Monday, December 5, 2016

Donald Trump in the White House [feedly]

Donald Trump in the White House
http://cepr.net/publications/op-eds-columns/donald-trump-in-the-white-house

Dean Baker
The Hankyoreh, December 4, 2016

See article on original site

I was obviously badly mistaken in my assurances that Donald Trump would not win the election. Why was I so wrong?

First, everyone should know that most voters did not support Donald Trump. While some votes are still being counted, Clinton has a lead in the nationwide popular vote of more than 1.8 million or roughly 1.5 percentage points. When the final numbers are in, it is quite likely her margin will exceed 2.0 million votes.

Trump will still win because he had more electoral votes. These are awarded as winner take all on a state by state basis. This means that Clinton effectively wasted huge numbers of votes by running up large margins in the biggest states, while Trump won a number of states by very small margins.

Putting this issue aside, Trump managed to do much better than the polls had predicted in a number of key industrial states. As a result he was able to win several large states, like Michigan, Wisconsin, and Pennsylvania, which had voted twice for President Obama and were thought to be safely in Hillary Clinton's column.

Part of the story is that her support was down somewhat from President Obama's among African Americans. While she still won the African American vote by an overwhelming margin, a substantial number of African Americans who came out to vote for Obama chose not to support Clinton.

But the more important part of the story is that Trump managed to have an unexpectedly large victory among white working class voters. These are defined as whites without college degrees. Obama lost this group by a substantial margin in both his campaigns, but exit polls showed Clinton losing to Trump among these voters by an even larger amount of almost 40 percentage points. Her margins among African Americans and Hispanic voters were not large enough in the key states to overcome these huge margins.

It seems this deterioration was not picked up in polls in part because many Trump voters were not people who usually vote. Polls typically weed out people who are not considered likely to vote, usually by asking respondents if they voted in prior elections. It appears that many people who did not vote in 2012 or 2008 came out to vote for Trump. He appealed to many white working class voters in ways that previous Republican nominees had not.

To some extent this greater appeal may have been attributable to his willingness to more openly embrace racist, xenophobic, and misogynist views than his predecessors. Republicans have often made racially loaded comments, but few would go as far in saying things like a judge could not be impartial in a court case because he had Mexican ancestry. Many explicitly racist groups openly embraced Trump's candidacy.

However part of Trump's appeal with the white working class was undoubtedly due to the fact that he promised to improve their economic plight. He promised to bring back manufacturing jobs that had been lost due to the growth of the trade deficit in the last two decades. He also promised to bring back coal mining jobs, which he claimed were lost due to environmental regulations.

Unfortunately for the working class people who supported him, the agenda Trump has put forward offers them little basis for hope. While he may be able to engineer some reduction in the trade deficit if he focuses on currency values, it is unlikely that many of the new manufacturing jobs will be located in the communities that lost them. Even in a best case scenario, we are unlikely see the return of more than one-third of the six million manufacturing jobs that have been lost since 2000.

As far as the coal mining jobs, there is little hope of anything except the most trivial job gains. The problem is that these jobs were not actually lost because of environmental regulation. They were lost because of increased productivity which drastically reduced the demand for mine workers. In more recent years the major cause of job loss in coal mining has been the availability of cheap natural gas obtained from fracking. Trump actually proposes to further ease restrictions on fracking which will make the prospects of the coal industry even bleaker.

In fact, Clinton clearly had the better agenda for working class voters. She proposed paid family leave for parents of young children or for those caring for sick family members. She also supported assistance with child care costs and free college for children from working class families.

Unfortunately few working class people ever heard about this agenda. Part of the problem was the media coverage of the campaign. It gave an enormous amount of attention to Clinton's improper use of a private e-mail server as secretary of state. This and other minor scandals dominated the newspaper and broadcast coverage of the campaign, with economic issues almost completely ignored.

However Clinton also bears some of the blame. Her own ads largely focused on attacking Trump's character rather than highlighting her stands on issues. This made it easy for Trump to paint her as the ally of Wall Street and the supporter of trade deals that sent jobs overseas.

