What’s the matter with Seymour, Indiana?

[Commenters have complained about a lack of posts on monetary policy.  What specific issues do you want me to address?  Also, keep in mind that most of my monetary policy posts are over at Econlog.  Otherwise, Trump posts will continue until morale in the comment section improves.]

For many years now, progressives have been asking “What’s the Matter with Kansas?”  That is, why do the lower income residents of places like Kansas vote against their economic interests? (It’s simply assumed that voting for the GOP is “obviously” against their interest, although it not clear to me why.  Nor is it clear why they don’t ask “What’s the Matter with the Upper East Side?”  Maybe they assume that rich Democrats are supposed to be idealistic while poor Republicans are not.)

For the past year we’ve been told that Trump’s 2.9 million vote loss to Hillary “proves” that most Americans don’t like trade (although polls show that they do.) Yes, it is true that Trump did well in areas that face import competition.  But what about areas that are the winners of globalization, such as Seymour, Indiana?

Demonising NAFTA helped Mr Trump to the presidency. But in reality millions of American jobs are supported by that pact. One of them belongs to Chris Gambrel, who builds vast diesel engines in Seymour, Indiana. It would be odd to think of Mr Gambrel, a skilled and brawny employee of Cummins, an engine-maker, as ignored or “forgotten”. He is proud of the “world-class” engines that he produces: 95-litre behemoths powerful enough to pull a cargo train. Three-quarters of them are exported to foreign customers for up to $1m apiece.

Free-trade rules, notably those provided by NAFTA, helped persuade Mr Gambrel’s bosses to build the giant engines in Seymour, rather than at a Cummins plant in India which almost won the work. America offered lower shipping costs and less red tape when exporting the engines, and—vitally—lower and fewer customs duties when components are imported from cost-effective suppliers around the world. Add on quick access to American engineers, and the Midwest was the most competitive site. Mr Gambrel’s job involves installing cylinder-heads made in Mexico, a task he carries out with a surgeon’s care.

Elsewhere at the Seymour plant, which employs 1,300 workers, whole assembly lines are kept profitable by supply chains that run to and from Mexico, a manager says; one of the lines “remanufactures” 16-litre engines from parts stripped, cleaned and repaired at a Cummins plant in Ciudad Juárez. Experienced workers in Seymour can earn $28 an hour or more. Cummins pays up to $7,000 a year for employees to study for college degrees. The manager proudly notes that in ten years he can count hourly workers who left of their own accord “on one hand”.

So obviously this area would have no interest in Trump, right?

In 2012 Jackson County, of which Seymour is part, gave the Republican presidential candidate, the stiffly patrician Mitt Romney, 62% of its votes. In 2016 the county swung hard to Mr Trump, giving the NAFTA-bashing populist 73%.

Mr Gambrel suggests that Seymour was ready to take a gamble: “People were tired, they wanted change.” Asked if he fears that Trumpian brinkmanship may imperil his job, the engine-maker shrugs. “Trade deals come and go. There probably is a price to pay,” he says. “But I’m far enough away that I’m insulated. And the press blows everything out of proportion.” As for the Mexican components that Mr Gambrel installs, he would like to see them made in America. At root he trusts Mr Trump: “The man’s a billionaire, he’s made some shrewd moves.”

Another Cummins worker, Lew Findley, concedes that cheaper Mexican components may save some American jobs. But still his hunch is that workers like him are safer under President Trump, who he feels shares his values on other questions, from guns (good) to abortion (bad). Seymour’s Republican mayor, Craig Luedeman, says that issues such as gun rights and immigration explain much of Mr Trump’s support. But unlike the Cummins workers, the mayor fears what a trade war could do to his city: “We’re not in a regional economy any more, we’re global.”

I cringe whenever I hear average voters tell reporters that Trump must be smart because he’s a billionaire.  George Soros is far richer—is he far smarter?  (Bad example, he is.  But you get my point.)

PS.  You’ve probably been wondering where Trump gets his real news from:

Way back on Friday, President Trump declared that several news organizations — ABC, CBS, CNN, NBC, The New York Times — were “the enemy of the American people.” You know who’s not the enemy, in his book?

Alex Jones.

Mr. Jones, in case you aren’t aware, is the conspiracy-theorizing, flame-throwing nationalistic radio and internet star who’s best known for suggesting that Sept. 11 was an inside job, that the Sandy Hook school shooting was “completely fake” and that the phony Clinton child-sex trafficking scandal known as Pizzagate warranted serious investigation (which one Facebook fan took upon himself to do, armed with an AR-15).

Mr. Jones, 43, has been around for a while. Like every media outfit in the Trump era, his platforms have gotten record traffic and, he told me last week, seen increases in revenue, with ads for water purification systems and for supplements to enhance “brain force” and virility.

But he is apparently taking on a new role as occasional information source and validator for the president of the United States, with whom, Mr. Jones says, he sometimes speaks on the phone.

Oh wait, this story is from the NYT, so it’s obviously fake news.

