Tag Archives: Krugman

Air We Shouldn’t Breathe, Water We Shouldn’t Drink

Yesterday, I posted about the shorter-and-longer term consequences of Trump’s assault on various policies and norms. I noted in passing that the next administration–assuming it is Democratic (if it isn’t, the America we grew up in is gone)–will need to reinstate numerous environmental safeguards before it can address the critical threat posed by climate change.

Paul Krugman has laid out the dimensions of the Trump administration’s assault on basic environmental protections. Here’s his lede:

Given what we’ve seen in the impeachment hearings so far, there is literally no crime, no abuse of power, that would induce Republicans to turn on President Trump. So if you’re waiting for some dramatic political turn, don’t hold your breath.

On second thought, however, maybe you should hold your breath. For air quality has deteriorated significantly over the past few years — a deterioration that has already cost thousands of American lives. And if Trump remains in power, the air will get much worse, and the death toll rise dramatically, in the years ahead.

Krugman clarifies that, in referring to air pollution, he isn’t talking about the greenhouse gases driving climate change. He is addressing the issue of pollutants with a much more immediate effect. That includes, as he points out,  “fine particulate matter,” the small particles that make the air hazy.  Those particulates pose a significant health hazard, because they penetrate deep into the respiratory tract.

The good news until a few years ago was that thanks to environmental regulation the concentration of fine particulates was in fairly rapid decline. The bad news is that since 2016 this kind of pollution has been on the rise again, reversing around a fifth of the gains since 2009.

That may not seem like a big problem, but estimates are that even this relatively small rise  led to almost 10,000 extra deaths last year.

If deaths don’t concern you (!), perhaps the economic cost of rising pollution will. A study Krugman cites puts it at $89 billion a year. As he notes, even in an economy as large as America’s, $89 billion is a pretty big number.

And things are poised to get much worse. The Trump administration is working on new rules that would effectively prevent the Environmental Protection Agency from making use of much of the scientific evidence on adverse health effects of pollution. This would cripple environmental regulation, almost surely leading to sharply worsening air and water quality over time….

Why is this happening? As many observers have pointed out, failing to act on climate change, although it’s an indefensible crime against humanity, is also in some ways understandable. Greenhouse gas emissions are invisible, and the harm they do is global and very long-term, making denialism relatively easy.

Particulates, however, are visible, and the harm they do is both relatively localized and fairly quick. So you might have thought that the fight against dirty air would have widespread, bipartisan support. Indeed, modern environmental protection began under none other than Richard Nixon, and retired E.P.A. officials I’ve talked to describe the Nixon era as a golden age.

Krugman says the GOP has become the party of pollution.

Why? Follow the money. There’s huge variation among industries in how much environmental damage they do per dollar of production. And the super-polluting industries have basically put all their chips on the Republicans. In 2016, for example, coal mining gave 97 percent of its political contributions to Republican candidates and causes. And polluters are getting what they paid for….If Trump doesn’t succeed in destroying our democracy (a big if), his most damaging legacy will be the vast environmental destruction he leaves behind.

Krugman’s column centered on air quality; recent EPA rollbacks pose an equally serious threat to the nation’s water supply.

How corrupt do you have to be to value your bottom line over the health of your children and grandchildren?

 

Red Myths, Rural Realities

Paul Krugman recently looked at the effects of Trump’s policies on rural America, and found–to no sentient person’s surprise–that the effects have been disastrous.

Economists, reports Politico, are fleeing the Agriculture Department’s Economic Research Service. Six of them resigned on a single day last month. The reason? They are feeling persecuted for publishing reports that shed an unflattering light on Trump policies.

But these reports are just reflecting reality (which has a well-known anti-Trump bias). Rural America is a key part of Donald Trump’s base. In fact, rural areas are the only parts of the countryin which Trump has a net positive approval rating. But they’re also the biggest losers under his policies.

As Krugman points out, whatever Trump’s campaign rhetoric might have promised, his actual policies have been aligned with (okay, dictated by) Congressional Republican priorities–what Krugman calls “G.O.P. standard”: big tax cuts for corporations and rich people, accompanied by cuts to the social safety net.

The only real deviation from GOP orthodoxy has been the tariffs, and Trump’s evident belief that trade wars are “easy to win.” Even the farmers who have been a reliable part of Trump’s base are beginning to recognize that they will bear the brunt of the substantial injuries caused by those wars.

As for the tax and social safety net cuts…

The Trump tax cut largely passes farmers by, because they aren’t corporations and few of them are rich. One of the studies by Agriculture Department economists that raised Trumpian ire showed that to the extent that farmers saw tax reductions, most of the benefits went to the richest 10 percent, while poor farmers actually saw a slight tax increase.

