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Donald Trump’s fairy tale economics is bad for his party and terrible for America
London's City A.M. ^ | July 28, 2015 | Ryan Bourne, head of public policy at the Institute of Economic Affairs.

Posted on 07/30/2015 3:46:16 AM PDT by 2ndDivisionVet

The Republican Party must be tearing its hair out. For years, visitors from the US have extolled the strength of the party’s potential Presidential candidates for 2016. The pack is certainly more impressive than in 2012 and, with the exception of one or two candidates, they are ostensibly advocates of relatively free market policies. In a campaign against an unlikeable Hillary Clinton, many conservatives were quietly confident of victory in 2016.

But all these voices are being drowned out by the brash businessman and property magnate Donald Trump. Despite widespread criticism for his remarks about “rapist” illegal Mexican immigrants, Trump yesterday topped a poll of GOP candidates, garnering the support of 18 per cent of Republicans. At best, he looks set to draw significant amounts of precious airtime in the coming months. At worst, given that he’s unlikely to win the Republican nomination, he may decide to run as an independent, handing Clinton the keys to the White House.

At least in part, Trump’s success so far is likely to reflect his stance on border control. As in the UK, many Americans are worried about (illegal) immigration – and feel that mainstream candidates do not reflect their concerns. But the overwhelming reason for Trump’s success looks to simply be many voters thinking a strong businessman is preferable to someone from a political class that is perceived to be weak.

Yet businessmen often make lousy politicians. The US should not need reminding of this – after all, Herbert Hoover was a businessman with no history of elected office before becoming President, and is now regarded as a failure by all sides. The importance of managerial skills and deal-making in delivering clear goals within large, centrally planned firms is not easily translatable to the political arena – which requires persuasiveness and nuance, rather than bombastic fist-slamming.

But the most worrying aspect of Trump’s candidacy is his contribution to the economic debate. Trump is a nativist and a protectionist. He laments that America imports cars and exports corn – taking the mercantilist position that imports are bad and exports good, alongside a Ross Perot-like fetish for manufactured “stuff”. This shows complete ignorance of comparative advantage – and trade being about the exchange of things people want and need.

Trump therefore promises “fair” tariffs on imported goods, and a crackdown on China’s currency manipulation through taxes which reflect currency “undervaluation”. This would likely start a trade war at a time when a growing Chinese middle class offers untold opportunities for rich Western countries to export services. But Trump doesn’t stop there. He also wants to tax firms that “export jobs” and factories overseas. In particular, he laments the fact that many call centres are based in India.

This shows a remarkable misunderstanding of the way the world works. Call centres are based elsewhere because, at the moment, it is cost-effective to do so. But these specific jobs being overseas need not lower US output or welfare. In fact, it helps lower prices for US consumers, and workers are freed up to work in higher-value occupations.

Even on fiscal issues, Trump has bizarre views. He’s promised the seemingly inconceivable agenda of hugely lower tax revenues and reduced spending, but balancing the books while leaving the big entitlement programmes – which are the real, long-term drivers of US debt – largely untouched. In the past, he’s advocated a potentially catastrophic one-time high wealth tax to “pay off the national debt” – a $5.7 trillion liquidation of assets that would have seen substantial capital flight and severely affected the US economy. While he’s not advocating a repeat today, he still promises populist “no pain” solutions to America’s long-term fiscal challenges that seemingly ignore reality.

Quite simply, Trump’s nativist economics agenda and fiscal fairy tales are not what the Republicans or the US need. They’d better hope he fades sooner rather than later.


TOPICS: Campaign News; Issues; Parties
KEYWORDS: freetrade; tariffs; trade; trump
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To: 2ndDivisionVet

Ryan Bourne is head of public policy at the Institute of Economic Affairs - UK

Stay the hell on your own side of the pond kid.

21 posted on 07/30/2015 4:42:38 AM PDT by McGruff (Eat a snickers...)
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To: McGruff

As if anyone from England understands capitalism.

Pray America is waking


22 posted on 07/30/2015 4:50:43 AM PDT by bray (Cruz to the White House)
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To: central_va; 2ndDivisionVet

‘Trump is a nativist and a protectionist.’

