Trump's Economy

[astralis]

DOR,

That only works on a national scale. Worldwide, there is nothing wrong with globalization. Just ask the billions that rose out of abject poverty in our lifetimes.

No substitute.

sure. but I'm a patriot first and foremost, so while it's nice billions rose out of abject poverty, I'd also prefer a national outcome that didn't involve the hollowing out of the US working/middle class, and the subsequent defection of the US working class to an ever-crazier GOP.

also, when a good portion of the "billions rising out of abject poverty" happen to occur in an authoritarian trending totalitarian regime, then my interest declines even further.

[TopHatter]

Household incomes grew more slowly in a majority of states under Trump – even before COVID-19

Even before the U.S. economy was slammed by a pandemic, the typical American household’s income grew at a slower pace in more than half of the states under Donald Trump than in the years leading up to his presidency, according to a new Capital & Main analysis of U.S. Census data.

Those states include several key battlegrounds, undercutting one of Trump’s central campaign themes: that before COVID-19 his actions led to an economy he has described as "the best it has ever been.”

Pennsylvania saw its typical household’s income growth slow from 6.2% in Obama’s last three years to 4.7% in Trump’s first three years, while median household income growth in Wisconsin declined from 7.1% to 6%.

In New Hampshire typical household income growth slowed from 7.2% between 2013 and 2016 to 3.1% from 2016 to 2019, while in Iowa it slowed from 4.5% to 3%.

Nationally, median family income growth in Trump’s first three years was almost identical to the rate of growth in the three years prior to his presidency, according to one of the two main Census surveys. A second Census survey shows that median household income growth actually slowed in Trump’s first three years to 2.1% annually compared with 2.6% annually during Obama’s last three years.

Defenders of the president point to other indicators such as family income, which does not include households with single people and unrelated people living together. Family income, they point out, grew faster in Trump’s first three years than in the years before he took office.

Measured by median household income, however, 26 states saw slower growth under Trump even before the pandemic – including in half of the 2020 battleground states identified by The Cook Political Report, a nonpartisan newsletter that analyzes campaigns and elections. They include Georgia, North Carolina and Ohio, along with Iowa, New Hampshire, Pennsylvania and Wisconsin. In addition, two states with battleground districts, Maine and Nebraska, saw median household income growth slow in real terms.

In the hotly contested 2016 race between Trump and Hillary Clinton, sixteen of the 26 states where household income growth slowed in the ensuing years supported Trump. Seven of those 16 are considered battlegrounds in the current presidential race.

The slowing income growth in most states during the Trump years came despite the fact that the president inherited a strong economy, unlike his predecessor, who took office during the worst downturn since the Great Depression.

“Obama was carrying us out of a very deep and long recession, and Trump inherited that. If anything, it's notable that real income didn't rise any faster under Trump than it did under Obama, despite the stimulus that his tax cuts were supposed to provide,” said Nari Rhee, director of the retirement security program at the University of California, Berkeley’s Center for Labor Research and Education.

The analysis of the latest American Community Survey data by Capital & Main, a nonprofit news organization, was conducted in conjunction with the UC Berkeley Labor Center. It compares two periods of economic expansion: Obama’s last three years in office (2014 to 2016) to the first three years of the Trump presidency (2017 to 2019). In each case, the income reported in the prior years (2013 and 2016) allows growth to be measured over the subsequent years.

Trump has repeatedly promised that he can return the economy to its pre-pandemic heights. But the Capital & Main analysis shows that, even before the pandemic, the rate of income growth for the typical household was geographically uneven.

"Family incomes surged to record-high levels in 2017, 2018 and 2019 as deregulation and tax cuts fueled a powerful engine," Moore wrote in an editorial earlier this month.
Stephen Moore, Donald Trump’s former economic adviser, argues that Trump rescued an economy in serious financial trouble.

Yet, for the first half of the Trump administration, during 2017 and 2018, real income growth for the typical household grew at less than half the rate it did in the two years before he took office, according to a previous analysis by Capital & Main and the Economic Policy Institute.