It is difficult at this point to know how Trump will govern since so many of his campaign pledges were contradictory or impossible. He also has the problem that his business empire creates massive problems of conflicts of interest. Unlike every past president over the last half century, he does not plan to put his assets in a blind trust. For my column next month I may have a clearer of what a Trump presidency will look like.


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Our Broken Budget and More [feedly]

Our Broken Budget and More
http://www.wvpolicy.org/our-broken-budget-and-more/

Jennifer Jett Prezkop writes, "West Virginia's financial situation is a precarious one at best," in her West Virginia Executive Magazine article. Read.
WVCBP Executive Director Ted Boettner had this to say on the matter: "policymakers will need to address the revenue problems in order to improve the state's fiscal health and make much needed investments that will help the state's economy."
"Policymakers need to take a more balanced approach by exploring more progressive options," Boettner added.
With President-elect Donald Trump's promise to bring back West Virginia's coal industry, WVCBP Executive Director Ted Boettner explores "What will it take for coal to make a comeback?" in this blog post. Read.
According to the latest forecast from West Virginia University, West Virginia will extract 80 million tons of coal per year for the foreseeable future. The state's production figure would need to be much higher — 140 million tons per year or at least 100 million — for the state's coal industry to be revived.
In the News
This week, Governor Tomblin announced a statewide $11.1 million cut to K-12 schools.
The Inter-Mountain talks with Upshur County Board of Education officials and WVCBP Executive Director Ted Boettner about the cuts, which Boettner says are just the beginning. Read.
"Our budget gap next year is going to be in excess of $350 million. There is going to be a large debate on how to close that gap," Boettner said. "Businesses won't invest in West Virginia if they don't know whether infrastructure is going to be maintained or that state schools will produce the workforce they need."
WVCBP Executive Director Ted Boettner discusses President-elect Donald Trump's campaign promise to bring back West Virginia's coal industry in this Public News Service story. Read.
"The chances of a rebound, especially in southern West Virginia, are close to zero," Boettner said of the coal industry.
"According to the  WVCBP , the decline in state coal production is being driven by cheap natural gas, low-cost wind and solar, competition from coal mined in Western states, and the fact that the easy-to-get Appalachian coal is gone."
Andrew Brown writes about U.S. Human and Health Secretary Sylvia Mathews Burwell's visit to West Virginia's Capital City in the Charleston Gazette-Mail. Read.
WVCBP Policy Outreach Coordinator Tara Martinez participated in the event's panel discussion, speaking about the importance of maintaining the Affordable Health Care Act (Obamacare) and its Medicaid expansion provision. Her daughter, who needs the life-saving Epipen drug, is insured through the  Children's Health Insurance Program (CHIP).
Martinez told the crowd she didn't know what the family would do if they had to pay out of pocket for the Epipen prescriptions.
Upcoming Events 
West Virginians for Affordable Health Care is hosting its annual reception and fundraiser on Friday, December 9 at the University of Charleston.
Malene Smith Davis is the event's featured speaker and President and CEO of Capital Caring, the first and largest hospice and palliative care organization in the country.
Register before December 5 online at wvahc.org, by calling 681.256.9008 or emailing info@wvahc.org.

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Links for 12-05-16 [feedly]

Links for 12-05-16
http://economistsview.typepad.com/economistsview/2016/12/links-for-12-05-16.html

Trade, Facts, and Politics [feedly]

Trade, Facts, and Politics
http://economistsview.typepad.com/economistsview/2016/12/trade-facts-and-politics.html

Paul Krugman responds to Tim Duy:

Trade, Facts, and Politics: I see that Tim Duy is angry at me again. The occasion is rather odd: I produced a little paper on trade and jobs, which I explicitly labeled "wonkish"; the point of the paper was, as I said, to reconcile what seemed to be conflicting assessments of the impacts of trade on overall manufacturing employment.
But Duy is mad, because "dry statistics on trade aren't working to counter Trump." Um, that wasn't the point of the exercise. This wasn't a political manifesto, and never claimed to be. Nor was it a defense of conventional views on trade. It was about what the data say about a particular question. Are we not allowed to do such things in the age of Trump? ...

