By Joseph E. Stiglitz
It is becoming
conventional wisdom that US President Donald
Trump will be tough to beat in November,
because, whatever reservations about him
voters may have, he has been good for the
American economy. Nothing could be further
from the truth.
January 18, 2020 "Information
Clearing House" -
As the world’s business
elites trek to Davos for their annual gathering,
people should be asking a simple question: Have they
overcome their infatuation with US President Donald
Trump?
Two years ago, a few rare corporate leaders were
concerned about climate change, or upset at Trump’s
misogyny and bigotry. Most, however, were
celebrating the president’s tax cuts for
billionaires and corporations and looking forward to
his efforts to deregulate the economy. That would
allow businesses to pollute the air more, get more
Americans hooked on opioids, entice more children to
eat their diabetes-inducing foods, and engage in the
sort of financial shenanigans that brought on the
2008 crisis.
Today, many corporate bosses are still talking about
the continued GDP growth and record stock prices.
But neither GDP nor the Dow is a good measure of
economic performance. Neither tells us what’s
happening to ordinary citizens’ living standards or
anything about sustainability. In fact, US economic
performance over the past four years is Exhibit A in
the indictment against relying on these indicators.
To get a good reading on a country’s economic
health, start by looking at the health of its
citizens. If they are happy and prosperous, they
will be healthy and live longer. Among developed
countries, America sits at the bottom in this
regard. US life expectancy, already relatively low,
fell in each of the first two years of Trump’s
presidency, and in 2017, midlife mortality reached
its highest rate since World War II. This is not a
surprise, because no president has worked harder to
make sure that more Americans lack health insurance.
Millions have lost their coverage, and the uninsured
rate has risen, in just two years,
from 10.9% to 13.7%.
One reason for declining life expectancy in America
is what Anne Case and Nobel laureate economist
Angus Deaton call deaths of despair, caused by
alcohol, drug overdoses, and suicide. In 2017 (the
most recent year for which good data are available),
such deaths stood at
almost four times their 1999 level.
The only time I have seen anything like these
declines in health – outside of war or epidemics –
was when I was chief economist of the World Bank and
found out that mortality and morbidity data
confirmed what our economic indicators suggested
about the dismal state of the post-Soviet Russian
economy.
Trump may be a good president for the top 1% – and
especially for the top 0.1% – but he has not been
good for everyone else. If fully implemented, the
2017 tax cut will result in tax increases
for most households in the second, third, and fourth
income quintiles.
Are You Tired Of
The Lies And
Non-Stop Propaganda?
|
Given tax cuts that disproportionately benefit the
ultrarich and corporations, it should come as no
surprise that there was
no significant change in the median US
household’s disposable income between 2017 and 2018
(again, the most recent year with good data). The
lion’s share of the increase in GDP is also going to
those at the top. Real median
weekly earnings are just 2.6% above their level
when Trump took office. And these increases have not
offset long periods of wage stagnation. For example,
the median wage of a full-time male worker (and
those with full-time jobs are the lucky ones) is
still more than
3% below what it was 40 years ago. Nor has there
been much progress on reducing racial disparities:
in the third quarter of 2019, median weekly earnings
for black men working full-time were
less than three-quarters the level for white
men.
Making matters worse, the growth that has occurred
is not environmentally sustainable – and even less
so thanks to the Trump administration’s gutting of
regulations that have passed stringent cost-benefit
analyses. The air will be less breathable, the water
less drinkable, and the planet more subject to
climate change. In fact, losses related to climate
change have already reached new highs in the US,
which has suffered more property damage than any
other country – reaching
some 1.5% of GDP in 2017.
The tax cuts were supposed to spur a new wave of
investment. Instead, they triggered an all-time
record binge of share buybacks – some $800
billion in 2018 – by some of America’s most
profitable companies, and led to
record peacetime deficits (almost $1 trillion in
fiscal 2019) in a country supposedly near full
employment. And even with weak investment, the US
had to borrow massively abroad: the most recent data
show
foreign borrowing at nearly $500 billion a year,
with an increase of more than 10% in America’s net
indebtedness position in one year alone.
Likewise, Trump’s trade wars, for all their sound
and fury, have not reduced the US trade deficit,
which was one-quarter higher in 2018 than it was in
2016. The 2018 goods deficit was the
largest on record. Even the deficit in trade
with China was
up almost a quarter from 2016. The US did get a
new North American trade agreement, without the
investment agreement provisions that the Business
Roundtable wanted, without the provisions raising
drug prices that the pharmaceutical companies
wanted, and with better labor and environmental
provisions. Trump, a self-proclaimed master deal
maker, lost on almost every front in his
negotiations with congressional Democrats, resulting
in a slightly improved trade arrangement.
And despite Trump’s vaunted promises to bring
manufacturing jobs back to the US, the increase in
manufacturing employment is still lower than it was
under his predecessor, Barack Obama, once the
post-2008 recovery set in, and is still markedly
below its pre-crisis level. Even the unemployment
rate, at a 50-year low, masks economic fragility.
The employment rate for working-age males
and females, while rising, has increased less than
during the Obama recovery, and is still
significantly below that of other developed
countries. The pace of job creation is also markedly
slower than it was under Obama.
Again, the low employment rate is not a surprise,
not least because unhealthy people can’t work.
Moreover, those on disability benefits, in prison –
the US
incarceration rate has increased more than
sixfold since 1970, with some
two million people currently behind bars – or so
discouraged that they are not actively seeking jobs
are not counted as “unemployed.” But, of course,
they are not employed. Nor is it a surprise that a
country that doesn’t provide affordable childcare or
guarantee family leave would have lower female
employment – adjusted for population, more than ten
percentage points lower – than other developed
countries.
Even judging by GDP, the Trump economy falls short.
Last quarter’s growth was just 2.1%, far less than
the 4%, 5%, or even 6% Trump
promised to deliver, and even less than the 2.4%
average of Obama’s second term. That is a remarkably
poor performance considering the stimulus provided
by the $1 trillion deficit and ultra-low interest
rates. This is not an accident, or just a matter of
bad luck: Trump’s brand is uncertainty, volatility,
and prevarication, whereas trust, stability, and
confidence are essential for growth. So is
equality, according to the International
Monetary Fund.
So, Trump deserves failing grades not just on
essential tasks like upholding democracy and
preserving our planet. He should not get a pass on
the economy, either.
Joseph E. Stiglitz, a Nobel
laureate in economics, is University Professor at
Columbia University and Chief Economist at the
Roosevelt Institute. His most recent book is People,
Power, and Profits: Progressive Capitalism for an
Age of Discontent.
Do you agree or disagree? Post
your comment here
==See Also==