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Article Artículo

If You Thought a Trump Presidency Was Bad ….

The Washington Post editorial page decided to lecture readers on the meaning of progressivism. Okay, that is nowhere near as bad as a Trump presidency, but really, did we need this?

The editorial gives us a potpourri of neo-liberal (yes, the term is appropriate here) platitudes, all of which we have heard many times before and are best half true. For framing, the villains are Bernie Sanders and Elizabeth Warren who it tells us “are embracing principles that are not genuinely progressive.”

I’ll start with my favorite, the complaint that the trade policy advocating by Warren and Sanders would hurt the poor in the developing world, or to use their words:

“And their ostensible protection of American workers leaves no room to consider the welfare of poor people elsewhere in the world.”

I like this one because it turns standard economic theory on its head to advance the interests of the rich and powerful. In the economic textbooks, rich countries like the United States are supposed to be exporting capital to the developing world. This provides them the means to build up their capital stock and infrastructure, while maintaining the living standards of their populations. This is the standard economic story where the problem is scarcity.

But to justify trade policies that have harmed tens of millions of U.S. workers, either by costing them jobs or depressing their wages, the Post discards standard economics and tells us the problem facing people in the developing world is that there is too much stuff. If we didn’t buy the goods produced in the developing world then there would just be a massive glut of unsold products.

In the standard theory the people in the developing world buy their own stuff, with rich countries like the U.S. providing the financing. It actually did work this way in the 1990s, up until the East Asian financial crisis in 1997. In that period, countries like Malaysia, Vietnam, and Indonesia were growing very rapidly while running large trade deficits. This pattern of growth was ended by the terms of the bailout imposed on these countries by the U.S. Treasury Department through the International Monetary Fund.

The harsh terms of the bailout forced these and other developing countries to reverse the standard textbook path and start running large trade surpluses. This post-bailout period was associated with slower growth for these countries. In other words, the poor of the developing world suffered from the pattern of trade the Post advocates. If they had continued on the pre-bailout path they would be much richer today. In fact, South Korea and Malaysia would be richer than the United States if they had maintained their pre-bailout growth rate over the last two decades. (This is the topic of the introduction to my new book, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, it’s free.)

CEPR / November 15, 2016

Article Artículo

Surviving the Age of Trump

I will claim no special insight into the politics that led to Trump’s election Tuesday. I was as surprised as anyone else when not just Florida and North Carolina, but also Pennsylvania, Michigan, and Wisconsin started to turn red. But that’s history now. We have to live with the fact of President Trump and we have to figure out how to protect as much as possible of what we value in this country from his presidency.

This won’t be easy when the Republicans control both houses of Congress and will soon be able to appoint a new justice to the Supreme Court to again give them a right-wing majority. But there are still points of pressure.

Most importantly, the people in Congress want to get re-elected. Pushing unpopular policies like privatizing Social Security or Medicare, or taking away insurance by ending Obamacare, will be horrible albatrosses hanging over their heads the next time they face voters. This reality has to constantly be put in their faces. It is easy for politicians to push nonsense stories about eliminating trillions of dollars of waste, fraud, and abuse. It is much harder to get away with taking away your parents’ Social Security check or the health care insurance that pays for your kid’s insulin.

The other point of pressure is that we know (even if the folks who report the news don’t) that Trump got elected by making many promises that he will not be able to keep. Rebuilding an economy in which the benefits of growth are broadly shared is a great idea, but Donald Trump is not going to bring back the coal mining jobs lost in West Virginia, Kentucky, Ohio and elsewhere. These jobs were not lost because of environmentalists concerned about the future of the planet; they were lost because of productivity growth in the industry (think of strip mining replacing underground mining). We should make sure that people regularly are informed about President Trump’s progress in bringing back coal mining jobs to Appalachia.

Before getting into some specific issues, it is worth noting that not everything Trump says he wants to do is bad. He says that he wants a big infrastructure program. This is badly needed both to modernize our infrastructure and also to create jobs. Trump’s proposed tax cuts will provide a boost to demand that will generate jobs as well. It’s horribly targeted in giving most of the benefits to the rich, but it will still lead to more consumption and therefore more demand and jobs. This may finally give the economy enough stimulus to restore the labor market to its pre-recession strength. That will be good, especially since the beneficiaries of the job growth and the stronger labor market will be disproportionately African American and Hispanic and less-educated workers. Now, I will get to some specifics.

CEPR / November 11, 2016

Article Artículo

The High Price of the Trans-Pacific Partnership

It will be very hard to get used to the two words “President Trump,” but somehow we will have to figure out a way to survive and keep the country and world intact for the next four years. There are many factors behind the rise of Donald Trump. Clearly, a big part of Trump’s appeal lay in his open expressions of racism, xenophobia, and misogyny.

But this is not the whole story. Many of the white working class people who voted for Trump yesterday voted for Barack Obama just four years earlier. Their character was not transformed in the last four years.

Undoubtedly, part of the story is that some of these people could not bring themselves to vote for a woman for president, even if they could vote for a black man with a foreign-sounding name. There were endless accounts of open and hateful displays of sexism directed against Hillary Clinton and her supporters, many of them encouraged by the candidate himself.

However, even against this backdrop the election was still incredibly close, with states like Wisconsin, Pennsylvania, and Michigan certainly well within Clinton’s reach. There were many factors that depressed Clinton’s vote, most obviously the endless drumbeat about e-mails, which were amplified in the last days of the campaign by F.B.I. Director James Comey’s bizarre intervention into the race.

While many of these factors were beyond the control of Clinton and the Democrats, one factor that was under their control was the decision to push the Trans-Pacific Partnership (TPP). Needless to say, there is little public knowledge of the details of the TPP. But the TPP symbolized a pattern of trade that cost millions of manufacturing jobs in the prior decade and put downward pressure on the wages of the workers without college degrees more generally.

CEPR / November 09, 2016

Article Artículo

Latin America and the Caribbean

Chile’s Municipal Election Results Indicate Historic Levels of Discontent

The clearest winner in Chile’s 2016 municipal elections was abstention, and that is bad news for all parties, left and right.

Municipal elections in Chile are often used as an indicator to measure how well traditional parties will fare in the following years’ parliamentary and presidential elections. During the latest elections ? held on October 23 ? Chileans voted for their alcaldes (mayors) and concejales (council members), varying between six, eight, or ten total local representatives, depending on the size of the population within the municipality.

The high rate of abstention in these elections isn’t surprising given the national polling data showing a steady decline in public confidence in government institutions and parties over the past two decades. According to the latest Servel figures, the 2016 municipal elections reached a 65 percent abstention level — a new historic high. The 35 percent participation rate for 2016’s municipal election is down from 43.2 percent in 2012.

In 2011, modifications to Chile’s electoral system instituted automatic voter inscription and the voluntary vote, following nearly a century ofobligatory voting. Taking these high abstention figures as simply a sign of voter apathy would be a mistake. Similarly, making an argument for a return to compulsory voting in order to increase participation also misses the point. At the center of the problem of abstention is the perceived failure of both the right and the left to implement reforms to create a more inclusive democracy and an equitable development model.

CEPR and Julia Villarruel-Carrillo / November 08, 2016