The Trump Wirtschaftswunder? Hardly.

Trump and his true believers make outrageous claims that he has created the best economy in history.  Let’s do a little analysis of those claims.

Let’s take a look at some of the trends.  First, job growth.  The job growth under Trump has been impressive and continuous, but it is continuing a trend that started under Obama and has continued now for 106 months straight.  Here is a graph that depicts that continuous growth:

Looking at the average change, the part of 2019 in this report saw the slowest increase in employment — an increase of 167,000 jobs each month — since the 86,000 added each month on average in 2010. Trump’s overall monthly average is higher than Obama’s, but the average monthly job increase under Trump has been slower than it was in Obama’s second term.  So job growth under Trump is fine, but not worthy of superlatives.

The second, and related, area to analyze is unemployment.  Here is the Bureau of Labor Statistics chart for unemployment since 2010:

Unemployment is at historically low levels, but it is clear from this chart that the decline is a continuation of a steady decline since the start of the recovery in 2010.  Nothing extraordinary here.

The third area to look at is general economic growth – generally considered to be characterized by real GDP.  Here is a chart of real GDP growth from 1990 to 2018. 

The statistics for 2019 are similar, with 3.1% in Q1, 2.0% in Q2 and 2.1% in Q3 and Q4 for an average growth rate of 2.3% in 2019.  The overall for 2018 was 2.9%, powered primarily by a sugar high from the 2017 tax break.  These results indicate a stable growing economy, but they are hardly indicative of the astronomical growth that Trump predicted both before his election and after his tax breaks were initiated – predictions from 4% to 6%.  And they are certainly not evidence, as Trump claims, of the best economy in history!

The last category that I will look at is the stock market and corporate earnings.  This is an area where Trump can truly claim to have made a big impact.  The Dow Jones Industrial Average (DJIA) has increased about 60% from 17,900 in early November 2016 to approximately 28,800 today.  Corporate profits also soared after the Trump tax break, though not in the same proportion as the stock market increases. 

There is no doubt that people who benefit from equities are much better off (on paper!) today than in 2016.  However, only a small percentage of Americans invest in the stock market.  A greater percentage will benefit because their 401k’s are in the stock market, but a majority of Americans have NO benefit from stock market increases.

So the economy is doing well under Trump, but certainly not as well as he and others claim.  And there are some disturbing statistics underlying these economic gains that could foretell trouble ahead.

Trump has repealed numerous regulations to stimulate the economy.  It is impossible to evaluate the effect of those regulatory changes on the numbers, and it is also impossible to predict the environmental and financial consequences of those regulations no longer being in place.  Suffice it to say that in the past the relaxation of regulations has generally resulted in bad behavior that has serious repercussions for our society.  There is a balance in maintaining a ‘free market’ and protecting the society from bad actors with regulations.  I would guess that Trump has caused the pendulum to swing too far in the laissez faire direction and there will be a price to pay in the near future.

Trump also pushed through major tax breaks, both for corporations and for individuals.  These tax breaks are the mirror side of the stimulus spending that Obama attempted throughout his presidency.  Obama was stymied because of deficit hawk opposition.  Those same hawks remained astonishingly silent as Trump increased our annual deficit to over a trillion dollars (expected deficit for 2020).  Here is a graph of the budget deficit growth as a % of GDP from 2015 to 2019:

  

The deficit was $585 billion in 2016 and was $984 billion in 2019.  That is a 68% increase in the deficit!  The tax break was sold to the public as a break-even deal because the increased revenue from growth would offset the expenses, but that simply did not occur and there is no indication that it will occur in the future.  Trump has traded potential long-term economic ills for short-term economic gains.  The sugar pill that the tax break gave to the economy may wear off very soon.

I will not address in detail the other major Trump initiative of using tariff wars to stimulate the economy and bring industry back to the U.S.  However, it is interesting to note that our trade deficit has actually increased by 30% since Trump took office.  

And manufacturing production has been on a steady decline - hardly the promised ‘made in America’ revival that Trump promised! 

And one last point – the revival of the coal industry, a major platform plank for Trump in 2016, has not occurred.  Coal consumption has dropped about 22% since Trump took office.  It will not return – you can take that to the bank!