“That is exactly what this country needs.”

Hear, hear.


23 posted on 07/30/2015 4:52:14 AM PDT by GoneSalt
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To: 2ndDivisionVet

Yeh that Trump the multi-billionaire. WTH does he know about sound economics? What morons of a lesser breed.


24 posted on 07/30/2015 4:57:05 AM PDT by tflabo (Psalm 1)
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To: Alberta's Child

Not a huckster. You would be replacing a person who hates America and Americans with someone who loves America and Americans. That in and of itself is great. Next we’d be replacing a Marxist with a capitalist. That would also be great. Then we’d be getting someone who would seal the border & enforce the U.S. Immigration laws. That would be awesome!


25 posted on 07/30/2015 4:58:41 AM PDT by Lopeover (My vote is valuable, you must earn it.)
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To: DoodleDawg
"He (Trump) laments that America imports cars and exports corn – taking the mercantilist position that imports are bad and exports good, alongside a Ross Perot-like fetish for manufactured “stuff”. This shows complete ignorance of comparative advantage – and trade being about the exchange of things people want and need."

Are you kidding me? Trump knows what "comparative advantage" is and takes advantage of it at every opportunity. Trump buys all kinds of "stuff" from China BECAUSE they have a comparative advantage in the production of "stuff". Yet the writer claims Trump is "complete(ly) ignorant" of comparative advantage. I could tear apart just about every paragraph that follows.

You can criticize Trump for a lot of things but claiming he is ignorant of economics is ridiculous.

26 posted on 07/30/2015 5:02:32 AM PDT by Former Proud Canadian (Save Western Civilization. Embrace the new Crusades.)
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To: 2ndDivisionVet

Compared to Obama? (I cannot stop laughing at these fools). We have something REAL and RELATIVE to compare to. And here is a guy that made 10 billion dollars being compared to Obama who couldn’t qualify to run a MacDonald’s.


27 posted on 07/30/2015 5:13:17 AM PDT by ThePatriotsFlag ( Anything FREELY-GIVEN by the government was TAKEN from someone else)
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To: 2ndDivisionVet

“Herbert Hoover was a businessman with no history of elected office before becoming President, and is now regarded as a failure by all sides.”

Okay...

Adolph Hitler was a politician with no history of elected office before becoming President, and is now regarded as a failure by all sides.


28 posted on 07/30/2015 5:23:11 AM PDT by sergeantdave
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To: 2ndDivisionVet

“This shows a remarkable misunderstanding of the way the world works. Call centres are based elsewhere because, at the moment, it is cost-effective to do so. “

Yes, exploiting poverty centers of the earth and ensuring they remain at 50 cents an hour through deals with corrupt governments, and through threats to relocate to another poverty center does indeed make it cost effective.
Semi slavery IS cost effective. That was the whole concept of British occupation of India.

This British ass could be speaking of tea, salt, and textile industries in the 1800s.


29 posted on 07/30/2015 5:26:27 AM PDT by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
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To: Former Proud Canadian
Are you kidding me? Trump knows what "comparative advantage" is and takes advantage of it at every opportunity. Trump buys all kinds of "stuff" from China BECAUSE they have a comparative advantage in the production of "stuff". Yet the writer claims Trump is "complete(ly) ignorant" of comparative advantage. I could tear apart just about every paragraph that follows.

And when Trump levies his tariffs on imported goods and increased the cost of consumer electronics, appliances, textiles, autos and what have you by 25% to 35% then what?

30 posted on 07/30/2015 5:29:03 AM PDT by DoodleDawg
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To: 2ndDivisionVet

Anyone who thinks Hoover was a poor president shows a stunning ignorance about him. He was a target of a Roosevelt socialist smear campaign, nothing more. Roosevelt came in on ignorant theories, implemented full socialism, and prolonged the depression by several years.
America was among the last nations to emerge from it.

Hoover was more successful BY FAR than Roosevelt.


31 posted on 07/30/2015 5:30:53 AM PDT by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
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To: central_va

“The British economist Ryan Bourne ( born 1987”

You’re kidding. Ive been responding to an article written by someone who was 8 years old when Monica was blowing Bill?


