I warned people that Trump was not even smart enough to pick competent advisors. Fortunately, Trump’s rather lazy and thus doesn’t have time to find 4000 people as foolish as he is; he needs to farm out some of the White House staffing choices to people like Pence. So a few good ones will slip through. But where Trump does get involved he has awful instincts. John Bolton was just named the number two guy at the State Department, as Trump continues to flesh out his Dr. Strangelove foreign policy team.
Consider Trump’s choice of Wilbur Ross to head Commerce (and also lead Trump’s trade policy). Here’s what Ross said back in August, in a letter to the WSJ:
Your editorial “Trump on the Economy” (Aug. 9) suggests that Donald Trump is wrong to be worried about imports because such increases are associated with a strong economy. It’s Econ 101 that GDP equals the sum of domestic economic activity plus “net exports,” i.e., exports minus imports. Therefore, when we run massive and chronic trade deficits, it weakens our economy.
I’m almost willing to cut him some slack on the claim that trade deficits weaken the economy. That’s obviously wrong, but I suppose lots of non-economists believe that to be true. But it’s far worse than that. He also claims this is true because of the national income accounting identity, and then even more ridiculously that “EC101” teaches this to be true. Even most “practical men” who have contempt for the views of economists on trade at least know what those views are. What’s the point of even having public universities if our top policymakers are this ignorant of the most basic ideas being taught to freshman? Especially if they claim freshman economics provides support for their ignorant views.
Trump’s policy mix has often been compared to Reagan’s, as both involved a bigger budget deficit and a stronger dollar. Reagan also had quotas on autos and steel. The Trump people don’t seem to understand that this mix also results in a larger trade deficit. God knows what they’ll do when they find this out. Will they lash out at foreign countries?
We have a president of almost breathtaking stupidity. A day after he tells us that he knows far more than the CIA about Russian cyber-warfare, we are informed that he plans to dispense with the traditional daily intelligence briefings that all presidents get. His explanation is that he is “smart” and doesn’t need any briefing from experts. Perhaps he is afraid they might disturb his carefully cultivated view that the world is full of conspiracies against Donald Trump and his friend Vladimir Putin. It looks like we’ve elected as President someone who combines:
1. Complete ignorance on policy issues
2. Supreme confidence that he so smart he doesn’t need good advice
What could go wrong?
PS. Here’s what Greg Mankiw had to say:
Their analysis of trade deficits, starting on page 18, boils down to the following: We know that GDP=C+I+G+NX. NX is negative (the trade deficit). Therefore, if we somehow renegotiate trade deals and make NX rise to zero, GDP goes up! They calculate this will bring in $1.74 trillion in tax revenue over a decade.
But of course you can’t model an economy just using the national income accounts identity. Even a freshman at the end of ec 10 knows that trade deficits go hand in hand with capital inflows.
Mankiw is referring to a paper by Peter Navarro and Wilbur Ross, which makes one absurd claim after another. Paul Krugman also trashes their work, so this is not one of those left/right splits within economics. For people not well versed in economics, Trump’s choice at Commerce would be like putting a believer in the Ptolemaic planetary system in charge of NASA.
HT: Ramesh Punnuru