All but two states experienced a trend of slower growth in median household income for the first two years of Trump’s presidency compared to the prior two years. The poorest households also saw slower income growth in Trump’s first two years compared with Obama’s last two years.

It was only in 2019 that the picture brightened for many Americans. The low unemployment rate and prolonged expansion likely led to rising incomes as more people found jobs in a tight labor market, says David Cooper of the Economic Policy Institute.

However, Cooper gives little credit to Trump’s economic policy for the growth in household incomes in 2019, saying he “squandered every opportunity to lift up ordinary Americans.”

“The data are a good reminder that the Trump administration inherited one of the best economies in (a) generation. But they did nothing in their first three years that meaningfully altered the overall trajectory of the economy during that time,” he said.

“Despite all the rhetoric, companies continue to offshore jobs, the trade deficit with China continues to grow. (Trump’s) signature economic policy was a massive tax cut that overwhelmingly benefited the rich.”

Cooper does not dispute that family incomes did grow at a faster pace under Trump than under Obama, but he credits the fact that the country was eight years into an economic expansion, not Trump’s tax cuts or deregulatory agenda. The austerity measures pushed by a Republican-controlled Congress and state legislatures prevented family incomes from rising more under Obama, according to Cooper.

Of course, what’s foremost on people’s minds right now is a pandemic and a recession that has erased economic progress made under Obama and Trump alike.

The employment gains made since the Great Recession have been wiped out by COVID-19-related job losses. Its impact on the typical household in battleground states and elsewhere will be more fully understood when the U.S. Census Bureau releases its income data next September, long after the election.
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[DOR]

DOR,



sure. but I'm a patriot first and foremost, so while it's nice billions rose out of abject poverty, I'd also prefer a national outcome that didn't involve the hollowing out of the US working/middle class, and the subsequent defection of the US working class to an ever-crazier GOP.

also, when a good portion of the "billions rising out of abject poverty" happen to occur in an authoritarian trending totalitarian regime, then my interest declines even further.

Ah, we decided that was tech, didn't we?
Nothing to do with policy, right?

And, by the way, the billions living under authoritarian trending totalitarian regimes that rose out of poverty ... the vast majority of those governments shifted from commie dogs to pseudo democracies at worst, full-fledged good folks at best.

[astralis]

Ah, we decided that was tech, didn't we?
Nothing to do with policy, right?

nope. I said tech was the main driver for the ills of the Rust Belt, not NAFTA. that's much narrower than "tech, 'nothing to do with policy". policy does still play a role. free trade -does- increase downward wage pressure for low/semi-skilled/resource/manufacturing jobs, because the labor pool dramatically expands from national to global.

and while I supported and do support free trade, it should also come with policy that ends up helping those on the crappy end of the "economic efficiency" stick within the US.

instead, not only did that not materialize, what policy we did get through our badly sclerotic political system was decades of regressive GOP tax policy, along with a decade of New Democratic banking deregulation.

so, at the profit end, the rich and corporations got almost all the benefits of the increased economic efficiency from free trade and improved productivity from tech. all while the working class faces relentless grinding downward wage pressure, while the upper middle classes face relentless exponential increase of costs for childcare and education and property.

And, by the way, the billions living under authoritarian trending totalitarian regimes that rose out of poverty ... the vast majority of those governments shifted from commie dogs to pseudo democracies at worst, full-fledged good folks at best.

IIRC, the vast majority of those that were lifted out of poverty post-1991 were Chinese.

again, though, my main issue is how the -US- has dealt with the dual issues of tech/globalization. the answer is "poorly", wherein we got some significantly bad domestic and foreign policy outcomes: a riven and restive domestic populace embracing kook theories and a would-be tinpot dictator, and a foreign great power competitor made wealthy in part due to our trade policies.

[tantalus]

astralis,


“both our trade and tax policies were meant to increase economic efficiency -- and they did. unfortunately, they also developed a system where the wealthiest among us concentrated the gains of productivity and economic efficiency, assisted with a vastly expanded labor pool across the globe.”


That only works on a national scale. Worldwide, there is nothing wrong with globalization. Just ask the billions that rose out of abject poverty in our lifetimes.

