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TRUMP’S ECONOMIC NONSENSE

November 8, 2017

TRUMP’S ECONOMIC NONSENSE

Trump is dismissing yesterday’s Republican electoral losses by throwing the “losers” under the bus, a classic case of ultimate bullying, i.e., kicking the losers while they are down, even fellow Republicans. He tells us that they lost because they did not fully embrace his policies. Yeah, right. Trouble is, he has no policies with his shoot from the hip idiocy, and even if he professes to have one, five minutes later it can become obsolete as he retreats from our world to his narcissistic otherworld and its intermixture of reality and fantasy.

Trump sees government through the lens of “The Apprentice,” where everything and everybody are in competition with one another and the substantive results of how and why you won are not important – only whether you “win.” Thus he is not particularly interested in the contents of his tax bill or any other bill (other than how the tax bill might add to his personal coffers); he is rather only interested in “having a win” so that he can bask in coming out on top. Example > In a speech given just hours ago in South Korea in the shadow of a belligerent atomic power, he bragged about having won his election. Given the time and place and grave environment, I can hardly think of a more inappropriate observation, but it does give us a glimpse into the mindset of an ill, ignorant and oblivious man, one who sits in the Oval Office and in his otherworld, flitting from one to the other as perceived occasion demands.

To the topic of his economic nonsense > The fact that the tax bill hurriedly passed by the House is now undergoing Senate scrutiny and that Senate tax writers have indicated they are going to write in a one-year delay in the corporate tax reduction and make a few other minor loophole changes is instructive. The Senate Republican majority is less than that in the House and if the Democrats stand together and can secure only a few Republican votes (as they did in the health care fiasco), the tax bill will fail, hence the proposed delay in the harsh House version based upon the old movie that “A little bit of sugar makes the medicine go down.”  Again, trouble is, no sugar is promised a year from now by the Senate, when we have to take our “medicine” via funding of corporate shareholders and executives.

My major motivation is writing this essay is that when Trump was throwing the Republican “losers” under the bus just hours ago he simultaneously bragged about how well the economy is doing under his leadership as demonstrated by increases in the Dow, thus equating stock market values with Wall Street assessment of future corporate performance while ignoring effects of real world austerity economics.

So hello, Mr. Trump. Answer these questions > How well is the economy doing for whom, sir? Is the economy doing well for those whose median wages (adjusted for inflation) have not moved for almost four decades as the Dow has exploded? Does it really make any difference (other than to a select few) what Wall Street thinks? Johnnie Lunch Bucket can’t eat dividends and capital gains; he and his can only eat well if their wages move in rough tandem with corporate profits (as they did from FDR to Reagan) when the middle class exploded and economic growth was in the stratosphere.

Instead Johnnie now finds his worker productivity gains not in his paychecks but hijacked to the Dow; he finds the ultimate arbiter of economic growth (aggregate demand) missing in the marketplace due to his lack of wherewithal, a result of chronic and subsisting wage inequality; he finds encouragement of monopoly (and thus lack of competitive pricing) by government rather than restrictions on mergers, acquisitions and price-fixing under the Sherman Anti-Trust Act; he finds his job underpaid but subject to outsourcing if he complains etc. etc. etc. In short, he is at the mercy of runaway greed mongers who have bought our politics, a purchase greatly at odds with whatever economic security he once had, and all the while living under the threat of corporate ownership of America and whatever is left of our democracy. Tell me how well millions of similarly-situated Americans are doing under your leadership, Mr. Trump, and without the usual imprecations aimed at Hillary and Obama.

I have blogged many times that wage inequality is our greatest domestic issue, and that unless we correct this lopsided return to favored capital over labor that aggregate demand will remain tepid and economic growth will stagnate with occasional ups and downs and recessions between and even during business cycles. Thus the argument that we currently hear that unemployment is at a low is relatively meaningless, as is the argument that median wages are nudging up, since any such miniscule increases are gobbled up by inflation.

When those working are working for peanuts, it doesn’t matter if every man, woman and child were employed. Their paychecks will barely nudge the demand meter. Those unemployment numbers now cited were old measures of economic progress when wages rose in tandem (and even sometimes) exceeded the rate of growth in corporate income from FDR to Reagan and have no application today when Wall Street has hogged all of the economy’s wealth and income (and even worker productivity). There is little left to enhance demand, and the present and temporary slight increase in demand comes primarily not from either a low in the unemployed or enhanced wage scales; it is in part attributable to an historic rise in credit card debt.

So is the Dow on the rise because corporate America is more efficient in providing goods and services for the marketplace, gains in productivity due to better automation, or the way to make a better mouse-trap via innovation in marketing techniques (see Amazon) or related activities? Not anymore.

The Dow is up lately because of the promise of “tax relief,” which will go straight to their bottom lines as a gift from ordinary American taxpayers and unrelated to their provision of goods and services. You and I are in effect funding the capital gains of shareholders and the stock options of corporate executives while being asked to pay more taxes and accept an increase of 1.5 trillion dollars in our debt our children and theirs and theirs and theirs will have to pay down the road.

So this is policy in the making designed for the common good or for the paymasters on Wall Street? You decide.     GERALD      E

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