Archive for the ‘Political Economy’ Category

Obamacare and Brexit

Wednesday, July 19th, 2017

Donald Trump’s promise to repeal and replace Obamacare, and Britain’s promise to exit the EU have much in common. Each was sold with a promise that change would be easy and nearly all citizens would benefit.

In neither case has the promise been kept. Nonetheless, writes FT columnist Gideon Rachman, repeal of Obamacare is simple compared to the complexity of Brexit.

During the US presidential election, Mr Trump energised conservative voters with his promise to scrap “Obamacare” — which he denounced as a total disaster. The Republican candidate was vague about what exactly would replace the Affordable Care Act, passed during the Obama administration. But he was quite certain that it would be “great”. For Trump enthusiasts this was enough. ….

The Brexit story is strikingly similar … — with “Brussels” serving the same purpose as “Obamacare” in America, as a symbol of waste and of government that was simultaneously remote and intrusive. During last year’s referendum campaign, the Brexiters gave the impression that … [t]he UK would announce its withdrawal, stop payments to the EU, regain full control over immigration, restore parliamentary sovereignty, negotiate free trade with the EU — and launch into a prosperous new future as “Global Britain”. Anybody who suggested that things could go badly wrong was dismissed as part of “Project Fear”. ….

But the sad fact is that Brexit makes repealing Obamacare look simple. The Trump administration is trying to unpick a piece of legislation that has been in place for just seven years — and that involves just one area of public policy. By contrast, the UK has been a member of the EU for almost half a century (since 1973), which means that European law is now enmeshed in every area of public life.

Gideon Rachman, “Obamacare, Brexit and the complexity problem“, Financial Times, 20 July 2017 (gated paywall).

America’s decline

Tuesday, July 18th, 2017

President Trump, in his inaugural address, used the phrase “American carnage” to describe his country. FT columnist Martin Sandbu agrees with Mr Trump’s assessment, but finds nothing in his policies that might lead to improvement.

American decline is not a figment of Mr Trump’s imagination. The US economy has left large numbers of people with stagnant wages for decades. It is an economy in which millions fewer people have a job than at the peak in 2000, and which still leaves tens of millions without secure, decent healthcare.

It is an economy dotted with towns that were thriving within living memory, but have been devastated by the loss of factory jobs — lost because automation made plants too productive to need as much human labour as before, or because a failure to automate made them uncompetitive against rivals.

Above all, it is an economy in which centuries-old progress against mortality has gone in reverse for middle-aged low-educated Americans, who are dying from the afflictions of broken lives and broken communities: drug overdoses, liver disease and suicide.

Martin Sandbu, “An enfeebled America stands alone“, Financial Times, 19 July 2017 (gated paywall).

Mr Sandbu also criticizes – less severely – policies of the UK, Germany, France and Italy, while praising policies implemented by the EU, Japan and – most notably – Canada:

Canada’s reconsecration of its globalist destiny matches its ambitious welcome of refugees.

thinking like an economist

Sunday, July 16th, 2017

From University of California-Berkeley economist Brad DeLong:

Economics might have developed as a descriptive science, like sociology or political science. If so, courses in economics would concentrate on economic institutions and practices and the institutional structure of the economy as a whole. But it has not; it has instead become a more abstract science that emphasizes general principles applicable to a variety of situations. Thus a large part of economics involves a particular set of tools: a unique way of thinking about the world that is closely linked with the analytical tools economists use and that is couched in a particular technical language and a particular set of data. While one can get a lot out of sociology and political science courses without learning to think like a sociologist or a political scientist (because of their focus on institutional description), it is not possible to get much out of an economics course without learning to think like an economist.

Brad DeLong, “How to Think Like an Economist (If, That Is, You Wish to…)”, Grasping Reality with All Tentacles, 15 July 2017.

This is a long, useful blog for those who would like to understand why, and how, economists reach conclusions that may seem odd to others. We are a weird tribe of nerds!

HT Mark Thoma


political populism and income inequality

Thursday, July 13th, 2017

From Martin Wolf’s Wednesday column.

