I’m pretty sure that Donald Trump doesn’t give a toss what Joe Stiglitz or any of his left-leaning economic buddies, some Nobel laureates, think about his proposed economic policies. (Stiglitz is up there with Krugman for partisan stupidity.)
Let’s face it, professional economists have a terrible record when it comes to forecasting. A study of forecasts by professional private sector economists for 77 countries made in April 2008 for the following year noted that not one forecast predicted a recession in 2009.
49 of these economies were in recession in 2009. Even by extending the forecast timeframe to September 2008, not a single forecast predicted recession. The IMF and OECD have similarly appalling records.
But this doesn’t stop most of these tossers ploughing on and giving us the benefit of their opinions. wisdom and foresight. A panel at the recent American Economic Association meeting in Chicago let it rip.
I’m presuming that Krugman is too grand these days to attend these sorts of events (gosh, he has his regular New York Times columns to complete and keep up the twitter feed). But he is in a bit of bind as he has repeatedly called for more infrastructure spending – massively more – but when Trump proposed this, he is opposed to Trump’s policy. Tres embarrassing.
(On the Trump economic agenda, the one major misgiving I have is the emphasis on the current account deficit, which is being misinterpreted both as a problem and something that should be targetted. Mind you, given the size of the US economy, we should not overlook optimal tariff theory when it comes to the proposed imposition of tariffs – the suppliers bear the burden, not the domestic consumers. His deregulation and tax cuts are by contrast masterful.)
Here is a the Bloomberg piece:
A pack of Nobel Prize-winning economists gave Donald Trump and his policy plans the thumbs-down on Friday, with one saying the president-elect’s programs could lead to a deep recession.
Speaking on a panel during the first day of the annual American Economic Association meeting in Chicago, the Nobel laureates voiced a variety of concerns about the billionaire developer’s stance, from his haranguing of US companies about their outsourcing plans to the risk his tax and spending proposals could lead to run-away budget deficits.
“There is a broad consensus that the kind of policies that our president-elect has proposed are among the polices that will not work,” said Joseph Stiglitz, summing up the views of the panel including his fellow Columbia University professor Edmund Phelps and Yale University’s Robert Shiller.
Such disapproval though is likely to fall on deaf ears. Trump rode to victory on the back of an unconventional campaign short on advice from Ph.D. economists – relying more on a team of wealthy businessmen – and there’s no indication that’s about to change. He pledges to accelerate growth and create millions of well-paid jobs through spending hikes and tax cuts as well as reduced regulations and renegotiated trade deals.
Phelps was particularly critical of Trump’s singling out of individual companies for abuse and praise, saying such interference could end up discouraging newcomers from entering markets and bringing with them much-needed innovation.
“The Trump government is threatening to drive a silver spike into the heart of the innovation process,” he said.
Phelps also voiced concern about Trump’s plans for big tax cuts and spending increases. “Such a policy runs the risk it could lead to an explosion of public debt and ultimately cause a serious loss of confidence and a deep recession,” he said.
That also has the University of Chicago’s Roger Myerson worried. While other presidents have run big budget deficits in the past, they depended on foreign purchases of US debt to do so.
‘Confidence and Trust’
With Trump threatening to renegotiate US trade agreements and shift to an “America First” policy, the willingness of foreigners to keep buying US government securities can’t be taken for granted, Myerson said.
America’s interaction with other countries “has to be based on confidence and trust,” Stiglitz said. “That’s being eroded.”
Angus Deaton of Princeton University said he was less worried about the US economy under Trump than he was about international relations, particularly when it comes to China.
The Asian nation was facing difficult economic problems and sounding more bellicose in the region even before Trump won the presidency on a vow to take it on, Deaton said.
Yale’s Shiller was the only Nobel Prize winner on the panel discussion who didn’t take a shot at Trump. “I’m a natural optimist and I would not like to speculate on how bad it could get,” he said. “Maybe one of the other panelists wants to do that.”
They certainly did.