PPS.  Trump no longer relies on the daily intelligence briefing that other presidents received.  Why should he trust the CIA, which is out to get him?  Better to get reports on Sweden from Fox News.

PPPS.  I do agree with America’s conservatives on one issue—it was outrageous for Berkeley to disinvite Milo Yiannopoulos just because he holds controversial views. It’s great to see America’s conservative movement stand up for free speech. Seriously, it’s good to know that America’s conservatives have zero tolerance for sexual predators.

PPPPS.  Under any other president, would this even have to be said?

U.S. Defense Secretary Jim Mattis said Monday the United States does not intend to seize Iraqi oil, shifting away from an idea proposed by President Donald Trump that has rattled Iraq’s leaders.

PPPPPS.  Here’s one Republican I can’t criticize:

President Donald Trump’s “constant fear-mongering’’ about terrorism is “irresponsible and dangerous.’’ He needs to “stop attacking the legitimacy of the judiciary.’’ He picked an attorney general with “anti-liberty” positions on surveillance and police seizure of property.

Those tough assessments come not from one of the president’s critics in the Democratic Party, but from a conservative Republican House member whose district decisively backed Mr. Trump in the election.

Rep. Justin Amash of Michigan has emerged as one of the leading Republican critics of the president, using a tool Mr. Trump himself often employs—an assertive presence on Twitter—to challenge and even taunt the president. While other House Republicans who were skeptical of Mr. Trump during the presidential campaign have since toned down their criticism, Mr. Amash, who has 100,000 Twitter followers, has remained a vocal critic.

Mr. Amash says his opposition is based on principle, as a libertarian concerned about government overreach and adherence to the Constitution.

 Pity there are so few like him.


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63 Responses to “What’s the matter with Seymour, Indiana?”

  1. Gravatar of Jerry Brown Jerry Brown
    20. February 2017 at 19:36

    Professor, I would like you to address what you see as far as the effects of different NGDP target levels. I know you have given me a few replies which are appreciated, but if you are looking for monetary policy topics, this is one I am curious about.

  2. Gravatar of Jerry Brown Jerry Brown
    20. February 2017 at 19:52

    One other thing is you might consider reposting some of your earlier articles occasionally, ones that you thought most important. I am sure there are a few I have missed, and probably there are some others like me that missed a few. And even if I already read them- it wouldn’t hurt to have a re-read often times. (You do question my reading comprehension fairly often)

  3. Gravatar of E. Harding E. Harding
    20. February 2017 at 20:15

    “Nor is it clear why they don’t ask “What’s the Matter with the Upper East Side?””

    -Clearly, you’ve never read What’s the Matter with Kansas. In it, Frank describes the increasing liberalization of his rich well-educated hometown of Mission Hills, Kansas, with it transforming from a conservative GOP bastion to a moderate GOP bastion to (Frank forecasts, if the Dems don’t change course) a solid Dem bastion (which it did become in 2016). He blames this on the Dems becoming a Woke Neoliberal party, and argues it must move backward to full populism/Sandersism. Read the book before you remark on it.

    “Bad example, he is.”

    -Doubt it. He’s not President, and his lies are at least as inane as Trump’s.

    “Oh wait, this story is from the NYT, so it’s obviously fake news.”

    -It is. I no longer trust any NYT story I read. Please don’t cite it; it’s Dem propaganda, as are all politically-related NYT stories. Change the title of the New York Times to the Blue Nation Review, and not a jot nor a tittle of its contents would change.

    “Why should he trust the CIA, which is out to get him? Better to get reports on Sweden from Fox News.”

    -Solid thinking. Trump should be giving the CIA its daily intelligence briefing.

    “U.S. Defense Secretary Jim Mattis said Monday the United States does not intend to seize Iraqi oil, shifting away from an idea proposed by President Donald Trump that has rattled Iraq’s leaders.”

    -Trump should fire this incompetent.

    “Here’s one Republican I can’t criticize:”

    -How about Rand Paul and Thomas Massie? They’ve kept their principles while supporting Trump. Like it or not, seriously advancing libertarian policies in the 2016 election required supporting Trump. I agree with half of Amash’s criticisms of Trump; many seem to be purely posturing.

    Cruz, though, is an utter hack, and is totally amoral and lacking principle. Glad I voted for Trump over him in the primary.

  4. Gravatar of E. Harding E. Harding
    20. February 2017 at 20:31

    Sample passages:
    https://books.google.com/books?id=AJKrMcOyQ3wC&pg=PA105&lpg=PA105&dq=%22the+people+of+mission+hills+support+gay+rights%22&source=bl&ots=AGB-ECVmun&sig=lFlrsxJsolLoVBiGU7wpcrfI_zc&hl=en&sa=X&ved=0ahUKEwi_jrzYrKDSAhWF14MKHTejDu0Q6AEIHDAA#v=onepage&q=%22the%20people%20of%20mission%20hills%20support%20gay%20rights%22&f=false

    Read up to page 109.

