The economy under Trump: Plan for the worst - By Lawrence Summers

[DonViejo]

Lawrence Summers is a professor at and past president of Harvard University. He was treasury secretary from 1999 to 2001 and an economic adviser to President Obama from 2009 through 2010.

An ironic contradiction is likely to define the global economic community’s convocation in Davos this week as it awaits Donald Trump’s inauguration. There has not been so much anxiety about U.S. global leadership or about the sustainability of market-oriented democracy at any time in the past half-century. Yet with markets not only failing to swoon as predicted, but actually rallying strongly after both the Brexit vote and Trump’s victory, the animal spirits of business are running hot.

Many chief executives are coming to believe that, whatever the president-elect’s infirmities, the strongly pro-business attitude of his administration, combined with Republican control of Congress, will lead to a new era of support for business, along with much lower taxes and regulatory burdens. This in turn, it is argued, will drive major increases in investment and hiring, setting off a virtuous circle of economic growth and rising confidence.

While it has to be admitted that such a scenario looks more plausible today than it did on Election Day, I believe that it is very much odds-off. More likely is that the current run of happy markets and favorable sentiment will be seen, with the benefit of hindsight, as a sugar high. John Maynard Keynes was right to emphasize the great importance of animal spirits, but economists have also been right to emphasize that it is political and economic fundamentals that dominate in the medium and long term. History is replete with examples of populist authoritarian policies that produced short-run benefits but poor long-run outcomes.

The new U.S president will be operating on a weak political foundation, is unlikely to be able to deliver the results he has promised to key constituencies and seems likely to take dangerous gambles in the international arena. This makes it probable that a cycle of growing disillusion, disappointment and disapproval will set in within a year.

more
https://www.washingtonpost.com/opinions/the-economy-under-trump-plan-for-the-worst/2017/01/16/0e7287c2-dbf8-11e6-ad42-f3375f271c9c_story.html?utm_term=.0590de5f8f04&wpisrc=nl_popns&wpmm=1

[dchill]

1. " ...disappointment and disapproval will set in within a year."

If we even have that long. I decided to start early on the disappointment and disapproval. Like a year ago.

[redstatebluegirl]

2. Trickle down economics again, get ready to experience what it feels like to be "trickled on".

[Vogon_Glory]

3. Trickle-down economics is like being p'd on from above

A lot like those golden showers, Hunh?