Archive for the ‘Political Economy’ Category

unleashing Donald Trump

Wednesday, May 18th, 2016

When a calm, reasonable man like Martin Wolf dreads the thought of Donald Trump in the White House, it is time for all of us to worry. It is sad and frightening to see democratic governance fail in a powerful country. Martin blames not Trump, but “elites on both sides [who] promoted economic changes that ended up destroying trust in their competence and probity”.

Donald Trump will be the Republican candidate for president. He might even become president of the US. It is hard to exaggerate the significance and danger of this development. The US was the bastion of democracy and freedom in the 20th century. If it elected Mr Trump, a man with fascistic attitudes to people and power, the world would be transformed.

Mr Trump is a misogynist, a racist and a xenophobe. He glories in his own ignorance and inconsistency. Truth is whatever he finds convenient. His policy ideas are ludicrous, where they are not horrifying. Yet his attitudes and ideas are less disturbing than his character: he is a narcissist, bully and spreader of conspiracy theories. It is frightening to consider how such a man would use the powers at the disposal of the president.


Economic, social and political changes have brought the US to the point at which a significant part of the population seeks a strongman. ….

Mr Trump realises that his supporters have no interest in the limited state beloved of conservatives. Their desire is rather the restoration of lost economic, racial and sexual status. His response is to promise massive tax cuts, sustained spending and reduced debt. But he does not need logical consistency. That is for the despised “lamestream media”.

Hillary Clinton is a weak candidate, tainted by her husband’s failings and her position in the establishment, and short on political talent. She ought to win but might not.

Martin Wolf, “Failing elites are to blame for unleashing Donald Trump“, Financial Times, 18 May 2016 (metered paywall).

London’s Muslim mayor

Wednesday, May 11th, 2016

By voting in Sadiq Khan, the Labour MP for Tooting, the UK capital has provided a much-needed role model for Muslim youth who feel, rightly or wrongly, that they are socially marginalised. Though he is not the only prominent Muslim in the UK, he is the first Muslim mayor of a major western city. The symbolism is important.

At a time of rising Islamophobia, the arrival in City Hall of the son of a Pakistani bus driver and a seamstress, who grew up on a council estate, is a celebration of multiculturalism. It is also a defeat for radicalism, be it the product of populist and far-right xenophobia or the poisonous teachings propagated by Isis.

Roula Khalaf, “Sadiq Khan offers new role model for young European Muslims”, Financial Times, 11 May 2016 (metered paywall).

Sadiq Khan was born in London in 1970 to immigrant parents from Pakistan. He was the Member of Parliament (MP) for Tooting (a district of South London) from 2005 to 2016.

The FT either overlooked Calgary, Alberta (Canada), or does not classify it as a “major western city”, since Calgary, with a population of 1.2 million, also has a Muslim mayor. The Mayor, Naheed Nenshi, was born in Toronto in 1972 and raised in Calgary. His South Asian parents migrated to Canada from Tanzania. Nenshi was elected Mayor of Calgary in 2010, then re-elected in 2013 with 74% of the vote.

It is more accurate to describe Sadiq Khan as the first Muslim mayor of a major western capital city. (Calgary is Alberta’s largest city, but not the capital.)

Donald Trump and moderate Republicans

Saturday, May 7th, 2016

Nine FT journalists have answered the following question: “Now that Donald Trump is poised to become the Republican party nominee in the US presidential election, should moderate Republicans now rally around him?”

All the responses are thoughtful and interesting. Here is a large excerpt from what for me was the best of the lot.

I have two responses to this proposal. The first is: are you joking? A moderate Republican should believe in limited government, a properly funded safety net, a balanced budget, liberal migration, an inclusive polity, an internationally open and domestically competitive economy, the maintenance of US alliances and, not least, the global role of the US as the bastion of democracy.

Nobody with such principles could support a xenophobe, racist and misogynist who has no coherent principles or policies other than rage and self-promotion. This is the antithesis of moderate conservatism. ….

The second is: what moderate Republicans? Anybody who has been following Republican party debates on policy, particularly since Barack Obama was elected, will realise that there are no moderates, merely different varieties of extremism. A party whose leading candidates turned out to be Donald Trump and Ted Cruz is in the grips of three elements: rightwing populism, the Christian right and the commitment to lower taxes for the wealthiest. …. Moderate Republicans are dinosaurs. They need to go somewhere else.

