Wednesday, January 18, 2017

Nobel Prize Winner Warns About Trump Fascist Economic Policy

Edmund Phelps, the 2006 Nobel laureate in economics, writes:
Trump thinks that bullying corporations, such as Ford and Carrier, and aiding others, such as Google, will boost output and employment. This is an expansion of corporatist policy the likes of which have not been seen since the fascist German and Italian economies of the 1930s. If this thinking persists, there will be more interference in the business sector to protect incumbents and block newcomers. This will clog the economy’s arteries, most likely preventing far more innovation than it stimulates among the established insiders.
Policymakers must wake up to the dangers of resurgent corporatism under Trump. Such an approach to today’s economic stagnation and deprivation threatens to drive a silver spike into the heart of innovation – and the American working class.
Trump holds a corporatist central planning view of economic policy as did the German and Italian leaders during the 1930s.

Phelps is correct, if Trump continues down this path, it will suffocate innovation and only benefit corporations close to Trump and his ruling team. It will stagnate the economy.



  1. The USA has been fascist in this regard since the 1930s. Trump is no different in principle. Previous presidents have done the same bullying. They hide it behind consumer protection, diversity, the environment, and more.

    Since Trump is big on vehicle production location so lets consider Obama increasing CAFE. Obama is bullying corporations into producing the vehicles he wants people to buy but not what they are actually buying. Just look at what Obama did this month accelerating his CAFE requirement because his party lost the election. How is this any different in principle? Obama says what they must build and Trump is saying where they must build it.

    1. Of course all governments violate people's property rights in a destructive manner, but that doesn't mean it's not noteworthy that a president wants to monkey specifically with international trade to a degree unseen in 70+ years, especially when that president hails from the alleged "party of small government."

    2. Except it isn't a degree unseen in 70 years. It just isn't cloaked in something else. Even if we restrict ourselves to outright border taxes there is LBJ's 1963 Chicken tax on light trucks. Or how about the Reagan era ban on privately importing vehicles less than 25 years old?

    3. It is fascinating how academia's examples of fascism only ever mention Germany and Italy. Hoover and FDR must be examples of "good fascism."

  2. Edmund Phelps fails to understand Austrian Business Cycle Theory:

    By the way, Mr. Phelps, Trump stole his manufacturing ideas from Obama. The corporatism you warn of has been with us for a long time in large part because of economists such as yourself:

    "If we want to encourage insourcing, there are four things the federal government needs to do:

    Create incentives for businesses to invest in hiring and expanding;
    Ensure that U.S. businesses seeking to expand globally have access to new markets;
    Guarantee that American workers are the mostly highly-educated and best-trained in the world; and
    Provide the financial and technical support necessary for companies to grow and expand.

    The goal of today’s insourcing forum at the White House is to begin the discussion necessary to accomplish all four of those goals.

    In the coming weeks, President Obama will put forward new tax proposals to reward companies that choose to invest or bring back jobs to the United States and to eliminate tax advantages for companies moving jobs overseas."