No substitute.

There is no credible argument that there was a substitute. It was a great success as a whole. But globalisation isnt a single entity and there are ways to criticise how things played out and that it could have been even better and some negatives outcomes could have been avoided.

We shouldnt make the mistake that given its success we are hostage to all free trade, and the free market, at all times. We should always be careful to just assume what has worked will continue to work. Iam not saying it wont but that we need to engage with the idea that it may not.

[tantalus]

DOR,



of course, the main failure of both parties -- under the New Democrats as well as pre-Trump Republicans -- was that there were no "verifiable, iron-clad-guarantees" of a replacement system of

the GOP placed a complete faith in the ability of the free market, seeing people as no more than economic units with complete labor mobility.

the New Democrats placed a near-equal faith on higher education and job retraining, so that people could better integrate into the realities of the free market: similar to the GOP view of people as economic units.

For me that's perfection.

I have plenty of sympathy to these mistakes.

But continuing to repeat them in the 2020s is very different. Right now the GOP are a lost cause but the democrats arent and it would be very helpful if they could learn the limitations of solutions that have been traditionally loved.

[tantalus]

Trying to “bring back” manufacturing to the US is like down-shifting on the freeway. Moving from agriculture to manufacturing is a major step up in adding value to an economy; the next step is from manufacturing to services.

if manufacturing is tech and robotics led it will ultimately make sense to do it closer to point of use as cheap labour will not be a major cost component. We should expect to see it coming back over time as the techology develops and use cases multiply. First just specific industries and eventually many industries. Initially slowly, then very rapidly.

But obviously you are right that most of the value creation will continue to be had in services in advanced economies.

[Albany Rifles]

if manufacturing is tech and robotics led it will ultimately make sense to do it closer to point of use as cheap labour will not be a major cost component. We should expect to see it coming back over time as the techology develops and use cases multiply. First just specific industries and eventually many industries. Initially slowly, then very rapidly.

But obviously you are right that most of the value creation will continue to be had in services in advanced economies.

This is true for basic items. But for components of more complex systems the tech....and job...are wide spread. The average automobile wiring harness crosses back and forth across the US-Mexico-Canadian border I think 4 times before going into a vehicle? F-35 wing components come from Italy.

So you can place the production near the consumer in only some cases.

[tantalus]

This is true for basic items. But for components of more complex systems the tech....and job...are wide spread. The average automobile wiring harness crosses back and forth across the US-Mexico-Canadian border I think 4 times before going into a vehicle? F-35 wing components come from Italy.

So you can place the production near the consumer in only some cases.

You are right ofcourse. For complex products there will always be a chain.

At the moment you basically cant eliminate it. Its a global supply through and through. Even if you assemble an item on western soil as you rightly illustrate large amounts of the supply chain are abroad and depend on these immensely complex but value efficient chains. I am not saying there is anything ideologically wrong with this. Although clearly the pandemic has exposed that in some instances it may be wise to be able to more at home.

But as technolgies like 3d printing develop, many components will be labour cheap to produce, and come close to costing just the raw materials inputed. More and more of these complex chains will develp locally and simplify. Companes like tesla will do more and more in house, vertically integrated. But even though companies like tesla still outsource for hundreds if not thoudands of components from around the globle, we should expect companies with these kinds of models to absorb greater market share and for many remaining outcourced components to be printed at the regional level.

[Albany Rifles]

Some context (there's that word again) regarding the 33.1% growth rate of the economy reported today.

1. That is an annualized rate. The annualized rate for JUL-SEP 33.1%. The actual rate is around 8.25% for the quarter. That follows the APR-JUN annualized rate of -31.4% or an actual -7.90% for the quarter.

2. The following gives a great laydown.

https://www.marketplace.org/2020/10/...ys-gdp-report/

[DOR]

The US, Q-3 2020 First Look

The US economy fell a further 2.9% in July-September 2020, as compared to the same months of 2019. The decline follows a 9.0% drop in Q-2, which was more that twice as deep as any previous quarter since modern record-keeping began in 1947. As a direct result, the quarter-to-quarter annualized rate of change flipped from -31.4% in Q-2 to +33.1% in Q-3.