  5. Gravatar of E. Harding E. Harding
    20. February 2017 at 21:00

    More important sample passage (describing the consequences of Woke Neoliberalism as a Democratic political strategy):

    https://books.google.com/books?id=TMY2_2Zbnc8C&pg=PA244&lpg=PA244&dq=%22such+democrats+look+at+a+situation%22&source=bl&ots=HFdA5kPHau&sig=Og9uHg578TJb8LUEz-vkhEYNcWU&hl=en&sa=X&ved=0ahUKEwjO3tGFs6DSAhVk1oMKHTiaDG0Q6AEIMDAD#v=onepage&q=%22such%20democrats%20look%20at%20a%20situation%22&f=false

  6. Gravatar of John John
    20. February 2017 at 21:43

    I think it’s quite clear that “cultural identity” is mostly influencing voting patterns. That’s why education level was such a huge predictor of the vote. Let me just be a pundit for a second. From 1980-2000, your political party was mostly a function of occupation. In any given town, the miners and teachers would be Democrats, while the police and small business owners would be Republicans. Now all the gun owners are Republican and the espresso drinkers are Democrats.

    Recall that as recently as 2000, West Virginia and Oregon were swing states. Now West Virginia went massively Republican and Oregon massively Democrat. As a consequence, we also see strange examples of people voting against their economic best interest (as you’ve pointed out) since they are actually voting based on cultural solidarity instead.

  7. Gravatar of Ryan Murphy Ryan Murphy
    20. February 2017 at 22:15

    “What specific issues do you want me to address?”

    Wonkish public finance.

  8. Gravatar of Scott Freelander Scott Freelander
    20. February 2017 at 22:21

    Disturbingly, Jones tells his audience that fluoride is put into public drinking water to feminize men, even turning some of them gay or transgendered, to help both make them agree more with the liberals on some issues and to make them passive enough for the UN and a global Jewish banking cabal to physically take over America. It also is said to lower male fertility, of course.

    Not kidding. This is almost straight out of the Kubrick film. Hence, Jones sells water filters and male vitality supplements to counteract this globalist feminization conspiracy.

    Much of the American conservative movement long ago became nothing but a collection of scams. From Alex Jones, to Ann Coulter and Sarah Palin, it’s just a lot of lying trolls looking to push merchandise and dupe gullible people into donating to fraudulent super-PACs and presidential campaigns that double as book tours. Trump is simply the most audacious scammer of them all, lying constantly, but fooling his flock into believing he’s on their side and everyone aligned against him is a liar.

    More and more Republican politics resembles cults like the Church of Scientology. Many of the rank and file are zombies, while most of the few remaining honest intellectuals of the party jumped ship after Trump became the nominee.

  9. Gravatar of Scott Freelander Scott Freelander
    20. February 2017 at 22:25

    By the way, some of you might enjoy some of the debate in the UK Parliament over whether to deny Trump an official state visit.

    https://www.theguardian.com/politics/2017/feb/20/party-lines-drawn-as-mps-debate-just-how-stupid-donald-trump-really-is

    Never thought I’d see an American president discussed about this way. We are a laughing stock even in the governments of our closest allies.

    Are Trumpistas proud of this?

  10. Gravatar of Scott Freelander Scott Freelander
    20. February 2017 at 22:27

    talked about this way, rather

  11. Gravatar of msgkings msgkings
    20. February 2017 at 23:02

    Scott F. is exactly right in this thread. +100

    THIS is what is ultimately the problem with Trump, this pathetic man in the big chair.

  12. Gravatar of James James
    21. February 2017 at 00:31

    Why WOULDN’T you take the oil? Idealism is for wimps. Let me give you a lesson: life isn’t fair. The strong survive and live well; the weak don’t survive and live a crappy existence. I am sure you are the latter, since you are teaching at Bentley (some unknown school in the northeast) and live modestly with very little income. Trump is a realist. And quite frankly, it is about time we had one in Washington.

  13. Gravatar of Viking Viking
    21. February 2017 at 01:19

    Trump was way off about Sweden. Nothing exciting ever happens there.

    http://www.express.co.uk/news/world/770010/Police-shoot-rioters-violence-erupts-no-go-zone-PM-denies-Sweden-crisis

  14. Gravatar of dtoh dtoh
    21. February 2017 at 01:42

    @Scott,

    Who ever claimed Americans didn’t like trade or that Trump doesn’t like trade? Does it make you a buffoon to falsely imply they don’t like trade?

    What people don’t like are unfair trade deals, or incompetently negotiated trade deals, or trade deals that cause sudden and dramatic disruption.

    As for Cummins, think how much better the employees would be doing if Trump’s predecessors had negotiated better trade deals. If I were a Cummins employee I would certainly have been worried that Hillary was going to throw my job away or worse sell it in exchange for a contribution to the Clinton foundation.

  15. Gravatar of John Hall John Hall
    21. February 2017 at 04:44

    My cousin’s an orthodontist in Seymour. So I suppose indirectly he should be caring quite a bit about Trump’s trade policy.

