Monday, July 02, 2018

The Trump/Pence Regime’s Potemkin Economy

Despite Trump lies, U.S. Steel is not opening plants.

Canada has announced a new round of tariffs on American products in further retaliation for the ill-conceived Trump tariffs.  The Trump/Pence regime's response to growing evidence of harm to American jobs is to lire - the regime's main approach to anything and everything.  Trump even claimed that U.S. Steel would be opening six new plants - the announcement came as a surprise to the corporation which had had NO communications with Trump.  Yet, the lie is typical of what the white Christian extremist/nationalist base eats up and is too stupid to confirm independently. A column in the New York Times looks at Trump's "wake economy" which brings to mind the myth of "Potemkin villages" in Russia. The difference, of course, was no fool while the same cannot be said of Trump's base which is too happy to embrace lies.  One can only hope harsh reality hits this base very, very hard.  Here are column highlights:
According to legend, Grigory Potemkin, one of Catherine the Great’s ministers (and her lover), created a false impression of prosperity when the empress toured Ukraine. He supposedly did this by setting up fake villages, or possibly just facades, along her route, then dismantling them after she passed, and setting them up again further down the road.  
There probably isn’t much if any truth to the story — among other things, Catherine was too smart and tough-minded to be that easily deceived — but never mind: the legend has become a byword for the general idea of prettifying reality to please a tyrannical ruler.
And it seems highly relevant to some of the economic “news” coming out of the Trump administration the past few days. Just to be clear, the U.S. economy is still doing quite well overall, continuing the long expansion that began during Obama’s first term. . . . But Trump’s actual policy initiatives aren’t doing so well. His tax cut isn’t producing the promised surge in business investment, let alone the promised wage gains; all it has really done is lead to a lot of stock buybacks.
Reflecting this reality, the tax cut is becoming less popular over time. And the early phase of the trade war that was supposed to be “good, and easy to win” isn’t generating the kinds of headlines Trump wanted. Instead, we’re hearing about production shifting overseas to escape both U.S. tariffs on imported inputs and foreign retaliation against U.S. products. It’s really worth reading the submission by General Motors to the Commerce Department, . . . . In other words, “Don’t you understand global supply chains, you idiot?”
But meanwhile, how is the administration responding? By making stuff up. Now, making stuff up is actually standard operating procedure for these guys. We’re talking about an administration that’s taking children away from their parents and putting them in cages in response to a wave of violent immigrant crime that doesn’t, you know, actually exist. Trade policy itself is being driven by claims about the massive tariffs U.S. products face from, say, the European Union — tariffs that, like the immigrant crime wave, don’t actually exist.
But these are negative fictions, tales of wrongdoing by others. When it comes to Trump’s own economic policies, by contrast, it’s all puppies and rainbows — happy stories with no basis in reality.
Some of these come from Trump himself. For example, he declared that the head of U.S. Steel called him to say that the company was opening six new plants. It isn’t, and as far as we can tell the phone call never happened.
Meanwhile, reports say that the Council of Economic Advisers did an internal report concluding that Trump trade policy will cost jobs, not create them; Kevin Hassett, the chairman, pressed on these reports, said that he could neither confirm nor deny them; in other words, they’re true.
But the most Potemkinesque story of the past week was the declaration by Larry Kudlow, the administration’s top economic official, that the budget deficit is “coming down rapidly” as “those revenues come rolling in.”  Actually, the deficit is rising fast, mainly because of a plunge in corporate tax receipts — the direct result of the tax cut . . . .
Trump and company are making claims about the results of their policies that bear no relationship to reality. But reality has a well-known liberal bias. Will Trump’s habit of making things up, and his advisors’ willingness to celebrate imaginary policy triumphs, make any difference?
But who will tell him how things are really going? Given what we’ve seen the past few days, they’ll respond to plant closings and economic disruption with fantasies of triumph, while Trump will dismiss reports of problems as fake news. Reality will take a long time to break through, if it ever does. And by then the world trading system may be broken beyond repair.
Again, I wish every economic misfortune possible on states like Michigan, Iowa and Wisconsin that should have know better than to embraces racism and lies.  They deserve immense economic pain. 

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