There are only two sure things in life: death, and Donald Trump refusing to release his taxes. At this point hiding his taxes isn’t even supposed to be an option: the law says that the House of Representatives has the right to see his returns, and IRS officials are breaking that law if they fail to comply. But this isn’t the America we used to know. It will be a big surprise if the Trump administration complies with the law, and most Republicans will surely support Trump in his defiance.
What will we see, if those returns ever become public?
- Maybe that Trump isn’t as rich as he claims;
- probably evidence of corrupt practices, before and after taking office; and
- we will definitely see clear, unconstitutional conflicts of interest in his dual role as president and business tycoon.
.. Hypocrisy is pretending to care about the public interest when you’re actually serving your own interests. Opposing things that would be to your personal benefit, and supporting things that would make you a bit poorer, isn’t hypocritical at all — if anything, it deserves a little extra respect, because you’re making at least some sacrifice in support of your beliefs.
Democrats of all people should realize that being rich — which, by the way, none of the candidates are, as the truly rich assess such things — doesn’t prevent a politician from helping ordinary working families. Ever heard of a guy named Franklin Delano Roosevelt?
I have to admit that Sanders’s reluctance to release those returns, and his vague, almost Trumpian promises to release them “soon” were starting to worry me. Was there something actually bad in them? But right now it seems that he was just being foolish.
Trump, by contrast, almost surely has some very strong reasons he doesn’t want us to see his taxes — reasons strong enough to push him into defying the law. And that’s exactly why the public interest demands that those returns get released.
Getting Real About Rural America
Nobody knows how to reverse the heartland’s decline.
But it’s also important to get real. There are powerful forces behind the relative and in some cases absolute economic decline of rural America — and the truth is that nobody knows how to reverse those forces.
.. But reviving declining regions is really hard. Many countries have tried, but it’s difficult to find any convincing success stories.
Southern Italy remains backward after generations of effort. Despite vast sums spent on reconstruction, the former East Germany is still depressed three decades after the fall of the Berlin Wall.
Maybe we could do better, but history is not on our side.
What’s the matter with rural America? Major urban centers have always been magnets for economic growth. They offer large markets, ready availability of specialized suppliers, large pools of workers with specialized skills, and the invisible exchange of information that comes from face-to-face contact. As the Victorian economist Alfred Marshall put it, “The mysteries of the trade become no mysteries; but are as it were in the air.”
But the gravitational pull of big cities used to be counteracted by the need to locate farming where the good land was. In 1950 U.S. agriculture directly employed more than six million people; these farmers supported a network of small towns providing local services, and some of these small towns served as seeds around which various specialized industries grew.
Nor was farming the only activity giving people a reason to live far from major metropolitan areas. There were, for example, almost half a million coal miners.
Even then, rural areas and small towns weren’t the “real America,” somehow morally superior to the rest of us. But they were a major part of the demographic, social and cultural landscape.
Since then, however, while America’s population has doubled, the number of farmers has fallen by two-thirds. There are only around 50,000 coal miners. The incentives for business to locate far from the metropolitan action have greatly diminished. And the people still living in rural areas increasingly feel left behind.
Some of the consequences have been tragic. Not that long ago we used to think of social collapse as an inner-city problem. Nowadays phenomena like the prevalence of jobless men in their prime working years, or worse yet, the surge in “deaths of despair” by drugs, alcohol or suicide are concentrated in declining rural areas.
And politically, rural America is increasingly a world apart. For example, overall U.S. public opinion is increasingly positive toward immigrants. But rural Americans — many of whom rarely encounter immigrants in their daily lives — have a vastly more negative view.
Not surprisingly, rural America is also pretty much the only place where Donald Trump remains popular; despite the damage his trade wars have done to the farm economy, his net approval is vastly higherin rural areas than it is in the rest of the country.