  16. Gravatar of ssumner ssumner
    21. February 2017 at 06:18

    Jerry, I have so many old posts, it’s hard to find any given posts.

    1. The advantage of a low NGDP growth target is that it implies a lower tax rate on capital income.

    2. The advantage of a higher NGDP target is that it reduces the problem of downward wage inflexibility, and also leads to a smaller central bank balance sheet.

    Harding, Why would Frank be encouraging people to be less idealistic?

    John, You said:

    “That’s why education level was such a huge predictor of the vote.”

    Was it? I thought it was mostly uncorrelated with the vote. Didn’t college grads vote about the same as non-college grads?

    Ryan, OK, but I’ve done a lot of public finance recently over at Econlog, have you seen those posts?

    James, Well then it’s a pity that Trump is so weak that he caved on the issue. What do you call weak men who cave in under pressure? Oh, it’s right in your post; “wimps”

    (And I don’t teach at Bentley, or anywhere else, nor is my income low.)

    Viking, What’s the murder rate in Sweden? And how about the US?

    dtoh, You said:

    What people don’t like are unfair trade deals, or incompetently negotiated trade deals, or trade deals that cause sudden and dramatic disruption.”

    Not one American in 1000 could tell you what is “unfair” about the Nafta deal, or the TPP. Few have read it. In any case, the article I quoted was about Nafta.

    And you may not think the election was about trade, but 100s of pundits are claiming it was about trade. That’s what I was responding too.

    And our trade deals didn’t “suddenly” cause disruption.

  17. Gravatar of LK Beland LK Beland
    21. February 2017 at 06:36

    ““That’s why education level was such a huge predictor of the vote.”
    Was it? I thought it was mostly uncorrelated with the vote. Didn’t college grads vote about the same as non-college grads?”

    In fact, it was.
    http://gregmankiw.blogspot.com/2016/11/the-triump-of-less-educated.html

  18. Gravatar of Jay Jay
    21. February 2017 at 07:21

    Trump created a fictitious country and sold himself as the only guy capable of making it great again. Trump said America was getting too much refugees (which isn’t true) who were not being properly scrutinized (another lie) and along with illegal immigrants mostly entering through Southern border with Mexico were turning America more dangerous.

    Trump also said unemployment was hitting record highs (which was true in specific communities) and Americans were being abused by foreigners and “loosing”, so trade deals and “globalism” were enemies of America so should stop, and nobody but Mr. Trump could do the job.

    American carnage was a manifestation of weak leadership that abandoned the police in favor of hostile movements like BLM, so it was time for a strong man to take care of domestic problems and take a tougher stance on foreign trouble makers like NK, China, Islamic terrorism and Iran that constitute eminent threats to American and Israeli security. Trump even invented a world where Russia was a worthy ally whilst NATO was an outdated organization and EU should better collapse.

    Too bad many people concerned with the status quo identified with Trump’s diagnosis and took the bet. Now we are here, exposing the buffoon he is but his believers are in complete denial in a mix of ignorance with face-saving, spending more time defending him than questioning the rationale behind his actions.

    I know it seems like “liberal media” is out of control and have abandoned reason but Mr. Trump can’t help but take wrong steps and serving his detractors with tons of facts that don’t reflect good on him. Trump is literally “Making Comedy Great Again” while making it the easiest profession in America (and beyond, remember the “America First _____ second” sketches in Europe and elsewhere?).

    The problem with Seymour is its embracing of Trump’s false narrative to explain their problems. NAFTA was not certainly central, particularly because HRC was ignorant about trade as well. Their vote was based on fear and reliance on a super man who could tackle all the threats.

  19. Gravatar of A Definite Beta Guy A Definite Beta Guy
    21. February 2017 at 07:23

    Never thought I’d see an American president discussed about this way. We are a laughing stock even in the governments of our closest allies.

    Are Trumpistas proud of this?

    I don’t see why we should be embarrassed by anything. What kind of lunatic legislative body forbids visits by the head of state of its closest ally, the most powerful nation in the world?

    It’s the Brits who should be embarrassed. Maybe once they have some aircraft carriers again we can stop laughing at them?

  20. Gravatar of Harry Chernoff Harry Chernoff
    21. February 2017 at 08:21

    Scott:

    1. Please address Adair Turner’s prescription for helicopter money in general and specifically in the context of central bank independence if Trump is determined to make the Fed great again.

    2. Please address what happens when the increased financial system leverage resulting from NGDP level targeting meets Minsky’s Financial Instability Hypothesis or Marks’ “markets abhor certainty.”

  21. Gravatar of aram aram
    21. February 2017 at 08:38

    Berkeley didn’t disinvite him. They paid for extra security even though this is normally the responsibility of the student group and when despite this they judged the black bloc made it too dangerous for the event to proceed, they cancelled it. I haven’t seen anyone argue that they didn’t make that call in good faith. If you want to blame anyone, blame the masked violent protesters.

