Voodoo Economics Again

The alt-right folks, the white supremacists, the swastika lovers are all obviously a lost cause when it comes to dissuading people from supporting Donald Trump, but what about the more rational people in the Trump camp? If they can’t be moved by the fact that their guy boasted about, and may well have committed, sexual assault, withheld payment from family-business contractors who did work for him, then dared them to sue him, ran several businesses into bankruptcy and left investors holding the bag, ran a fraudulent “university” that did nothing but separate people from their money, never stops whining that the system is stacked against him and his troubles are everybody else’s fault, has refused to disclose his tax returns – documents that may well show that he salutes the flag of an adversary because of his business ties to it, mounted a blatantly racist and totally false “birther” campaign targeting the President of the United States, and has demonstrated a total lack of understanding of the competing interests at play in the Middle East and made a fool of himself advocating military tactics he knows nothing about…

…if they can’t be persuaded by all of that (and so much more) – if their weird man crush remains intact – then maybe a discussion of money – their money – will do the trick

I assume that pro-Trump financial advisors are telling their clients what’s about to happen to them if Trump wins the election. Which is, they’re going to lose a lot of their money. As Heather Long of CNN Money put it: “Trump is the king of unpredictability (something Wall Street hates), and he's campaigned on an anti-trade agenda, which wouldn't be good for big business.”

It may be that markets are already pricing in the possibility of a Trump win – as of this writing, the Dow has lost ground for nine straight days, the longest decline since the 2008 crisis – but still, most Wall Streeters predict a sell-off in the event of a Trump victory. Their predictions range from a low of 8-percent to 15-percent or more. The reason, and it’s a pretty straightforward one: Clinton, no matter how loudly Republicans howl about what they perceive as her anti-business bent, represents the continuation of a business and economic environment in which the Dow has more than doubled in value, inflation has remained negligible, and bellwether industries – e.g., automotive – have prospered as never before. In other words, she represents business as usual. Investors like that.

Trump represents who knows what. And investors don’t like that. Besides his general criticism of the regulatory environment in the U.S., and of the way trade deals have been negotiated, he hasn’t said much. One thing he has said, in keeping with the tough-buy, us-against-them stance his followers find so appealing, is that he’d impose a 45-percent tariff on Chinese imports. That’s an idea that Michael Schuman, in an article in the New York Times, argued, “would set off a cascade of global economic consequences, mostly negative.” Consequences that could well include a trade war and a recession, neither of which would be good for American business and job prospects.

Another thing Trump has said is that the numbers are “phony.” Because a large part of his pitch to his followers is that the economy is in terrible shape – still in the recession that started in 2007 -- and that he alone can fix it, he simply denies reality. The reality is that over 15-million jobs have been added since 2010, the unemployment rate is half of what it was in 2009, and average hourly wages jumped 2.8 percent, to $25.92, in October from a year earlier, the biggest such increase since 2008. He has also repeated the wild fiction that the unemployment rate is higher than what the Labor Department says it is; much higher, he tells people – more like 40-percent. If that were actually the case, we would probably have noticed it, since during the Great Depression unemployment peaked at just under 25-percent, and their were bread lines, soup kitchens, Hoovervilles, people selling apples on street corners, and caravans of “Oakies” headed west in search of economic salvation. There were no automobile manufacturers setting sales records as they are now. (It must be all those unemployed folks who are buying all those cars and pick-ups.)

It’s not surprising that 370 economists, including eight Nobel Prize winners, have signed a letter denouncing him for peddling “magical thinking and conspiracy theories over sober assessments of feasible economic policy options.”

In the years since the recession ended and the recovery began, investors – including millions of Trump supporters whose life savings are in stock-market-heavy 401K accounts -- have seen their investments grow and have prospered greatly. Now, apparently, they’re about to vote to bring that to end and get things headed in the opposite direction.