I’m worried. There’s a lot of talk in Washington about Trump trying to goose the economy with either Keynesian monetary policy or Keynesian fiscal policy.
It would be much better, as I discuss in this interview with Yahoo Finance, if Trump instead declared a ceasefire in the trade wars he’s started.
The interview largely revolved around trade policy and monetary policy, so I was mostly critical of Trump.
But I want to focus on the point I made midway through the discussion, when I said that Trump is undermining and offsetting some of his Administration’s good policies – most notably tax reform and regulatory easing.
As an economist, I’m frustrated by this inconsistency. It’s akin to a watching a kid get good grades in some classes and bad grades in others (and I worry his GPA is declining).
Though I suppose I shouldn’t be surprised. This is what the theory of “public choice” tells us to expect.
I can only imagine, though, how frustrating this must be for Republican political operatives. They’re focused on winning in 2020 and the President is sabotaging that goal with bad trade policy.
P.S. Toward the end of the interview, I pointed out that Trump should have gone through the World Trade Organization in his effort to curtail China’s protectionism. When the history of the Trump presidency is written, I suspect this will be viewed as a major mistake.
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Image credit: DonkeyHotey | CC BY-SA 2.0.