At the same time, the assault on the safety net is especially harmful to rural America, which relies heavily on safety-net programs. Of the 100 counties with the highest percentage of their population receiving food stamps, 85 are rural, and most of the rest are in small metropolitan areas. The expansion of Medicaid under the Affordable Care Act, which Trump keeps trying to kill, had its biggest positive impact on rural areas.

It is fair to suggest that many rural Americans are unaware of the variety of ways in which Medicaid expansion and other social programs support farm country; some of those benefits are indirect (which doesn’t mean they aren’t critically important). The impact of the tariffs, however, is hard to miss.

What about protectionism? The U.S. farm sector is hugely dependent on access to world markets, much more so than the economy as a whole. American soybean growers export half of what they produce; wheat farmers export 46 percent of their crop. China, in particular, has become a key marketfor U.S. farm products. That’s why Trump’s recent rage-tweeting over trade, which raised the prospect of an expanded trade war, sent grain markets to a 42-year low.

If Trump succeeds in plunging us into a full-blown trade war, which certainly seems more likely than not, Krugman says American imports and exports will both shrink — and since farmers rely disproportionately on exporting, they will be the biggest losers.

The harm being done to rural America by Trump leads to that perennial question: why do so many of the people bearing the brunt of his ignorance continue to support him?

Krugman delicately suggests that it has to do with “cultural factors”–by which he means hostility to immigrants and resentment of coastal elites they believe look down on rural America. (What Krugman calls hostility to immigrants is, if the research is to be believed, part of a much larger and more ingrained hostility to non-whites and non-Christians.)

Krugman thinks that rural America’s support for Trump may start to crack as the negative effects of his policies become too obvious to miss. I’m less sanguine.

When we so-called “elitists” talk about “voting ones interests,” we are almost always referring to economic interests. When I listen to Trump supporters–when they post angry diatribes on Facebook or are interviewed for a new program–what I hear is a very different view of what constitutes their interests.

Economic reality be damned. Trump voters are defending their vision of America, and that vision is white, heterosexual, and fundamentalist Christian. So long as they believe Trump is hurting people who fall outside that narrow category, he’s their guy.

 

How Democracies Die

Academia has its prejudices, and they aren’t the ones ascribed to us by rightwing critics. For example, there’s a common opinion that most economists are sort of weird. (Apologies to my friend and colleague Jerome…)

Obviously, I don’t know Paul Krugman personally, but he and Joseph Stiglitz are my very favorite economists, and Krugman ranks right up there with my other favorite political columnists. I particularly liked this year’s Christmas Eve column, in which he addressed the stock market’s free fall.

Two years ago, after the shock of Donald Trump’s election, financial markets briefly freaked out, then quickly recovered. In effect, they decided that while Trump was manifestly unqualified for the job, temperamentally and intellectually, it wouldn’t matter. He might talk the populist talk, but he’d walk the plutocratic walk. He might be erratic and uninformed, but wiser heads would keep him from doing anything too stupid.

In other words, investors convinced themselves that they had a deal: Trump might sound off, but he wouldn’t really get to make policy. And, hey, taxes on corporations and the wealthy would go down.

But now, just in time for Christmas, people are realizing that there was no such deal — or at any rate, that there wasn’t a sanity clause. (Sorry, couldn’t help myself.) Put an unstable, ignorant, belligerent man in the Oval Office, and he will eventually do crazy things.

There is no sanity clause….Love it.

Earlier this month, in a column with the threatening headline “How Democracies Die” he wrote,

Donald Trump, it turns out, may have been the best thing that could have happened to American democracy.

No, I haven’t lost my mind. Individual-1 is clearly a wannabe dictator who has contempt for the rule of law, not to mention being corrupt and probably in the pocket of foreign powers. But he’s also lazy, undisciplined, self-absorbed and inept. And since the threat to democracy is much broader and deeper than one man, we’re actually fortunate that the forces menacing America have such a ludicrous person as their public face.

I have actually made similar arguments. What if Trump actually knew what he was doing? What if he was just as greedy, self-important and mentally-ill, but smart? And able to spell…

Trump’s election was a service to democracy, in much the same way that a fire burning down your house when no one was home is a service: it reminds you what is truly valuable.

Of course, there’s a lot of damage to repair…

Like so many Americans, I was (naively) reassured by Obama’s election. Look how far America had come! Then, of course, the rocks lifted and the cockroaches crawled out. Racism and resentment of the black man in the White House motivated despicable behaviors from neighborhoods to Congress.