  22. Gravatar of ssumner ssumner
    21. February 2017 at 09:11

    LK, That shows exactly the opposite, it was not a “huge” predictor. The margin was fairly small. Things like race were far better predictors.

    Jay, You said:

    “Trump is literally “Making Comedy Great Again” while making it the easiest profession in America (and beyond, remember the “America First _____ second” sketches in Europe and elsewhere?)”

    Great line.

    Harry, I’ve done many, many posts on Helicopter money. One good one is:

    http://www.themoneyillusion.com/?p=10888

    It did not work in Japan, so I see no reason to pursue the idea.

    I’m not sure if NGDP targeting would have much impact on “leverage”, but if leverage is a problem you address that through better financial system regulation, not monetary policy.

    Aram, Fair point. But my point still stands, conservatives were outraged that leftist protesters didn’t allow him to speak at Berkeley.

  23. Gravatar of John John
    21. February 2017 at 09:52

    I mispoke slightly. This is what I was referring to: http://fivethirtyeight.com/features/education-not-income-predicted-who-would-vote-for-trump/. Education rather than income or even race was a better predictor of who voted for Trump at the margin. On average other factors (like race) are more important, but of course you win an election by appealing to the marginal voter (who voted Obama) rather than the average voter in your camp.

    I see America slowly segregating itself into tribes based on cultural identity (urban/rural, church/atheist, black/white) rather than ideas, profession, or whatever it used to be back in the day. Remember West Virginia and Oregon used to be swing states during the election of W in 2000 (unimaginable today)!

  24. Gravatar of LK Beland LK Beland
    21. February 2017 at 11:48

    “LK, That shows exactly the opposite, it was not a “huge” predictor. The margin was fairly small. Things like race were far better predictors.”

    In that case, I agree. However, the shift of less educated voters towards Trump is interesting. If I understand, it is also linked to (less educated) minority voters staying at home while less educated white voters were a bigger share of the vote than usual and more tilted toward Trump than usual (R +39 !).

    Among good predictors, age and religion were also very good predictors.

  25. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    21. February 2017 at 13:05

    ‘Viking, What’s the murder rate in Sweden? And how about the US?’

    Wouldn’t we have to adjust for the differences in ethnic make-up between Sweden and the USA? You know, the different rates between native Swedes and Swedish Americans.

    Or, maybe the different murder rates between Swedish Lutherans and recent immigrants to to Sweden from Islamic countries. Maybe the different incidence of rape, too.

  26. Gravatar of Scott Freelander Scott Freelander
    21. February 2017 at 14:51

    mskings,

    Yes, we have a president who follows and appears on Alex Jones broadcasts. ‘Nuff said, really.

  27. Gravatar of Student Student
    21. February 2017 at 15:18

    Savage.

  28. Gravatar of Massimo Heitor Massimo Heitor
    21. February 2017 at 16:00

    I’m waiting for Sumner’s pre-election prediction of Trump’s full blanket amnesty for illegal immigrants to materialize.

    I’m also waiting for Sumner’s pre-election prediction of Trump betraying his supreme court pick list and nominating supreme court justices that wouldn’t rule against him.

    Sumner promised that the instant Trump was inaugurated, Trump would turn on all of his supporters, and reverse on his pledges to reduce immigration and nominate a principled supreme court justice.

    National Review endorsed Jeff Sessions’ appointment as a “huge victory for conservatives”. It looks like most of Trump’s presidency is that way. Sumner is not a conservative so that makes sense.

  29. Gravatar of Jerry Brown Jerry Brown
    21. February 2017 at 16:01

    Thanks for the reply Professor Sumner. I don’t understand why a lower NGDP target necessarily constitutes a lower tax rate on capital. Is it because a lower NGDP target implies less overall inflation? And that inflation is considered more of a tax on capital than a tax on labor?

  30. Gravatar of Benjamin Cole Benjamin Cole
    21. February 2017 at 16:11

    Scott Sumner: I concur with Henry Chernoff and would like to see a lot more Adair Turner and a lot less Don Trump in your posts.

    What is the meaning of monetary or fiscal policy if the Bank of Japan can buy the bulk of outstanding national government debt through quantitative easing?

    Are you defining the Bank of Japan’s QE program as a helicopter drop?

    Don Trump has a helicopter. Could he not be persuaded to engage in a helicopter drops to positive effect?

  31. Gravatar of Benjamin Cole Benjamin Cole
    21. February 2017 at 16:24

    http://onlinelibrary.wiley.com/doi/10.1111/jmcb.12202/abstract;jsessionid=FE3C0486494DE4D85F5EC4167A88BA27.f02t02

    This prestigious journal article worth contemplating….trade deficits equate to house price booms

  32. Gravatar of Scott Freelander Scott Freelander
    21. February 2017 at 17:29

    Benjamin Cole,

    Why would you talk American helicopter drops at a time like this? We’re clearly near full employment.

  33. Gravatar of Ray Lopez Ray Lopez
    21. February 2017 at 18:04

    Sumner: “What specific issues do you want me to address?”