Martin Wolf, “Should moderate Republicans rally around Donald Trump?“, FT Debate, Financial Times, 7 May 2016 (metered paywall).

FT readers are invited to submit their own answers in the online comments section. The best contributions will be featured in a future issue of the FT.

the myth of ‘working class’ support for Trump

Friday, May 6th, 2016

Exit polls of primary voters show that supporters of Trump, like others in the Republican party, tend to have high incomes compared to other Americans. This was a surprise to me.

Trump voters’ median income exceeded the overall statewide median in all 23 states, sometimes narrowly (as in New Hampshire or Missouri) but sometimes substantially. In Florida, for instance, the median household income for Trump voters was about $70,000, compared with $48,000 for the state as a whole.

By Nate Silver, “The Mythology Of Trump’s ‘Working Class’ Support“, FiveThirtyEight, 3 May 2016.

Donald Trump and political parties

Thursday, May 5th, 2016

Against all predictions, Donald Trump will soon be the official Republican candidate for president of the United States. The President of the United States functions as head of state and head of government. A President Trump in this powerful office frightens many, including the editors of the Financial Times. Today’s FT contains a strong ‘non-endorsement’ of Trump. Below are highlights from the editorial.

Mr Trump’s personality, intellect and experience make him radically unqualified for the presidency of the United States. ….

It is indeed shocking that the party of Abraham Lincoln and Dwight Eisenhower is about to nominate a shallow narcissistic demagogue such as Mr Trump. But, in some respects, the Republicans have sown the seeds of their own downfall — by flirting for decades with nativist themes and radical anti-government rhetoric that has too often shaded into conspiracy theories about everything from gun control to the “liberal media”. ….

…. Mr Trump’s antitrade stance and isolationism carry disturbing echoes of the 1930s.

Despite all this, … [h]is defenders in the American establishment are already advancing the idea that much of Mr Trump’s campaign rhetoric is an act. They argue that the “real” Donald Trump is a shrewd businessman who would govern pragmatically once he was in the Oval Office. They also suggest that Mr Trump will move to the middle-ground and show a more moderate face to the world once he has definitively secured the nomination of the Republican party.

Yet Mr Trump cannot simply erase the memory of the campaign to date. The past few months have already demonstrated that he would be a disastrous choice for the most powerful political office in the world.

Trump and the future of American leadership“, Financial Times editorial, 5 May 2016 (metered paywall).

Regardless of whether Mr Trump wins (with help from supporters of Bernie Sanders) or not, it is clear that the Republican party will never be the same. I think it is time for the US to move to a three-party system. The Republican party could become the Tea Party in everything but name: a coalition of social conservatives and libertarians. The Democrats since Bill Clinton have embraced conservative policies, similar to those of the Eisenhower and Reagan Republicans of old. What is missing is a party on the left, one that would attract supporters of Bernie Sanders. This new party would be similar to the Labour party in the UK or Canada’s New Democrats. It could even adopt the name New Democratic Party. The Democrats would become the party of the centre, the Republicans the party of the right, and New Democrats a party of the left.

In the three-party system outlined above there is no place for “a shallow narcissistic demagogue such as Mr Trump”. That is intentional. It is not a bug.

crime and incarceration

Saturday, April 30th, 2016

In recent decades, the United States has recorded a falling rate of crime and rising rate of incarceration. (See the two figures below.) Correlation, however, is not causation. Crime rates can fall for other reasons, such as population ageing and more (or more efficient) policing.

Macalester College (Minnesota) economist Timothy Taylor sorts this out in a concise blog, concluding with the following summary:

Crime is falling for lots of reasons over the last three decades. Rising incarceration may well have been a moderate contributor to the fall in crime back in the 1980s, when the incarceration rate was relatively low. But by the 2000s, when the incarceration rate had more than doubled, it had become a costly and not-very-powerful way of reducing crime. From that perspective, it’s not a coincidence that California and other states have been scaling back on their incarceration rate in the last few years. As various states are recognizing, there are more cost-effective alternatives to keep the crime rate on a downward trend.

Timothy Taylor, “Crime and Incarceration: Correlation, Causation, and Policy“, Conversable Economist, 29 April 2016.

