Tuesday, March 29, 2016

The failure of Republican math and Trump's macroeconomics plan

potential economic downward spiral
under proposed Republican candidatess policies
especially, Donald Trump/Drumpf's
Let me be clear; I have no doubt that those who write the legislation that continues to increase wealth and income inequality for the benefit of the wealthy 1% (or fraction thereof) know full well what they are doing.

They are deliberately embracing short term gain and greed over legislation that benefits the majority, the ordinary every-day citizens of the United States. Those conservatives voters in that majority don't appear to understand fundamental macroeconomics.  To those who think simplistically and who believe what they want to hear without critical evaluation of it are gullible.

There have been plenty of color commentary pieces which argue that there are some, if not lots, of college educated voters, including current college students, among Trump/Drumpf supporters.  But there is nothing in those fluff pieces which demonstrate any competency at the most basic level of economics 101 on the part of Trump supporters, nor have any of those fluff pieces demonstrated those with higher levels of education have any depth or breadth of knowledge about Trump/Drumpf's experience or record.

Rather they presume he is successful in business - that is mixed success at best, and failure in many respects.  They presume he is knowledgeable in foreign matters because he has sold his name to entities overseas.  That is not the same as having EITHER foreign affairs knowledge or knowledge in economics, not among voters, not among legislators or other elected officials, and not among candidates.  It is foolish to equate the capacities the way these right wing nut voters are doing, and it reflects wishful thinking rather than rational thought.

It is abundantly clear that it is also true that conservatives don't know, or more precisely choose to ignore and deny, that immigrants, including illegal immigration, have actually been GOOD for the nation, far exceeding any costs equated with them.

There is always a problem with cognitive bias, which translates as a refusal to believe whatever factual information does not agree with one's existing beliefs, and that this is far more the case when those beliefs are also part of one's perception of identity.

Moody's Analytics is a subsidiary of Moody's Corporation which is the umbrella corporation that also owns Moody's Investment Services aka the credit rating agency that rates bonds, like the downgrades of New Jersey, Louisiana, and Kansas under poor Republican governance.  So to be clear, they are different entities but part of the same whole.  Moody's Analytics is known for it's research on risk and performance - and they are generally regarded pretty highly as being good at what they do.

So it is nothing to sneeze at when Moody's Analytics came up with the following analysis of how VERY BADLY the proposed policies of Trump/Drumpf (and those of other Republican candidates to the extent they are similar) would affect our economy.  It is not bad enough that Republican governance reduces our growth and overall economic health; Trump/Drumpf's policies would sink us back into another Great Depression, and take other nations (and arguably the rest of the world) with us.  A recession in Mexico, wall or no wall (and it would likely be no wall) would only INCREASE the number of people south of the border attempting to immigrate, legally or illegally.

Donald Trump’s trade war could kill millions of U.S. jobs

Trade has been one of Donald Trump's great selling points on the campaign trail. China and Mexico are killing us, he has told crowds on his way to the lead position for the Republican presidential nomination, and if Trump wins the White House, he will fight back. The implication is that getting tough with our trading partners -- by taxing their exports as they cross America's borders -- will bring jobs and prosperity to the United States.
An economic model of Trump's proposals, prepared by Moody's Analytics at the request of The Washington Post, suggests Trump is half-right about his plans. They would, in fact, sock it to China and Mexico. Both would fall into recession, the model suggests, if Trump levied his proposed tariffs and those countries retaliated with tariffs of their own.
Unfortunately, the United States would fall into recession, too. Up to 4 million American workers would lose their jobs. Another 3 million jobs would not be created that otherwise would have been, had the country not fallen into a trade-induced downturn.
The amount of predicted economic damage surprised Mark Zandi, chief economist for Moody's Analytics, who prepared the model. He said it is magnified by the precarious -- and historically unusual -- state of the U.S. and global economies right now: Under the Moody's model, the Federal Reserve has little power to slow the recession, because interest rates remain near zero. Congress refuses to enact any stimulus measures, such as spending increases or tax cuts, that might increase the federal budget deficit further.
What results, in the model, is a downward spiral of reduced economic activity. Prices rise on imported goods from China and Mexico, which has the effect of reducing spending power for American consumers. If China and Mexico retaliate, U.S. exports fall, forcing layoffs at American companies that sell to those foreign customers. The ensuing growth slowdowns spread to other trading partners, particularly in Europe, and cause stock markets to plunge, which in turn slows growth even more.
...Zandi said that the forecasts undercut Trump's contention that trade is an area where some countries "win" at the expense of others. From a broad economic perspective, he said, shutting down trade is "a lose-lose" for the United States and its trading partners -- and one that could have consequences in other areas of concern for Trump and his supporters: If tariffs cause Mexico to fall into recession, Zandi said, "you'll have a lot more people knocking on the door" to immigrate to America.
Conservative governance and policies are failures.  Educate those who support candidates on the right as to the realities of their candidates policies - if you can get past their cognitive bias.  You should have more success with the better educated, except that it appears the better educated revert to an even stronger cognitive bias against dissenting information.  So....... good luck, and let us profoundly hope that Trump does not advance, or at best splits conservatives for a sound loss.

Our economic lives depend on it, and arguably as a result, so does the security and stability of the world, which is more vulnerable the less successful economies are.

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