If Hillary had been elected, it’s almost certain that misogyny would have motivated the same tribal behaviors.  Meanwhile, the erosion of democratic norms–an erosion that began long before Trump, and enabled his election– would have continued unnoticed by the general public.

The election of Trump was our national house fire. He has done an enormous amount of damage, both domestically and to America’s stature in the world, but as the midterm elections confirmed, he has also been democracy’s wake-up call. (Scholars tell us that more people have taken to the streets to protest Trump than protested during the height of the Viet Nam war.)

Thanks to the absence of a sanity clause, we are at a crossroads: we can rebuild the house–and while we’re at it, repair some of the parts that weren’t working properly, or had outlived their usefulness–or we can retreat into our respective tribal enclaves and accuse each other of lighting the match that burned it all down.

We can turn what’s left of our democracy over to the plutocrats who already control so much of it, or we can use the election of this pathetic man as a turning point, and build it back– better. And better–as Krugman points out–means without gerrymandering, without voter suppression, without authoritarian power grabs like those in Wisconsin, North Carolina and Michigan.

We have our marching orders for the New Year…..

Tariff Time…

Trump’s Tariffs went into effect last week, and the response from America’s trading  partners has been predictable–with one possible caveat. The targeted nations have responded by imposing their own tariffs, as expected–but they have also focused those retaliatory measures on goods produced in states that supported Trump. It’s an interesting gambit; we’ll see how it plays out.

The Republican Party used to be adamantly opposed to tariffs and trade wars, but the supine and complicit GOP Senators and Representatives currently serving have barely uttered a peep. It isn’t because they don’t know the dangers a trade war poses to the recovery we are currently enjoying–it’s because they must once again choose between the remaining shreds of their integrity and their business constituents, on the one hand, and the rabid Trump supporters who form a majority of the shrinking party’s base on the other.

As usual, Paul Krugman’s analysis of the political calculations involved is direct and on point. Krugman connects two very important dots: the longstanding Faustian bargain between big business and the GOP’s racist foot-soldiers, and the party’s war on expertise and evidence.

The imminent prospect of a trade war, it seems, concentrates the mind. Until very recently, big business and the institutions that represent its interests didn’t seem to be taking President Trump’s protectionist rhetoric very seriously. After all, corporations have invested trillions based on the belief that world markets would remain open, that U.S. industry would retain access to both foreign customers and foreign suppliers.

Trump wouldn’t put all those investments at risk, would he?

Yes, he would — and the belated recognition that his tough talk on trade was serious has spurred a flurry of action. Major corporations and trade associations are sending letters to the administration warning that its policies will cost more jobs than they create. Meanwhile, the U.S. Chamber of Commerce has begun an advertising campaign to convince voters of the benefits of free trade.

As Krugman notes, there is a heaping pile of “just deserts” here; corporate America has played cynical politics for years and is reaping what it sowed.

What do I mean by cynical politics? Partly I mean the tacit alliance between businesses and the wealthy, on one side, and racists on the other, that is the essence of the modern conservative movement.

For a long time business seemed to have this game under control: win elections with racial dog whistles, then turn to an agenda of tax cuts and deregulation. But sooner or later something like Trump was going to happen: a candidate who meant the racism seriously, with the enthusiastic support of the Republican base, and couldn’t be controlled.

The nature of that alliance became abundantly clear to anyone paying attention in 2016. But Krugman’s other important point is still insufficiently appreciated.

When organizations like the Chamber of Commerce or the Heritage Foundation declare that Trump’s tariffs are a bad idea, they are on solid intellectual ground: All, and I mean all, economic experts agree. But they don’t have any credibility, because these same conservative institutions have spent decades making war on expertise.

The most obvious case is climate change, where conservative organizations, very much including the chamber, have long acted as “merchants of doubt,” manufacturing skepticism and blocking action in the face of overwhelming scientific consensus. Not to put too fine a point on it, it’s hard to pivot from “pay no attention to those so-called experts who say the planet is warming” to “protectionism is bad — all the experts agree.”

Similarly, organizations like Heritage have long promoted supply-side economics, a.k.a., voodoo economics — the claim that tax cuts will produce huge growth and pay for themselves — even though no economic experts agree. So they’ve already accepted the principle that it’s O.K. to talk economic nonsense if it’s politically convenient. Now comes Trump with different nonsense, saying “trade wars are good, and easy to win.” How can they convince anyone that his nonsense is bad, while theirs was good.

Krugman ends his analysis by pointing to another looming threat to business (and the rest of us): authoritarianism. As he notes, it isn’t simply world trade that’s at risk, but the rule of law. “And it’s at risk in part because big businesses abandoned all principle in the pursuit of tax cuts.”

