I tend to take a theoretical approach to evaluating the economy rather than an empirical approach, because the empirical approach is so short-term; over the long run, it serves to confirm what we expect theoretically. Tariffs hurt an economy; that’s a fundamental principle. Tariffs provide a small benefit to one sector while imposing a larger cost on everything else. Hence, Mr. Trump’s tariffs are hurting the economy. It might take a while for those results to become clear, but there’s no question as to the ultimate outcome.
Mr. Trump’s tax cuts give us an example of short-term benefits versus long-term costs. Sure, borrowing lots of money (the ultimate effect of the tax cuts) makes for good times in the short term. Over the long term, however, the tax cuts will hurt the economy by imposing higher interest rates on everybody.
Another stupid card trick Mr. Trump pulled has been his elimination of many government regulations regarding health and safety. These regulations produce long-term benefits in the form of reduced health care costs, but impose short-term costs by reducing the efficiency of businesses. By cutting back on such regulations, Mr. Trump boosts the economy — for the moment. The costs will be paid in the future, under the administration of a future President whom stupid Americans will blame for poor economic performance.
Anyway, thanks for providing the detailed empirical information that confirms what we all expected. It’s only a matter of time before reality catches up with Mr. Trump.