In the last post I discussed Trump's position on the environment and how his decisions regarding it are made. One of the main points was that policy is set, not on how it effects the environment and by extension Americans' health and well-bring, but on bottom-line costs and supposed job creation. I say "supposed", because rollback of various regulations will likely cause costs to the affected corporations to decrease, but that this doesn't necessarily translate into more jobs. Companies, especially large companies, do not automatically pass on increased profits to their employees. The only legal responsibility of any board of directors or management team is to maximize profit for their shareholders. Employment levels at any company will be set according to the minimum needed to produce their product in quantities that meet the demand. Jobs will be created only if an additional demand for the product materializes, not because the profit margin increases. The coal industry is a great example. The demand for coal is down due to competition from other energy sources; in addition, fewer workers are needed due to increased automation. Scrapping regulation isn't going to resurrect coal industry jobs.
Trump knows this.
Trump, despite his history of bankruptcies and stiffing his contractors, knows how business works. His Mar-a-Lago golf club hires temporary workers on immigrant visas because it would cost more to pay local people. I'm sure that he's never advocated hiring extra people just because the balance sheet was looking good that year. So what is his motivation for talking as if repealing regulations that cost companies money is a good thing? It can only be that he is working to make life better for, not the coal miner or assembly line worker, but for the owners of the coal mines and the factories. This is an updated version of the trickle-down economics of the eighties. Which didn't work in the eighties.
But what about the "record job creation" and the stock market setting new records every week? Surely that means that Trump knows what he's doing. Right?
Let's look at jobs. During Trump's first six months in office, 1.1 million jobs were created. Is that a record? Is that a good number? Any increase in employment is good, but not exactly a record; approximately the same amount of jobs were created during Obama's last six months in office, so we're essentially still coasting along on 2016's economy. Obama's first six month of his second term had an increase of 1.2 million jobs - other presidents had similar numbers. (Obama's first six months of his first term saw a loss of 3.4 million jobs - coming off a nationwide recession).
How about the stock market? Here we see a similar trend. Trump likes to brag about record setting Dow Jones numbers, and technically he's correct. We are continually setting new records, however, since 2010 the stock market (based on the Dow) has been on a steady upward curve that has continued into Trump's term. To be fair, many economists predicted that Trump's unpredictability would cause the market to drop, which hasn't happened. But is the precipitous rise in stock prices indicative of a healthy economy? Maybe. It's at least an indicator that the people who are buying stocks think that the economy is going to continue to be healthy for a while. But before we get too excited about Trump's stock market savvy, remember that just this week he talked about the increase in value of the Dow Industrial Average stocks as if they negated part of our national debt.
Trump has no real knowledge of economics, or at least doesn't care about the rules of economics. He's all about talking about helping American workers and bringing jobs back, but his actions thus far have been, by chance or design, have benefited other billionaires, with scant evidence that the lot of working Americans is improving.
But slogans, we have good slogans - the best slogans.
No comments:
Post a Comment