    1) What would convince you money is neutral short term? That money is largely neutral short term? (effects lasting a few weeks at best)?

    2) If there’s no such thing as bubbles, does it matter if asset prices suddenly collapse?

    3) Is there such a thing as a balance sheet recession?

    4) Why should we not worry about the Fed’s balance sheet going from 1T to 4T?

    5) What is the greatest Kenneth Arrow paper you’ve read?

    6) given the poor state of data collection for public finances, as bemoaned by GM Kenneth Rogoff et al in his book “This Time Is Different”, can you explain why nobody seems to care? What does this mean for your NGDP future market proposal? Same for Case-Shiller data for housing. Is the apathy a bounded rationality / behavioral economics phenomena?

    7) Do you see a Trump rally worldwide? (Reference data from the EU improving, Walmart same store sales up 3%, stock market rally). Can we attribute this to an increase in animal spirits?

    8) Are you related to any famous Sumner surnames in Boston?

    9) Is Ray Lopez right that increased animal spirits, not devaluing gold in 1933/34, was the reason the USA broke the back of the bank run of that era and the Great Depression bottomed?

    10) Is Ray Lopez smarter than you?

    I don’t read EconLog (I’m banned over there), so please answer in a post here.

  34. Gravatar of bill bill
    21. February 2017 at 18:18

    IIRC Milton Friedman said in Free to Choose that the right level of trade restriction and tariff rates for any country is zero – all the time, even if the other countries don’t reciprocate. It’s even better for both countries if they do reciprocate, so the only logic for applying a tariff is to use it as a negotiating tool. But it’s costly to apply the tariff while you wait/negotiate. I enjoyed the book (like 30+ years ago).

  35. Gravatar of Benjamin Cole Benjamin Cole
    21. February 2017 at 18:19

    Scott Freelander:

    As defined, we have about one of out 20 Americans actively wanting work who are instead unemployed.

    But graphs show the Us economy never recovered from the 2008 recession, but went into a lower flight path.

    Labor participation rates also fell by about 5% and never recovered.

    Egads man, what is wrong with some old-fashioned prosperity? Unemployment rates were lower in the 1990s, and labor participation rates higher, and we did not have much inflation.

    Japan and Thailand have essentially no unemployment and no inflation.

    Not only has the trade of orthodox macroeconomics become ossified and self-reverential, it has recently added defeatism to its credentials.

    How about our central bank and establishment target Full-Tilt Boogie Boom Times in Fat City, instead of wimpy, whining sniveling about full employment and labor shortages and inflation? What a bunch of weenies.

    Take off your short pants Scott Freelander, put on some man britches, and let the economy rip.

    Get rid of property zoning and the criminalization of push-cart, or truck vending. Have sensible and effective and humane border control.

    There is a reason Don Trump nearly won the election. The establishment has brought prosperity to itself, but not the middle class.

  36. Gravatar of Don Don
    21. February 2017 at 19:35

    Why is liking trade a binary thing? The premise of this post is a strawman.

  37. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    21. February 2017 at 19:36

    What’s the matter with Sweden’s electorate? Nothing, they rebelled against their ‘betters’ and got immigration restricted. Maybe because of what Tino Sanandaji (U of Chicago Phd) discovered;

    http://www.adlibris.com/se/bok/massutmaning-9789198378702

    ‘Foreign-born people account for about 17 percent of the [Swedish] population, and second-generation immigrants, for additional five percent. Foreign-born people make up despite this, 53 percent of them with long prison terms, 54 percent of the unemployed and the group receives 60 per cent of the paid social benefits. 71 percent of the country’s child poverty among households with a foreign background, while 76 percent of the members of criminal gangs have invandrarbakgrund.Även rise of the problems are driven in large part by immigration. Since the early 1990s, they have an immigrant background accounted for half of the increase in the proportion of low-income people, more than half of the reduction of powers among pupils leaving primary school, about two-thirds of the increase in social assistance and more than one hundred percent of the increase in unemployment – which dropped from Swedish born. Problems such as throwing stones at police and rescue personnel and arson are also highly concentrated in immigrant areas.’

  38. Gravatar of Steve J Steve J
    21. February 2017 at 19:39

    dtoh – if there is one thing that pisses me off it is people saying our trade deals are unfair. Sorry if you are not skilled enough to compete globally but if I want to buy a cheap TV from China then get out of my way. If you want welfare take welfare but do not make me give you welfare thru a trade deal just take the food stamps directly please.

  39. Gravatar of Lorenzo from Oz Lorenzo from Oz
    21. February 2017 at 19:47

    Scott, while I can enjoy your outrage in its own terms, there is also rich philosophical irony in a Rortian appalled by the post-truth world and a utilitarian wrestling with many people having a sense of national (and/or civic) identity as.a powerful part of their utility. Adding angst to repulsion does tend to give outrage an extra edge.