[T]he US income distribution is now more like that of a developing than an advanced country. Populism (of both left and right) is a natural consequence of high inequality. If so, Mr Trump may be no temporary anomaly.

Martin Wolf, “Donald Trump’s clash of civilisations versus the global community“, Financial Times, 12 July 2017 (gated paywall).


Donald Trump abandons his followers

Tuesday, June 13th, 2017

NY Times columnist David Leonhardt writes that Donald Trump “cares more about ‘winning’ than any coherent philosophy”, so is quickly abandoning promises he made during the campaign.

The biggest priority for today’s Congressional Republicans is shrinking the size of government so they can cut taxes for the wealthy.

Donald Trump, on the other hand, managed to win the presidency on an agenda that promised robust government programs in health care, retirement and other areas.

Something was going to have to give, and it’s long been clear that the something would be Trump’s campaign promises. Trump doesn’t actually care much about the working class and has quickly abandoned his earlier commitments.

David Leonhardt, “Opinion Today“, New York Times daily email, 12 June 2017.

Bernie Sanders on Republicans and Donald Trump

Friday, June 9th, 2017

FT columnist Simon Kuper has tea in Dublin with Mr Sanders. The interview will appear in tomorrow’s weekend edition of the Financial Times. The paper is printed on pink paper, if you search for it in a newsstand.

If you are a subscriber, you can read the article online, at the link below. Alternatively, free registration allows you to download three free columns each month. This should be one of them. (more…)

policy reversals can be excessive

Saturday, May 27th, 2017

FT ‘undercover economist’ Tim Harford has no problem with policymakers reversing course when necessary, but finds that Donald Trump and Theresa May, leaders of the US and the UK, do it so often that they are “spinning policy doughnuts” rather than making U-turns. (more…)

remembering economist William Baumol

Monday, May 22nd, 2017

British economist Diane Coyle (born 1961) praises the work of William Baumol, who passed away on the 4th of May, aged 95, and laments that they no longer make economists like him. (more…)

Microsoft and the ransomware attack

Wednesday, May 17th, 2017

Microsoft’s behaviour is outrageous. My next computer will be a Mac. Microsoft XP was an excellent operating system, one that I miss, but has now been made totally obsolete. I assume that Apple will continue to service its software for Mac without prohibitive charges. (more…)

The Economist interviews Donald Trump

Saturday, May 13th, 2017

The Economist has deposited, online, a complete transcript of their interview with Donald Trump. Here is the part that refers to the question of Mr Trump’s release of his tax returns.

Mr President, can I just try you on a deal-making question? If you do need Democratic support for your tax plan, your ideal tax plan, and the price of that the Democrats say is for you to release your tax returns, would you do that?

I don’t know. That’s a very interesting question. I doubt it. I doubt it. Because they’re not going to…nobody cares about my tax return except for the reporters. Oh, at some point I’ll release them. Maybe I’ll release them after I’m finished because I’m very proud of them actually. I did a good job.

Hope Hicks [White House director of strategic communication]: Once the audit is over.

President Trump: I might release them after I’m out of office.


President Trump: By the way, so as you know I’m under routine audit, so they’re not going to be done. But you know, at a certain point, that’s something I will consider. But I would never consider it as part of a deal.

Right, got that.

I would never do it. That would be…I think that would be unfair to the deal. It would be disrespectful of the importance of this deal. Because the only people that find that important are the reporters.

Well, the Democrats say it’s important.

Well, don’t forget I got elected without it. Somebody said, “Oh but you have to do it,” I said, “Look where I am”. I was, you know, I was out front, I was asked that question, every debate, I said, you know, I’m under routine audit.

Mr Mnuchin: And the president’s financial disclosure has been longer than any…

President Trump: Plus my financial disclosure is 104 pages.

Ms Hicks: I think when people say that that makes it about the president and the politics versus the people, which is what we’re focused on.

President Trump: Right.

The Economist, “Transcript: Interview with Donald Trump“, 11 May 2017.

Read the full transcript at the link above, on trade, immigration and tax reform, and weep. The conversation took place on May 4th, 2017.