32 posted on 07/30/2015 5:33:19 AM PDT by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office)
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To: 2ndDivisionVet
World War II spending pulled us out of the slump.

That's a fallacy.

WWII did end the unemployment of the Depression, but when the government forces 9 million citizens into the military that will happen. For those Americans left at home, living standards were lower than during the Depression because consumer goods were so severely rationed.

The Depression was ended finally because, after the death of FDR, a Republican congress ended most of the Depression-era controls that had hobbled the economy. War does not create economic growth.

It just eats up capital manufacturing goods destined for destruction on the battlefield. This is not an anti-war screed, just an economic truth.

33 posted on 07/30/2015 5:35:32 AM PDT by BfloGuy ( Even the opponents of Socialism are dominated by socialist ideas.)
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To: BfloGuy

My father wasn’t drafted, he voluntarily joined the Marine Corps. Do you know the percentage of men who were considered unfit to serve physically due to malnutrition?


34 posted on 07/30/2015 5:38:33 AM PDT by 2ndDivisionVet (You can help: https://donate.tedcruz.org/c/FBTX0095/)
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To: central_va
Trump is a nativist and a protectionist.

The writer says this as if it's a bad thing.

35 posted on 07/30/2015 5:38:38 AM PDT by Jane Long ("And when thou saidst, Seek ye my face; my heart said unto thee, Thy face, LORD, will I seek")
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To: Jane Long

I want a bumper sticker: Nativist and Protectionist on board.


36 posted on 07/30/2015 5:40:35 AM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: DoodleDawg
"And when Trump levies his tariffs on imported goods and increased the cost of consumer electronics, appliances, textiles, autos and what have you by 25% to 35% then what?"

Then, maybe, China's comparative advantage goes away. Then Walmart might have to look elsewhere for their cheap junk. Then, maybe, they will have to look to domestic sources to manufacture their cheap junk.

Comparative advantage between trading partners is great when those countries are similar in economic terms. When one country's labor costs are a tiny fraction of the other's it doesn't take a genius to figure out what is going to happen.

Look at North American trade. The FTA between Canada and the US worked out very well because labor rates and other economic metrics were similar. When Mexico was included in NAFTA all hell broke loose because Mexican labor rates sucked the life out of manufacturing.

The next argument from you will be that a tariff on Chinese goods will initiate a trade war that will presage a global depression. We are already on the cusp of a global depression. Erecting tariff barriers will not change that.

North America is a far different place in 2015 then it was in 1930. We have lots of clean air and clean water. We can feed ourselves. We have plenty of energy in all forms. Can Japan say that? Can China? We can survive if trade collapses. We can actually make everything we need and still feed ourselves. Can China?

I'm not saying a depression wouldn't be bad, it just won't be as bad here as in Asia or Europe.

37 posted on 07/30/2015 5:45:36 AM PDT by Former Proud Canadian (Save Western Civilization. Embrace the new Crusades.)
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To: 2ndDivisionVet

OK, tell us what is good for America. Whatever is happening and has happened has been terrible for America. So please, you are so smart give us the solutions.


38 posted on 07/30/2015 5:55:56 AM PDT by mulligan (I)
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To: 2ndDivisionVet

Fairy Tale Economics? When Obama has the printing presses running flat-out and cooks the hell out of the unemployment and growth numbers each month? That’s rich!


39 posted on 07/30/2015 6:10:28 AM PDT by Buckeye McFrog
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To: 2ndDivisionVet

Does this make any sense?

“This shows a remarkable misunderstanding of the way the world works. Call centres ...being overseas need not lower US output or welfare. In fact, it helps lower prices for US consumers, and workers are freed up to work in higher-value occupations. “

Are workers currently not free to work in higher-value occupations? If my engineering job were to be outsourced overseas, should be grateful because I would be free to work in investment banking?

This is the level of stupidity idiocy we see everyday from the over-educated idiots of the Left. They actually believe this stuff.


40 posted on 07/30/2015 6:12:35 AM PDT by pelican001
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