    Philosophical systems often have hidden premises that are only revealed by events. Rorty appeals to a common community that globalist-progressivist politics fundamentally unpicks by deeming social outcomes as being overwhelmingly driven by the malice of fellow citizens and decrying any sense of common community with such malice-bearers. Their community is tribal, albeit an international tribe; so, of course, on good Rortian principles, they do not share a truth community with outsiders (especially not such outsiders). And, of course, vice versa.

  40. Gravatar of Lorenzo from Oz Lorenzo from Oz
    21. February 2017 at 19:55

    Patrick: Muslims are the only migrant group which generate any serious pushback against the features which make Western societies attractive in the first place. It comes from being a very different civilisation with some crucial similarities–monotheist universalism sanctifying differences while generating a powerful counter-identity.

    The dynamics of Muslim migration in Anglo-settler societies where they are typically selected for migration on basis of education and skills, are part of a diverse migrant stream and are less than 2% of the population–so fitting in is the crucial issue–are very different from having Muslims as the dominant migrant group, often less educated, making up 5%, 10%, 15% of the population, so large enough to generate a serious counter-identity and provide cover for Islamist networks on various stages of the “Caliohate curve”.
    http://sultanknish.blogspot.com.au/2016/01/understanding-caliphate-curve.html

  41. Gravatar of dtoh dtoh
    21. February 2017 at 21:01

    Scott,
    So show me where Trump (or anyone in Seymour) said they were against trade in general?

  42. Gravatar of Scott Freelander Scott Freelander
    21. February 2017 at 21:17

    Benjamin Cole,

    Inflation’s already up lately. I don’t see why something as unconventional as a helicopter drop is necessary. Might be a little room to run with looser policy. I think a change in forward guidance would be enough to end the bit of slack that might be left.

    Unfortunately, it looks like real GDP potential is lower than it was pre-recession. This is likely due to some of the long-term unemployed never re-entering the workforce, slowing growth in the working age population, and lower productivity, if the productivity numbers are to be believed, along with Obamacare and rising minimum wages.

  43. Gravatar of Scott Freelander Scott Freelander
    21. February 2017 at 21:22

    Benjamin Cole,

    If trade deficits helped feed the housing market run-up, why didn’t trade deficits do the same in the past? More urban restrictions on home building?

  44. Gravatar of Ray Lopez Ray Lopez
    21. February 2017 at 22:12

    Off-topic 1: Influential Monday WSJ op-ed by Donald Luskin that Trump simply order the Fed to follow Knut Wicksell’s R-star (let the Fed follow the free market interest rate) is an implicit acknowledgement by Luskin that money is neutral.

    Off-topic 2, money neutrality: Moldova had 1/8th of their money supply stolen in 2014 yet no real affect on the economy. This week’s Economist on Moldova: “A leaked report revealed that up to $1bn, equivalent to more than an eighth of the country’s GDP, had been stolen from three banks [in 2014] … yet since then the country has coped remarkably well. GDP shrank by a mere 0.5% in 2015 (whereas Russia’s fell by 4% and Ukraine’s tanked by10%). Last year Moldova grew by 2%, fast by European standards.”

    How much evidence do you cultists need of money neutrality?

  45. Gravatar of Larry Larry
    21. February 2017 at 23:28

    (Not a Trump supporter) I confess to desiring that every President succeed (including Obama). So far, Trump has proven even sloppier than I expected, but on substance, he has exceeded my (low) expectations. I’m ok thinking that his initial missteps can be corrected. He just needs to dump Navarrro and the other economic ignoramusses. Then we might be ok.

    Trump supporters are reacting to the cultural disenfranchisement more than economic issues. They Dems can’t even see those issues. The NYT is still arguing that Dems need to move left. As a non-Dem, I couldn’t agree more. Trump voters don’t love Trump, but they couldn’t handle Hill. Any normal Dem could have beaten Trump. We’re not going to be getting normal Dems. Dems have decided to go full Corbyn. Oops.

  46. Gravatar of dtoh dtoh
    21. February 2017 at 23:44

    @Larry
    I agree. I think the radicalization of the Democratic Party made it possible (if not likely) that Trump or someone like him would get nominated and then get elected.

  47. Gravatar of Daniel Daniel
    22. February 2017 at 02:07

    If I didn’t know better, I’d say that Scotty’s obsession with Trump as a sexual predator reveals him to be an envious little virgin.

  48. Gravatar of bill bill
    22. February 2017 at 04:35

    @Steve J,
    Well said.

  49. Gravatar of Scott Freelander Scott Freelander
    22. February 2017 at 04:53

    Larry,

    You must not be that familiar with Corbyn. I don’t know of many Democrats that extreme, yet.

    Those of you smugly hoping Democrats go extreme left might be sorry they do. The same forces that make fascism attractive at times like these also benefit the far left. If Democrats are willing to go the whole hog with giveaways, they’ll rediscover that left populism works.

    We are in danger of a hard left counter-reaction.