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Desperately Searching For A New Strategy [feedly]

Desperately Searching For A New Strategy
http://economistsview.typepad.com/economistsview/2016/12/desperately-searching-for-a-new-strategy.html

Tim Duy:

Desperately Searching For A New Strategy, by Tim Duy: President-Donald Trump's renewed call for a 35% import tax on firms that ship jobs out of the United States triggered the expected round of derision from an array of critics, both on the left and the right. The critics are correct. It is indeed a terrible idea. One sure way to discourage job creation in the US is to guarantee that firms will be punished if they need to layoff employees in the future. It is just bad policy, plain and simple.

But if that's your takeaway, I think you are making a mistake.

Whether or not Trump can or should attempt to reverse the decline in manufacturing jobs is not the big story here. He can't. The real story is that he continues to tap into the anger of his voters about being left behind. That will give him much more power than our criticisms will take away.

Politicians, aided by economists, have long ignored the negative impacts of trade-induced structural change. Indeed, they have even cheered it on. After all, the process "releases resources" for use in other, more productive parts of the economy. Those workers are just "low-skilled" workers. The US needs more "high-skilled" workers anyway.

Fact: Workers hate being referred to as "low-skilled."

How we respond to Trump is important. If we simply fall back on our standard numbers, we lose. If we confidently predict that TPP is a big win because it will add 0.5% to GDP by 2030, we lose. If we just use this as an opportunity to reiterate the importance of a college degree, we lose. We have been doing this for decades, and it helped deliver Trump to office.

As an example, take Paul Krugman's latest on trade. I don't want to keep picking on Krugman, but he epitomizes traditional economic thinking on international trade. He concludes with this:

But what about the now-famous Autor-Dorn-Hanson paper on the "China shock"? It's actually consistent with these numbers. Autor et al only estimate the effects of the, um, China shock, which they suggest led to the loss of 985,000 manufacturing jobs between 1999 and 2011. That's less than a fifth of the absolute loss of manufacturing jobs over that period, and a quite small share of the long-term manufacturing decline.

I'm not saying that the effects were trivial: Autor and co-authors [sic] show that the adverse effects on regional economies were large and long-lasting. But there's no contradiction between that result and the general assertion that America's shift away from manufacturing doesn't have much to do with trade, and even less to do with trade policy.

Nothing is wrong with the analysis here. But I think Krugman is downplaying the transition costs, especially regional impacts. Politically, that is the important part. Economists tend to just play lip-service to the negative effects as we seek what is perceived to be the bigger prize, the aggregate effects. Fundamentally. Krugman is looking for what we got right in trade theory, and he finds it in Autor et al.

For me, Autor et al is not about what we got right in trade theory, but what we got wrong. Spectacularly wrong:

The importance of location for evaluating trade gains depends on how long it takes for regional adjustment to occur. A presumption that US labor markets are smoothly integrated across space has long made regional equilibration the starting point for welfare analysis. The US experience of trade with China makes this starting point less compelling. Labor-market adjustment to trade shocks is stunningly slow, with local labor-force participation rates remaining depressed and local unemployment rates remaining elevated for a full decade or more after a shock commences. The persistence of local decline perhaps explains the breadth of public transfer programs whose uptake increases in regions subject to rising trade exposure. The mobility costs that rationalize slow adjustment imply that short-run trade gains may be much smaller than long-run gains and that spatial heterogeneity in the magnitudes of the net benefits may be much greater than previously thought. Using a quantitative theoretical model, Caliendo et al. (2015) find that in the immediate aftermath of a trade shock, constructed to mimic the effects of growth in US imports from China, US net welfare gains are close to zero. The ultimate and sizable net gains are realized only once workers are able to reallocate across regions to move from declining to expanding industries. Establishing the speed of regional labor-market adjustment to trade shocks should capture considerably more attention from trade and labor economists.

The speed of regional labor market adjustment to shocks is agonizingly slow in any area that lacks a critical mass of population. Rural and semi-rural areas remain impacted by negative shocks for at least a decade, but often longer. Relative to life spans, in many cases the shocks might as well be permanent.