So the Trump Wirtschaftswunder is not quite so wonderful or miraculous after all.  The economy is in good shape, unemployment is at record low levels and the stock market is booming.  But these are not entirely attributable to Trump (except perhaps the stock market), and the budget deficit, stock market bubble and manufacturing languor seem to me to be dark clouds on the horizon.

Admittedly, I am not a Trump fan, in fact I detest the man and feel that he is the very antithesis of a good leader.  I believe he has built a house of cards in the last 3 years and I fervently hope that it comes crashing down on him before the election later this year.  Otherwise it is quite possible that a Democratic president will once again inherit (a la Obama) the wreckage of a Republican president’s tenure.  We shall see.

The Illusion of Political Harmony

The current partisan rancor in our society may seem extreme and unusually vicious, but a deep read of history makes it clear that respectful bi-partisanship is the rare exception rather than the rule.  Though we fear that today’s highly emotional political bickering and culture wars may somehow cause irreversible rifts in our national unity, the emotions in play may not be nearly as long-lasting or as corrosive as others in our past.

What is perhaps more remarkable than the current enmity is the predisposition that all humans appear to have for highly emotional opinions and positions on various issues.  The irrational rage and fury that accompany any political activity seem dramatically out of proportion to other human behaviors. 

It may be that the anonymity of political belief is partly to blame, like the driver whose road rage is so explosive until he or she sees a neighbor behind the wheel of the other car.  Most of us develop our political ideology in a cocoon of our own thoughts and the echo chamber of like-minded people.  

Our outrage grows as we see others with the audacity to question our beliefs and come to completely different conclusions.  And sadly, we find it difficult to ‘cross the aisle’ in civil discussion.  Our emotions quickly raise the conversation to a fever pitch and we stop listening or probing thoughtfully.

Another factor in creating disharmony is the media (both traditional and social) scrutiny and amplification of every issue.  People find it expedient to voice extreme and provocative opinions in order to get coverage and ‘views’.  Dog whistle phrases, stereotypes, generalizations and other tropes become ubiquitous.  Thoughtful, data-rich analysis is a rarity.  We are far more entertained by a candidate ‘scoring points’ than elucidating a carefully thought out position.

American political life has always been tumultuous.  From the early battles over federalism versus democratic-republicanism, which led to incredibly vitriolic personal attacks, through the multi-decade battle over slavery, to the violent years of reconstruction, the years of anti-immigrant fever (which has never really abated), the years of industrial robber barons and the opposing worker rights movements, the prohibition years, the years of feverish accusations over communism and socialism, and to the  divide over the Vietnam War and the counter-culture movement, the US has never really had a lengthy period of political harmony.

Remember those oft-romanticized halcyon days of the fifties?  The economy may have been great (we were, after all, the only industrial power left standing after a cataclysmic world war that killed over 100 million people!) but things were not so friendly in the political sphere.  The McCarthy witch hunts and general paranoia about communism created a rather toxic environment for politicians. 

And the sixties brought a potent mix of civil rights, the Great Society, the Vietnam War, the sexual revolution and the general counter-culture movement.  The reactionary Moral Majority of the Nixon period was not so very different from the religious right and tea party of today.

One of the primary examples of presumed bi-partisanship is the era of Ronald Reagan and Tip O’Neill.  Their purported chumminess has been debunked often but the myth persists.  The compromises that were reached in that period only came about after initial hardball efforts that softened up the opponents.  O’Neill referred to Reagan as ‘Herbert Hoover with a smile’ and ‘a cheerleader for selfishness’.  Reagan referred to Tip as ‘a round thing that gobbles up money’.   Like most human beings of different viewpoints, when they actually met and sat down together, they managed to find enough in common – their Irish ancestry for example – to appear cordial.

No, the sad truth is that human beings are simply not good at working rationally through issues.  We quickly become emotional, inarticulate children in the face of opposing views.  Our nation has always had many challenges – it was created and grew through immigrants who conquered and drove out the original inhabitants and then imported slaves to expand the economy.   

Indeed, every nation has a set of ancient ills that continues to plague its modern attempts to create harmony.  The complexity of these issues makes it easy for many divergent opinions to exist.  We just need to become mature enough as human beings to work rationally together to negotiate common goals.  It shouldn’t be so hard.