So what can be done to help rural America? We can and should make sure that all Americans have good health care, access to good education, and so on wherever they live. We can try to promote economic development in lagging regions with public investment, employment subsidies and, possibly, job guarantees.
But as I said, experience abroad isn’t encouraging. West Germany invested $1.7 trillion in an attempt to revive the former East Germany — more than $100,000 per capita — yet the region is still lagging, with many young people leaving.
I’m sure that some rural readers will be angered by everything I’ve just said, seeing it as typical big-city condescension. But that’s neither my intention nor the point. I’m simply trying to get real. We can’t help rural America without understanding that the role it used to play in our nation is being undermined by powerful economic forces that nobody knows how to stop.
How Goes the Trade War?
Consumers, not foreigners, are paying the Trump tariffs.
Say this for Donald Trump: He’s provided us with many iconic quotations, which will surely be repeated in histories and textbooks for decades if not generations to come. Unfortunately, they’ll be repeated because they are extremely clear examples of bad ideas.
In economics, the line you hear most is Trump’s declaration that “trade wars are good, and easy to win.” Coming in second is his assertion that “I am a Tariff Man,” coupled with the claim that foreigners pay the tariffs he has been imposing.
Now, that last claim is something you can test. Over the course of 2018 Trump imposed tariffs on about 12 percent of total U.S. imports, and many of those tariffs have been in effect long enough that we can get a first read on their consequences.
On Saturday economists from Columbia, Princeton, and the New York Federal Reserve released a paper, “The impact of the 2018 trade war on U.S. prices and welfare,” that used detailed import data to assess the tariffs’ impact. (The paper, by the way, is a beautiful piece of work.) The conclusion: to a first approximation, foreigners paid none of the bill, U.S. companies and consumers paid all of it. And the losses to U.S. consumers exceeded the revenue from the new tariffs, so the tariffs made America poorer overall.
How did they get this result? The U.S. government collects data on the prices and quantities of many categories of imports. Many of these categories faced new tariffs, but many others didn’t. So you can compare what happened to the tariffed imports to the de facto control group of untouched imports; this tells you the impact of the tariffs.
Under Trump’s vision, in which foreigners would have paid the tariffs, what you would have expected to see is falling prices for tariffed goods, offsetting the tariff, so that consumer prices didn’t change. What you actually see, however, is no visible effect of the tariffs on import prices. So foreign suppliers don’t seem to have absorbed any of the tariffs, which were fully passed on to consumers; tariff-inclusive prices (Figure 1) have risen by the full amounts of the tariffs.
The Sum of Some Global Fears
Setting the table for a smorgasbord recession.
The last global economic crisis, for all its complex detail, had one big, simple cause: A huge housing and debt bubble had emerged in both the United States and Europe, and it took the world economy down when it deflated.
The previous, milder recession, in 2001, also had a single cause: the bursting of a bubble in technology stocks and investment (remember Pets.com?).
But the slump before that, in 1990-91, was a messier story. It was a smorgasbord recession — a downturn with multiple causes, ranging from the troubles of savings and loan institutions, to a glut of office buildings, to falling military spending at the end of the Cold War.
The best guess is that the next downturn will similarly involve a mix of troubles, rather than one big thing. And over the past few months we’ve started to see how it could happen. It’s by no means certain that a recession is looming, but some of our fears are beginning to come true.
China: Many people, myself included, have been predicting a Chinese crisis for a long time — but it has kept not happening. China’s economy is deeply unbalanced, with too much investment and too little consumer spending; but time and again the government has been able to steer away from the cliff by ramping up construction and ordering banks to make credit ultra-easy.
But has the day of reckoning finally arrived? Given China’s past resilience, it’s hard to feel confident. Still, recent data on Chinese manufacturing look grim.
And trouble in China would have worldwide repercussions. We tend to think of China only as an export juggernaut, but it’s also a huge buyer of goods, especially commodities like soybeans and oil; U.S. farmers and energy producers will be very unhappy if the Chinese economy stalls.