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Defying the Odds

Defying the Odds
New book about the 2016 election.

Tuesday, December 27, 2016

Trump's Economic Worldview

Ben White reports at Politico:
“He’s likely to be unsuccessful on any sort of broad increase in U.S. manufacturing jobs,” said James Pethokoukis, a scholar at the American Enterprise Institute. “That line may blip up or down based on how the economy is doing but these are long-term trends that aren’t likely to change.”

Trump transition officials did not respond to a request for comment on how the administration would measure economic success.

In the face of all these challenges, Trump could simply use anecdotal examples of new manufacturing and coal industry jobs, seize on any further increase in wages, decide the jobless rate is now legitimate and declare victory.

“The president-elect judges his own personal wealth based on his own feelings,” Pethokoukis said. “So on any given day, he could just decide based on his feelings that America is great.”
Back in March, Adam Davidson wrote at The New York Times:
As an economic journalist, when trying to explain the idea of rent-seeking, I have always used one quintessential example from the United States — a sector in which markets don’t function, in which excess profits are held by a few. That world is Manhattan real estate development. Twenty-three square miles in area, Manhattan contains roughly 854,000 housing units. But there are many more people than that who want to own property there. A Manhattan pied-à-terre has long been a globally recognized sign of wealth and status — especially in recent years, as billionaires the world over have come to see a Manhattan condo, even one rarely visited, as a vessel for laundered wealth or a hedge against political upheaval at home.
Manhattan real estate development is about as far as it is possible to get, within the United States, from that Econ 101 notion of mutually beneficial transactions. This is not a marketplace characterized by competition and dynamism; instead, Manhattan real estate looks an awful lot more like a Middle Eastern rentier economy. It is a hereditary system. We talk about families, not entrepreneurs. A handful of families have dominated the city’s real estate development for decades: Speyer, Tishman, Durst, Fisher, Malkin, Milstein, Resnick, LeFrak, Rose, Zeckendorf. Having grown up in Manhattan myself, I think of these names the way I heard Middle Easterners speak of the great sheikhs who ran big families in Jordan, Iraq and Syria. These are people of immense power and influence, but their actual skills and abilities are opaque. They do, however, make ‘‘deals.’’
In recent weeks, hearing Trump talk, I’ve realized that his economic worldview is entirely coherent. It makes sense. He is not just a rent-seeker himself; his whole worldview is based on a rent-seeking vision of the economy, in which there’s a fixed amount of wealth that can only be redistributed, never grow. It is a world­view that makes perfect sense for the son of a New York real estate tycoon who grew up to be one, too. Everything he has gotten — as he proudly brags — came from cutting deals. Accepting the notion of a zero-sum world, he set out to grab more than his share. And his policies would push the American economy to conform with that worldview.