Middle East War and Peace

Trump’s decision to assassinate one of the most important Iranian military and political figures has ratcheted up the conflict in the Middle East rather dramatically.  The U.S., which until recently appeared to be attempting to reduce its military role in the region, could now easily be drawn into a ‘hot’ war with Iran as response and counter-response to the assassination occur.

Americans love to see the world in black and white, good and evil.  A great many Americans will believe that Trump acted as a force of ‘good’ in killing General Soleimani.  He was, after all, the architect of many military and paramilitary (in our parlance ‘terrorist’) activities throughout the region.  For political expediency, our leaders will frame his death in terms of getting rid of a ‘bad actor’ and portray his end as a powerful deterrent to Iran for future misdeeds.

But when has the death of an adversary’s leader ever done anything but inflame passions and lead to further hatred, defiance and bloodshed?  There are dozens of Soleimani’s ready to step into his role, and they will certainly be emboldened to make even more radical antagonistic moves in the future.

And can we really say that Soleimani was any more 'evil' or dasterdly than a host of other strongmen throughout the world?  Assassinating powerful men has never been the path to more security or a better world.  It may satisfy our yearning for frontier justice, but it will do nothing but inflame the passions of our adversaries and lessen any potential for easing tensions.

The Middle East is a quagmire of tribal and religious divisions, further exacerbated by the constant irritant that Israel and its increasing settlement of formerly Palestinian territory provide.  There is ultimately no right and wrong here.  These are age-old resentments and power struggles that have been made worse by the unintended but foreseeable consequences of meddling by world powers over the last 150 years – the dismantlement of the Ottoman empire, the Balfour Agreement, the formation of Israel, the CIA-sponsored coup in Iran that installed the Shah, and the exploitation of oil by multi-national corporations and their super-wealthy Arab sponsors and benefactors, to name a few.

Our foreign policy in this region over the last 40 years is characterized by one bone-headed mistake after the next – our cold-war support of Jihadists and Islamic extremism to counter the Soviet Union in Afghanistan (which contributed, over time, to the rise of Al Qaeda, Daesh/Islamic State and a long list of other Islamic extremist groups); our support of Iraq and Saddam Hussein in the Iraq/Iran war followed by our two wars on Iraq, thus alienating, radicalizing and impoverishing those two nations and creating an ever closer bond between them; our continued unequivocal support for and armament of Saudi Arabia, the source of the most extreme form of fundamentalist Islam in the region and a horribly repressive regime; our unwillingness to use our influence with Israel to stop their settlement of the West Bank and push them to work toward an equitable Palestinian state solution.  Our post-9/11 wars and subsequent attempts at nation-building in Iraq and Afghanistan may go down in history as one of the greatest ‘empire’ mistakes ever.

The region presents complex problems to be sure.  The U.S. has operated partially on the basic principle that it must be the guarantor of stability in the region to protect world oil supplies.  But like so many world powers before us, the U.S. has let hubris and personal (Presidential) animus or caprice drive its foreign policy in this region.  Jimmy Carter’s weak position in the latter part of his presidency led to an over-reaction to Soviet incursions into Afghanistan, which were then increased substantially under the hawkish Reagan.  The first Bush also allowed his own political weakness and need to show decisiveness push him beyond economic measures to war against Iraq in 1990-91.  And the second Bush was clearly personally motivated to allow his gang of neo-cons to push a combined war and ill-fated regional nation-building after 9/11.

Would the Middle East be in a worse state today if none of these wars had been prosecuted?  Can the expense of lives, limbs and treasure be seen as anything but an incredible debacle for the U.S.?  How many millions of lives have been shattered by our military prowess?  Iraq and Afghanistan are horribly broken countries now.  Can we really convince ourselves that we have been a force for good in this region?

As we head toward a climate disaster fueled by carbon emissions from oil and gas, this region may eventually become as unimportant and neglected by the U.S. as Africa and Latin America are now. How quickly we learn to ignore hot spots in the world (remember Somalia?  Bosnia?) once they no longer seem to have 'strategic' relevance. What kind of moral high road is that?

Iran, Saudi Arabia, Israel and Turkey are all vying for regional power in the Middle East.  Now is not the time for more war and saber-rattling.  Now is the time for decreasing tensions and creating opportunites for dialog between nations.  Now is the time for diplomacy and rational strategies for conflict resolution.  Alas, our head of state is neither diplomatic or rational.  And so it goes.