Meanwhile, the experts who are scorned by this administration are weighing in on the likely consequences of Trump’s economic ignorance:

There’s no formal definition of what constitutes a trade war, but the escalating exchange of trade barriers between the United States and its trading partners has hit a point where most economists say there will be a negative impact. Companies will scale back on investments, growth will slow, consumers will pay more for some items, and there could be more job losses. The Federal Reserve warned Thursday some companies are already scaling back or postponing plans.

We all need to hang on tight, because when you give the keys of your economic vehicle to a guy who couldn’t pass the drivers’ test, your ride is likely to be something between bumpy and disastrous.

 

 

Trashing The Economy

Schadenfreude would be appropriate if real people weren’t being hurt.

Recent business news included the planned overseas move by that icon of Americana, Harley-Davidson. Although a quote attributed to the CEO to the effect that Trump is a moron who knows nothing about either trade or economics turned out to be bogus, the  decision to move production offshore sends a not-dissimilar message.

As Paul Krugman noted in a recent column, Harley-Davidson may be an icon, but it isn’t really a big economic player.

Nonetheless, I think the Harley story is one of those anecdotes that tells us a lot. It’s an early example of the incentives created by the looming Trumpian trade war, which will hurt many more American companies and workers than Trump or the people around him seem to realize. It’s an indication of the hysterical reactions we can expect from the Trump crew as the downsides of their policies start to become apparent — hysteria that other countries will surely see as evidence of Trump’s fundamental weakness.

No President can be an expert on all of the subjects on which a President must make consequential decisions. Most of those who have occupied the Oval Office have compensated for that reality by surrounding themselves with credentialed, expert advisers. But then, most of Trump’s predecessors were mentally stable enough to recognize that a need for advice about a highly technical area isn’t tantamount to an admission of inferiority.

There’s a reason the Trump Administration is filled with incompetents and sycophants–increasingly from Fox News–and even then, has seen unprecedented turnover.

And what Trump’s alleged experts have to say about the controversy offers fresh confirmation that nobody in the administration has the slightest idea what he or she is doing.

About that trade war: So far, we’re seeing only initial skirmishes in something that may well become much bigger. Nonetheless, what’s already happened isn’t trivial. The U.S. has imposed significant tariffs on steel and aluminum, causing their domestic prices to shoot up; our trading partners, especially the European Union, have announced plans to retaliate with tariffs on selected U.S. products.

And Harley is one of the companies feeling an immediate squeeze: It’s paying more for its raw materials even as it faces the prospect of tariffs on the cycles it exports. Given that squeeze, it’s perfectly natural for the company to move some of its production overseas, to locations where steel is still cheap and sales to Europe won’t face tariffs.

Opposition to tariffs used to be a hard-and-fast position of (what used to be) the Republican Party. It was a position I heartily endorsed, for reasons that Krugman alludes to and all Americans will soon begin to appreciate. That Harley and other companies would choose to move in reaction to those tariffs was entirely predictable.

But while it’s what you’d expect to see, and what I’d expect to see, it’s apparently not what Trump expected to see. His view seems to be that since he schmoozed with the company’s executives and gave its stockholders a big tax cut, Harley owes him personal fealty and shouldn’t respond to the incentives his policies have created….

So what do Trump’s economists have to say about all of this? One answer is, what economists? There are hardly any left in the administration. But for what it’s worth, Kevin Hassett, the chairman of the Council of Economic Advisers, isn’t echoing Trump’s nonsense: He’s uttering completely different nonsense. Instead of condemning Harley’s move, he declares that it’s irrelevant given the “massive amount of activity coming home” thanks to the corporate tax cut.

That would be nice if it were true. But we aren’t actually seeing lots of “activity coming home”; we’re seeing accounting maneuvers that transfer corporate equity from overseas subsidiaries back to the home corporation but in general produce “no real economic activity.”

As real economists and business reporters have documented, those tax reductions have once again failed to “trickle down” to the workers they were supposed to benefit. Most have been used in corporate stock buy-backs. Meanwhile, Congressional Republicans are voting to rob Social Security and Medicaid and make access to other social welfare programs more difficult–just as the Administrations uninformed trade war policy threatens to tank the economy. We are already seeing a weakening in consumer spending.

There is a (very unattractive) part of me that is watching this train wreck as vindication–this is what happens when you turn government over to people who ignore history and evidence and scorn the “effete elites” who actually know what they’re doing.

Schadenfreude.

But then I think of all the people who will suffer needlessly thanks to this clown and his circus…