Private consumption fell in line with the economy (-2.9%), after contracting 10.2% in April-June. Durable goods bounced back by +12.7%, but services continued falling for the third quarter in a row, dropping 7.2%. Capital investment fell 3.8%, the fourth drop in succession, and following on from 16.9% decline in Q-2. Goods and services exports fell 14.6% and imports by 4.2%.

Prices across the economy rose 1.2% in the third quarter, double the Q-2 pace. The same figures were recorded for both the GDP and PCE deflators, and for both quarters. The M-2 money supply, which rose 20.6% in Q-2, was up 23.6% in July-September. As a result, Prof. Milton Friedman's assertion that inflation is everywhere and always a monetary phenomena can now be safely put to rest.

[DOR]

“The US economy has performed better when the president of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. Or many measures, including real GDP growth (our focus), the performance gap is large and significant. This paper asks why. The answer is not found in technical time series matters nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior total factor productivity (TFP) performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future."

--Princeton Professors Alan S. Blinder and Mark W. Watson; as noted by Prof. Brad DeLong, UC Berkeley
https://www.icloud.com/keynote/0N6bJ...day-2020-10-30


Policy mismanagement is much more common under Republicans
– Nixon wage-and-price controls
– Reagan deficits
– George W. Bush's financial misregulation
– Donald J. Trump's trade wars
… which did not boost growth or raise incomes, and they weren't paid for by China (that was the American consumer and corporate check he cashed). It did not raise manufacturing employment nor reduce the goods trade deficit.


The paper: https://www.aeaweb.org/articles?id=10.1257/aer.20140913

[TopHatter]

'It doesn't exist': A top Republican economist says Trump has no economic plan for a 2nd term

A top Republican economist says President Donald Trump has failed to lay out an economic plan for his second term.

"He has no economic plan. I don't mean that I don't like it. It doesn't exist," Glenn Hubbard, former chair of the Council of Economic Advisors under President George W. Bush, told Bloomberg.

Hubbard said Trump could have discussed issues like fiscal reform or trade, but hadn't done so.

"Anybody who says they know what Trump would do in a second term, I don't know where they're getting that from," he said.

Trump has struggled to lay out a vision for a second term throughout the year, even when asked by friendly hosts on Fox News. He's boasted about building the strongest economy ever before the pandemic slammed into it, a misleading claim since the economy grew faster under previous presidents.

The president hasn't specified a re-election agenda on the economy. He's called for a middle-class tax cut without offering specifics. He also wants Congress to forgive the payroll taxes deferred earlier this year which has mostly impacted federal employees and US troops.

Trump has also expressed support for another large stimulus package after the election, though his position has veered wildly over the past month.

The nonpartisan Tax Policy Center released an analysis last week indicating how permanently extending parts of the 2017 Republican tax law set to expire in 2025 could impact the economy. It would grow the federal deficit by $1.1 trillion and cut the tax burden at all income levels. Most of its benefits, though, would go towards wealthier people.

The center also said the Trump campaign would not provide further details on other proposals the president has brought up in speeches, such as tax breaks for domestic production.

"Although TPC could not estimate the effects of those proposals, their impact is generally clear: They would reduce taxes for certain businesses," the organization said.

Meanwhile, the Democratic presidential nominee Joe Biden is campaigning on sharply increasing taxes on the richest Americans and corporations to fund a suite of ambitious plans on healthcare, childcare, education, and housing. But he's repeatedly pledged to not raise taxes on households earning below $400,000.
__________

[JRT]

Some wealthy individuals in the US may be preparing to avoid possible future increases in the redistributions of wealth espoused by Biden and some of his Democrat cohorts.

The former CEO of Google has applied to become a citizen of Cyprus

Eric Schmidt is effectively buying a passport that he can use to enter the European Union.

By Theodore Schleifer
09 November 2020

The former CEO of Google, Eric Schmidt, is finalizing a plan to become a citizen of the island of Cyprus, Recode has learned, becoming one of the highest-profile Americans to take advantage of one of the world’s most controversial “passport-for-sale” programs.

