wrote in a Twitter post, “Mnuchin may be the greatest sycophant in Cabinet history.”
.. Especially in the early days of his presidency, aides delivered the president daily packages of news stories filled with positive coverage
.. Some aides and outside advisers hoping to push their allies and friends for top postings, such as ambassadorships, made sure their candidates appeared speaking favorably about Trump in conservative news outlets — and that those news clippings ended up on the president’s desk.
.. H.R. McMaster, the president’s national security adviser, has frequently resorted to diversionary tactics to manage Trump.
.. he will volunteer to have his staff study Trump’s more unorthodox ideas
.. When Trump wanted to make South Korea pay for the entire cost of a shared missile defense system, McMaster and top aides huddled to come up with arguments that the money spent defending South Korea and Japan also benefited the U.S. economy in the form of manufacturing jobs
.. If [Trump] wanted to do something that I thought could be problematic for him, I would simply, respectfully, ask him if we could possibly wait on it and then reconsider,” Nunberg
.. During the campaign, after reading a story in the New York Times that said Trump’s advisers went on television to talk directly to him, the candidate exploded at his then-campaign chairman, Paul Manafort, chastising his top aide for treating him like “a baby,”
.. The president appreciates how Mattis, a four-star Marine general, speaks to him candidly but respectfully and often plays down disagreements in public.
.. Mattis’s focus has been on informing the president when they disagree — before the disagreements go public — and maintaining a quiet influence.
.. Mattis has also gone out of his way not to suck up to the president
.. Mattis has also worked to get on Trump’s good side by criticizing the media for putting too much emphasis on his disagreements with Trump
.. When he has broken with the president, Mattis has done it as subtly possible.
.. Several people who have met with Trump in recent weeks said he mocks other officials in Washington, especially fellow Republicans.
.. Trump upset Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Paul D. Ryan (R-Wis.) by cutting a deal with Democrats. In subsequent days behind closed doors, the president mocked the reactions of McConnell and Ryan from the meeting with an exaggerated crossing of his arms and theatrical frowns.
.. “They have an on-the-record ‘Dear Leader’ culture, and an on-background ‘This-guy-is-a-joke’ culture,”
Trump can’t repeal the laws of economics
Investors have, on balance, concluded that the combination of a shift to very expansionary fiscal policy and major reductions in regulation in sectors ranging from energy to finance to drug pricing will raise demand and reflate the U.S. economy.
.. over the medium- and long-term they were catastrophic for the working class in whose name they were launched. This could be the fate of the Trump program given its design errors, implausible assumptions and reckless disregard for global economics.
.. an approach based on tax credits for equity investment and total private-sector participation that will not cover the most important projects, not reach many of the most important investors and involve substantial mis-targeting of public resources.
.. Many of the highest-return infrastructure investments — such as improving roads, repairing 60,000 structurally deficient bridges, upgrading schools or modernizing the air traffic control system — do not generate a commercial return and so are excluded from his plan. Nor can the non-taxable pension funds, endowments and sovereign wealth funds that are the most promising sources of capital for infrastructure take advantage of the program.
.. I am optimistic regarding the efficacy of fiscal expansion. But any responsible economist has to recognize that, past a point, it can lead to some combination of excessive foreign borrowing, inflation and even financial crisis.
.. Many, such as the proposed abolition of the estate tax, will benefit only the high-saving wealthy.
.. The same cannot be said of Trump’s global plan, which rests on a misunderstanding of how the world economy operates.
Consider the immediate effects of Trump’s victory. The Mexican peso has depreciated about 10 percent relative to the dollar over fears of new protectionist policies, and many other emerging market currencies have also fallen sharply. The impact of this change is to raise the cost of anything the U.S. exports to Mexico and to lower the cost of anything Mexico exports to the United States.
.. The plan seems to assume that we can pressure countries not to let their currencies depreciate
Voters deserve responsible nationalism not reflex globalism
But there is a kind of Gresham’s Law of advocacy whereby bolder claims drive out more prudent ones.
.. A new approach has to start from the idea that the basic responsibility of government is to maximise the welfare of citizens, not to pursue some abstract concept of the global good.
.. If Italy’s banking system is badly undercapitalised and the country’s democratically elected government wants to use taxpayer money to recapitalise it, why should some international agreement prevent it from doing so? Why should not countries that think that genetically modified crops are dangerous get to shield people from them? Why should the international community seek to prevent countries that wish to limit capital inflows from doing so? The issue in all these cases is not the merits. It is the principle that intrusions into sovereignty exact a high cost.
What is needed is a responsible nationalism — an approach where it is understood that countries are expected to pursue their citizens’ economic welfare as a primary objective but where their ability to harm the interests of citizens elsewhere is circumscribed. International agreements would be judged not by how much is harmonised or by how many barriers are torn down but whether citizens are empowered.