And note that this is not just about negative trade shocks. Trade is an easy punching bag for Trump, but his message carries wider because we are really talking about structural shocks in general. For example, rural towns in Oregon where devastated by the collapsed of the timber industry in the mid-80s. Here is what the New York Times wrote about Oakridge, Oregon a decade ago:

For a few decades, this little town on the western slope of the Cascades hopped with blue-collar prosperity, its residents cutting fat Douglas fir trees and processing them at two local mills.

Into the 1980's, people joked that poverty meant you didn't have an RV or a boat. A high school degree was not necessary to earn a living through logging or mill work, with wages roughly equal to $20 or $30 an hour in today's terms.

But by 1990 the last mill had closed, a result of shifting markets and a dwindling supply of logs because of depletion and tighter environmental rules. Oakridge was wrenched through the rural version of deindustrialization, sending its population of 4,000 reeling in ways that are still playing out.

Residents now live with lowered expectations, and a share of them have felt the sharp pinch of rural poverty. The town is an acute example of a national trend, the widening gap in pay between workers in urban areas and those in rural locales, where much of any job growth has been in low-end retailing and services.

Trump is speaking to all of these workers, not just the trade-impacted workers. And you can complain that they don't matter, they aren't high-skilled workers, that the economy is shifting away to urban areas, that they should just move. In the rural Oregon case, you can add in that the big (and labor-intensive) trees were almost gone anyway, that technology was taking over at the logging site and at the mill, that falling transportation costs meant you didn't need to mill locally.

None of that works because all you are doing is telling people they have no value relative to the lives they knew.

We don't have answers for these communities. Rural and semi-rural economic development is hard. Those regions have received only negative shocks for decades; the positive shocks have accrued to the urban regions. Of course, Trump doesn't have any answers either. But he at least pretends to care.

Just pretending to care is important. At a minimum, the electoral map makes it important.

These issues apply to more than rural and semi-rural areas. Trump's message – that firms need to consider something more than bottom line – resonates in middle and upper-middle class households as well. They know that their grip on their economic life is tenuous, that they are the future "low-skilled" workers. And they know they will be thrown under the bus for the greater good just like "low-skilled" workers before them.

The dry statistics on trade aren't working to counter Trump. They make for good policy at one level and terrible policy (and politics) at another. The aggregate gains are irrelevant to someone suffering a personal loss. Critics need to find an effective response to Trump. I don't think we have it yet. And here is the hardest part: My sense is that Democrats will respond by offering a bigger safety net. But people don't want a welfare check. They want a job. And this is what Trump, wrongly or rightly, offers.


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What Ben Carson should learn about housing segregation [feedly]

What Ben Carson should learn about housing segregation
http://www.epi.org/blog/what-ben-carson-should-learn-about-housing-segregation/

President-elect Donald Trump proposes to nominate Ben Carson to head the Department of Housing and Urban Development (HUD). Mr. Carson has expressed opposition to the Obama administration's new requirement that cities and suburbs develop plans to end their segregation or face possible loss of federal funds. He calls this "social engineering," and says that such well-intentioned programs have unintended consequences that their proponents later come to regret. Instead, he says, emphasis should be placed on revitalizing distressed minority neighborhoods in central cities.

What Mr. Carson's view ignores is that the racial segregation of every metropolitan area in the nation is also the result of "social engineering"—the purposeful efforts of federal, state, and local governments to create and enforce the residential separation of the races. What the Obama administration has begun are plans to undo this social engineering. Failing to continue these plans doesn't avoid social engineering—it perpetuates it.

Read more


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Eastern Panhandle Independent Community (EPIC) Radio:Occupy West Virginia On EPIC Radio -- Dec 6, 2016

John Case has sent you a link to a blog:



Blog: Eastern Panhandle Independent Community (EPIC) Radio
Post: Occupy West Virginia On EPIC Radio -- Dec 6, 2016
Link: http://www.enlightenradio.org/2016/12/occupy-west-virginia-on-epic-radio-dec.html

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