Schmidt, one of America’s wealthiest people, and his family have won approval to become citizens of the Mediterranean nation, according to a previously unreported notice in a Cypriot publication in October. While it is not clear why exactly Schmidt has pursued this foreign citizenship, the new passport gives him the ability to travel to the European Union, along with a potentially favorable personal tax regime.

The move is a window into how the world’s billionaires can maximize their freedoms and finances by relying on the permissive laws of countries where they do not live. Schmidt’s decision in some ways mirrors that of another famous tech billionaire, Peter Thiel, who in 2011 controversially managed to secure citizenship in New Zealand.

Interest from Americans in non-American citizenship has been spiking during the coronavirus pandemic, which has sharply limited Americans’ ability to travel overseas. Experts say some of that increase is also due to concerns about political instability in the United States.

But it is still uncommon to see Americans apply to the Cyprus program, according to published data and citizenship advisers who work with the country. The program is far more popular with oligarchs from the former Soviet Union and the Middle East, and it has become mired in so many scandals that the Cypriot government announced last month that it was to be shut down.

A representative for Schmidt declined to comment on the move or Schmidt’s thinking.

The Cyprus program is one of about a half-dozen programs in the world where foreigners can effectively purchase citizenship rights, skirting residency requirements or lengthy lines by making a payment or an investment in the host country. They have become the latest way for billionaires around the world to go “borderless” and take advantage of foreign countries’ laws, moving themselves offshore just like they might move their assets offshore, a phenomenon documented by the journalist Oliver Bullough in the recent book Moneyland.

Small, financially struggling countries — beginning with St. Kitts and Nevis in the Caribbean — have embraced the idea over the last few decades, raking in money that they would otherwise never see in exchange for citizenship papers. But what can be good for one country can be bad for the world: Anti-corruption activists have grown deeply worried about a race to the bottom with these programs, concerned that criminals can purchase foreign citizenship to escape prosecution in their home countries, or to funnel drugs through friendly borders, or to hide their assets from tax authorities.

The Cyprus program in particular — despite helping save the country after its 2013 bankruptcy by bringing in $8 billion since then — has become notorious.

The lion’s share of the 4,000 Cypriot citizenship recipients since 2013 have been wealthy individuals from Russia, according to people who advise these individuals on obtaining Cypriot citizenship. It has historically not even been marketed to Americans, whose passports usually allow them to travel freely in Europe. It is not unheard of, however, for Americans to take advantage of the program, and advisers say it has been happening more frequently over the last few months.

Undercover journalists found that Cyprus government officials were saying they could arrange a passport for someone despite being told that the person was a criminal, a scandal that ended up leading to the officials’ resignations. Cyprus announced in mid-October that due to “abusive exploitation,” it was shutting the program down. (Which is also, coincidentally, around when Schmidt’s approval was published.)

“European values are not for sale,” a European Union official said.

It isn’t known what role the coronavirus and new travel restrictions might have played in Schmidt’s decision to apply to Cyprus. Schmidt likely applied between six months ago, when the pandemic was raging, and about a year ago, when it had yet to begin, according to advisers. Schmidt’s wife, the philanthropist Wendy Schmidt, and his daughter, the media executive Sophie Schmidt, have also applied and been approved, according to the listing in the Cypriot publication, Alithia.

Theo Andreou, who heads the Cyprus program for Astons, an “investment immigration firm,” said that 90 percent of the firm’s clients seek Cyprus citizenship either as a backup plan or an insurance policy due to concerns in their home country, such as the coronavirus, or for financial reasons. Andreou speculated that Schmidt could be making the move for two possible reasons.

“One reason is to have a Plan B during Covid. The other reason is that they are expanding their business in Europe,” he said.

Nuri Katz, the founder of Apex Capital Partners and who has advised the Cypriot government on immigration matters, guessed that Schmidt “feels the need to diversify his citizenship.”

“Eric Schmidt cannot travel to Europe,” Katz noted. “He’s like everybody else — like a lot of other high-net-worth people who want to have options.”