Professor Taylor quotes extensively from a 79-page, April 2016 report of the Council of Economic Advisers, titled “Economic Perspectives on Incarceration and the Criminal Justice System“. Here is one example, followed by figures from the report:

CEA conducted “back-of-the-envelope” cost-benefit tests …

  • We find that a $10 billion dollar increase in incarceration spending would reduce crime by 1 to 4 percent (or 55,000 to 340,000 crimes) and have a net societal benefit of -$8 billion to $1 billion dollars.
  • At the same time, a $10 billion dollar investment in police hiring would decrease crime by 5 to 16 percent (440,000 to 1.5 million crimes) have a net societal benefit of $4 to $38 billion dollars.

chart of the day

Friday, April 29th, 2016

Never before in recent American history — perhaps never before, period — have the two major candidates for president been so disliked by the electorate. A huge majority – 65% — of voters dislike Donald Trump. Hillary Clinton does slightly better, as she is disliked by ‘only’ 56% of voters. Their net popularity ratings (measured as positive minus negative views) are negative 23% for Mrs Clinton and negative 41% for Mr Trump. (Mr Trump’s negative rating appears to go off the chart below!)

Regardless of which of the two candidates is elected president, I fear the United States will become even more ungovernable in the future than it has been in the recent past. So much hatred of political leaders makes sane governance all but impossible.

Chart: Clinton, Sanders data

According to the latest Wall Street Journal-NBC poll, only a third of US voters have a positive opinion of Mrs Clinton, while 56 per cent of Americans view her negatively. She fares somewhat better than Mr Trump, who is disliked by 65 per cent of Americans and liked by just 24 per cent, but worse than all the other remaining presidential candidates including Ted Cruz, the Texas senator.

Courtney Weaver and Demetri Sevastopulo, “US election: Can Hill thrill after you’ve felt the Bern?“, Financial Times, 29 April 2016.

libertarian logic

Tuesday, April 19th, 2016

These are not direct quotes, but similar statements are sometimes uttered simultaneously, by the same person.

“Redistribution of income with revenue from taxes will never work because people are inherently selfish.”

“Charity will cover everything because people are inherently generous.”

HT “The Discovery of the Heart“, CBC Ideas podcast, with Paul Kennedy, 13 April 2016.


working-class Republicans in US politics

Saturday, April 16th, 2016

American journalist Jacob Weisberg has an interesting op-ed in this weekend’s Financial Times. Here are two paragraphs that caught my attention. To place these paragraphs in context, note that working-class Democrats who became Reagan Republicans decades ago are Donald Trump Republicans today.

Working-class Republicans are waking up to the reality that their party does not represent them any more than the Democrats did. On issue after issue, Mr Trump’s supporters are at odds with Republican dogma. They do not support free trade and globalisation. They do not favour tax cuts for the wealthy, or bailouts for banks, or financial deregulation, or the rollback of consumer protections. And, though nationalistic, their families are the ones that paid the human cost for the neoconservative fantasy of bringing democracy to Iraq. ….

In this context, the rise of the Tea Party now appears as a red herring. Rank-and-file Republicans were not dismayed by George W Bush’s failure to shrink their benefits. It was the party’s wealthy elite who were frustrated about that. Working-class Republicans were enraged because they saw the federal government bailing out Wall Street banks instead of ordinary citizens. The Tea Party quickly dissipated into irrelevance because it did not represent the people it claimed to represent.

Jacob Weisberg, “The Republicans face a historic rupture“, Financial Times, 16 April 2016.

Jacob Weisberg (born 1964) is editor-in-chief of Slate Group, and former editor of Slate magazine.

Robert Frank on success and luck

Thursday, April 14th, 2016

It is often said, tongue in cheek, that the two most important decisions a child can make is to choose good parents and a good place of birth. Parents and birthplace, for the bably, are of course a matter of chance, since choice is not possible. But the fact remains that these are incredibly important determinants of success in life.

Cornell University economist Robert Frank (born 1945) has written a book on this very topic, which was published just days ago by Princeton University Press. The book’s title is Success and Luck: Good Fortune and the Myth of Meritocracy. An essay adapted from his book has been printed in the May 2016 issue of The Atlantic magazine. Here are some excerpts. (more…)