Stiglitz Throws Down the Gauntlet to America's President-Elect

Donald Trump has promised to "make America great again." That was his whole shtick and he rode it to an upset win over the odds-on favourite, Hillary Clinton.

Unfortunately Trump was feeding his Gullibillies a diet rich in horseshit. Now that they're used to the taste he has to deliver. How to make America great again, how?

Former World Bank chief economist and Nobel laureate, Joe Stiglitz, has the answers - if Trump is interested (hint: he's not).

Over the past third of a century, the rules of America’s economic system have been rewritten in ways that serve a few at the top, while harming the economy as a whole, and especially the bottom 80%. The irony of Trump’s victory is that it was the Republican party he now leads that pushed for extreme globalisation and against the policy frameworks that would have mitigated the trauma associated with it. But history matters: China and India are now integrated into the global economy. Besides, technology has been advancing so fast that the number of jobs globally in manufacturing is declining.

Trump's Great "Jobs Scam"

The implication is that there is no way Trump can bring a significant number of well-paying manufacturing jobs back to the US. He can bring manufacturing back, through advanced manufacturing, but there will be few jobs. And he can bring jobs back, but they will be low-wage jobs, not the high-paying ones of the 1950s.

If Trump is serious about tackling inequality, he must rewrite the rules yet again, in a way that serves all of society, not just people like him.
The first order of business is to bolster investment, thereby restoring robust long-term growth. Specifically, Trump should emphasise spending on infrastructure and research. Shockingly for a country whose economic success is based on technological innovation, the GDP share of investment in basic research is lower today than it was a half-century ago.

Trump the Inequality Slayer - (Giggle)

...A comprehensive approach is also needed to improve America’s income distribution, which is one of the worst among advanced economies. While Trump has promised to raise the minimum wage, he is unlikely to undertake other critical changes, such as strengthening workers’ collective bargaining rights and negotiating power, and restraining CEO compensation and financialisation.

Regulatory reform must move beyond limiting the damage that the financial sector can do and ensure that the sector genuinely serves society.

Trust Busting, Teddy Roosevelt Style

In April, President Barack Obama’s council of economic advisers released a brief showing increasing market concentration in many sectors(pdf). That means less competition and higher prices – as sure a way to lower real incomes as lowering wages directly. The US needs to tackle these concentrations of market power, including the newest manifestations in the so-called sharing economy.

Dismantling America's Home Grown Tax Havens - For the Rich

...An obvious target should be to eliminate the special treatment of capital gains and dividends. Another is to ensure that companies pay taxes – perhaps by lowering the corporate-tax rate for companies that invest and create jobs in America, and raising it for those that do not. As a major beneficiary of this system, however, Trump’s pledges to pursue policies that benefit ordinary Americans are not credible; as usual with Republicans, tax changes will largely benefit the rich.

...Much has changed since President Ronald Reagan began hollowing out the middle-class and skewing the benefits of growth to those at the top, and US policies and institutions have not kept pace. From the role of women in the workforce to the rise of the internet to increasing cultural diversity, 21st-century America is fundamentally different from the America of the 1980s.

...The agenda I have just sketched is not only about the economy, it is about nurturing a dynamic, open, and just society that fulfils the promise of Americans’ most cherished values. But while it is, in some ways, somewhat consistent with Trump’s campaign promises, in many other ways, it is the antithesis of them.

My very cloudy crystal ball shows a rewriting of the rules, but not to correct the grave mistakes of the Reagan revolution, a milestone on the sordid journey that left so many behind. Rather, the new rules will make the situation worse, excluding even more people from the American dream.

What Stiglitz recommends all makes sense - to anyone setting out to implement Trump's "make America great again" promises. Trump, however, isn't of those ranks and neither are the Republican establishment leaders moving in to control him. Don't worry. He won't be held captive and waterboarded into concessions. All his handlers will do is to put in political language what already lurks deep inside Trump's guts.

But what of the poor Gullibillies? What will happen when they find out they've been had? The first thing is they really won't want to admit they've been conned by such an obvious blowhard. They'll settle and nothing works better than scapegoating. This could get ugly fast.