Individuals who claim Cyprus citizenship can also be attracted by a reduction in their tax burden, especially if they’re willing to renounce their US citizenship. Immigration attorney Andy Semotiuk said that his only American client who had claimed Cypriot citizenship did so to avoid paying US income tax.

The way the program works is that once a foreigner lays down between $2 million and $3 million worth of investment in Cyprus, typically through a real estate purchase, they can apply to what is technically called the “Citizenship by Investment” program. After the government reviews the applicant’s background, conducts a security check, and hosts a visit from the foreigner, their application can be approved.

Schmidt, with a net worth of $15 billion and many homes around the US, is a titan of the technology industry: The longtime CEO of Google helped make the company into an international powerhouse and served as the tip of the spear of the company’s US lobbying program. While he stepped down as CEO in 2011 and left the board last year, he still serves as a technical adviser to the company and is one of its largest shareholders. These days, he spends most of his time as a philanthropist, investor, and Democratic political donor at Schmidt Futures, the organization that gives away his and his wife’s money, and speaking out on issues like competition with China and how Silicon Valley can cooperate with the US military.

At Google, Schmidt was a proponent for the company paying as little in taxes as possible, even if that meant capitalizing on foreign countries’ tax rules. The company has long been dogged by allegations that it was not paying its fair share of American taxes by utilizing foreign tax rules in places like Bermuda or the United Kingdom.

“I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,” Schmidt told one interviewer in 2012. “It’s called capitalism.”

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[JRT]

My take is that if they are going to drill there, may as well happen before the permafrost thaws.

Drilling Leases in the U.S. Arctic National Wildlife Refuge

by Jennifer A Dlouhy
13 November 2020

The Trump administration is advancing plans to auction drilling rights in the U.S. Arctic National Wildlife Refuge before the inauguration of President-elect Joe Biden, who has vowed to block oil exploration in the rugged Alaska wilderness. Federal leases are contracts hard to rescind once issued.

The Interior Department is set to issue a formal “call for nominations” as soon as Monday, kick-starting a final effort to get input on what tracts to auction inside the refuge’s 1.56-million-acre coastal plain. The plans were described by two people familiar with the matter who asked not to be named detailing administration strategy.

Biden has pledged to permanently protect the refuge, saying drilling there would be a “big disaster.” But those efforts could be complicated if the Trump administration sells drilling rights first. Formally issued oil and gas leases on federal land are government contracts that can’t be easily yanked.

The U.S. Geological Survey has estimated the refuge’s coastal plain might hold between 4.3 billion and 11.8 billion barrels of technically recoverable crude. Yet it’s unclear how many oil companies would have the appetite to mount costly operations in the remote Arctic wilderness amid low crude prices, steep public opposition, and regulatory uncertainty. Major U.S. banks have sworn off financing Arctic drilling projects, and conservationists are also pressuring oil executives to rule out work in the region.

Environmentalists argue Arctic oil development imperils one of the country’s last truly wild places -- a swath of northeast Alaska populated by polar bears, caribou, and more than 200 species of birds.

The Trump administration is also fast-tracking a proposal to conduct 3-D seismic surveys inside the refuge before Jan. 20. The surveys can help pinpoint possible underground oil reserves, but environmentalists warn they are large industrial operations that threaten polar bears hidden in snow-covered dens.

Oil companies that buy leases in the refuge might never get the opportunity to use them while Biden is in the White House. Even if leases are sold and issued before Jan. 20, companies will need permits governing air pollution, animal harm, water usage and rights of way that the new administration could stall or deny.

Congress mandated the Interior Department hold two auctions of coastal plain oil leases before Dec. 22, 2024. But environmentalists, states and indigenous groups have already mounted legal challenges against the leasing plan. Any victory by the conservationists or settlement with the Biden administration requiring more environmental review could jeopardize leases.

Interior Department representatives didn’t immediately respond to an emailed request for comment. The “call for nominations” will help Interior’s Bureau of Land Management decide the contours of an auction. The agency still must issue a formal “notice of sale” before holding one.

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