Wednesday, February 22, 2017

Trump's Lack of Knowledge About Economics

Have to put up a link to this because it covers so many of the insane ideas Trump has about economics.

Trump claimed the GDP was “below zero.”

First, this suggests that Trump doesn’t even know what the gross domestic product (GDP) is. It’s the total market value of all final goods and services produced by an economy in a period (quarterly or yearly). It can’t be less than zero, by definition.

Trump claimed that the U.S. never “beats” China in a trade deal: “They kill us.”

The first thing false about this claim is that we don’t have any trade deals with China. Our trade relations with China aren’t based upon “deals.” They are based on our membership in the World Trade Organization, which China joined in 2001, long after the rules were established. China doesn’t “kill us” in trade deals, because there are no such deals.

The second false thing is that we do kill China on trade, anyway. The WTO has a dispute resolution process and, as pointed out on the U.S. Trade Representative’s Enforcement page, the Obama administration’s record was remarkable.

Trump claimed that the Trans-Pacific Partnership (TPP) “was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.”

Let’s consider something else Trump has said about China. In a November 2015 GOP primary debate, Trump ludicrously claimed that the TPP was designed to benefit China, when its guiding rationale was precisely the opposite — to create a Pacific Ocean trade agreement that excluded China.

There’s just one problem with Trump’s rant on China, as Sen. Rand Paul emphatically pointed out at the debate: China isn’t actually a part of the Trans-Pacific Partnership.

Trump sowed massive confusion over the possibility of defaulting on the federal debt.

Trump sent shockwaves through the financial world with his May 5, 2016, interview with CNBC’s Andrew Ross Sorkin and Becky Quick. (Recapped by PolitiFact here.) When asked whether he thought the United States should “pay 100 cents on the dollar” or whether the U.S. debt could be renegotiated

Trump called Michael Flynn at 3 a.m. to ask whether a strong or a weak dollar was good for the U.S.

Flynn has a long record in counterintelligence but not in macroeconomics. And he told Trump he didn’t know, that it wasn’t his area of expertise, that, perhaps, Trump should ask an economist instead.

Trump has claimed that the “true” unemployment rate is 42 percent.

Trump is referring to the number of working-age Americans who are not in the labor force. As we pointed out when then Texas Gov. Rick Perry in 2014 said he was “worried” about those not in the labor force, they include everyone age 16 and over who isn’t working or looking for work: teenagers, college students, folks who are well into their retirement years, stay-at-home parents, the independently wealthy and more.

In fact, the current figure — 95 million as of January — includes only 6 million who say they want to work.

Trump has claimed he will produce sustained 4 percent growth.

In September 2016, Trump’s economic team claimed that his economic plan wouldraise annual economic growth to 3.5 percent, while Trump himself claimed it could be 4 percent or better. Trump had even said, earlier, that it would be “easily attainable.”

For Trump to have any chance of meeting his target, the CBO projections would have to be wrong by a lot. On top of that, Trump’s mass deportation plan would shrink the labor force, taking us in exactly the wrong direction. Comprehensive immigration reform, including a path to citizenship for many undocumented workers, would almost certainly lead to higher productivity, because citizens and documented immigrants generally have higher job skills and can take on jobs that produce more valuable goods.

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