  50. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    22. February 2017 at 06:17

    Better question; What’s the matter with cCalifornia?

    http://www.latimes.com/opinion/op-ed/la-oe-hanson-oroville-20170214-story.html

    ————–question————–
    A new generation of Californians — without much memory of floods or what unirrigated California was like before its aqueducts — had the luxury to envision the state’s existing water projects in a radically new light: as environmental errors. To partially correct these mistakes some proposed diverting storage water for fish restoration and re-creating of wild rivers to flow uninterrupted into San Francisco Bay.

    Indeed, pressures mounted to tear down rather than build dams. The state — whose basket of income, sales and gas taxes is among the highest in the country — gradually shifted its priorities from the building and expansion of dams, reservoirs, aqueducts, bridges and highways to redistributionist social welfare programs, state employee pensions and an enormous penal archipelago.

    California currently hosts a third of the nation’s welfare recipients. Over one in five Californians lives below the poverty line. One in four Californians was not born in the United States. These social transformations pose enormous political challenges and demand that infrastructure and schools grow commensurately to meet soaring populations.

    Instead, California is eating its seed corn.

    State lawmakers spend their time obsessing over minutia: a prohibition against free grocery bags and rules against disturbing bobcats. When they do turn their attention to development, they tend to pick projects that serve urban rather than rural populations — for example, that boondoggle of a bullet train whose costs keep climbing even as the project falls years behind schedule.
    —————endquote————-

    It was California that gave Hillary her popular vote ‘victory’.

  51. Gravatar of Phil Phil
    22. February 2017 at 07:49

    What specific issues would you like me to address?

    A while ago you linked to a blog post by Basil Halperin. He had a couple things on NGDPLT. One of his posts was rather critical and identified several issues w/ it. http://www.basilhalperin.com/blog/2015/01/a-practical-critique-of-ngdp-targeting/

    You said you were going to respond to these criticisms but I don’t think you ever did. I read some of his other content and I agree it’s excellent so I’d like to see what you have to say about his thoughts.

  52. Gravatar of Kevin Dick Kevin Dick
    22. February 2017 at 08:59

    When I read the title of this post, I wondered about the relationship between Indiana and Seymour such that she would know what was wrong with him :-)

  53. Gravatar of Benjamin Cole Benjamin Cole
    22. February 2017 at 10:24

    Scott Freelancer: America started running lalapalooza trade deficits combined with tighter property zoning.

  54. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    22. February 2017 at 15:42

    Since Donald Trump is being blamed for anti-semitism in America now, maybe we should visit … Sweden;

    http://www.thelocal.se/20161228/sweden-hits-back-at-anti-semitism-israel-accusations

    ————-quote———–
    ti-Semitic or anti-Israel remarks of 2016.
    The Simon Wiesenthal Center (SWC), which is headquartered in Los Angeles, lists the Swedish minister’s comments in eighth place in its ranking of the “ten worst global anti-Semitic/anti-Israel incidents”.

    In first place is the recent UN Security Council resolution condemning Israeli settlement construction, which passed 14 to 0 after the US abstained rather than using its veto as it traditionally has done. The SWC singles out President Barack Obama for “facilitating” “the most stunning 2016 UN attack on Israel”.

    In December last year, Wallström denounced a spate of Palestinian knife and car-ramming attacks against Israelis in a Swedish parliament debate and voiced support of Israel’s right to defend itself.

    However, she added (and a few weeks later called for an investigation into the deaths of those killed in the conflict): “Likewise, the response must not be of the kind – and this is what I say in other situations where the response is such that it results in extrajudicial executions or is disproportionate in that the number of people killed on that side exceeds the original number of deaths many times over.”
    ————–endquote————-

  55. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    22. February 2017 at 15:47

    And, a year earlier;

    http://www.timesofisrael.com/facing-death-chants-and-hate-crimes-swedens-jews-live-in-a-climate-of-fear/

    ————–quote————-
    On a chilly fall day, passersby on a central street in Sweden’s third largest city, Malmö, were greeted with chants in Arabic urging the killing of Jews.

    “Death to the Jews,’ and ‘More stabbings,’ the protesters screamed,” recalls Jehoshua Kaufman, head of communications for Malmö’s Jewish community. The protesters at the October pro-Palestinian rally were referring to the near-daily stabbings of Jews by Arab assailants over the past couple of months in Israel.

    Swedish politicians, including two parliament members, were present at the protest. However, after Israel’s ambassador to Sweden, Isaac Bachman, condemned the event, they distanced themselves, claiming they had not understood the meaning of the Arabic slogans.
    ————-endquote———-

  56. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    22. February 2017 at 15:49

    From the same article as above;

    ————-quote————
    These types of incidents, where anti-Israel rhetoric turns violently anti-Semitic, have created a climate of fear for Sweden’s small Jewish community, which numbers 15,000. Hate crimes against Jews are on the rise, with 2014 seeing a 38 percent increase in reported anti-Semitic incidents from the previous year, according to a report by the Swedish National Council for Crime Prevention.

    ‘Right now, a lot of Jews in Sweden are scared’
    “Right now, a lot of Jews in Sweden are scared. Parents are scared to drop off their kids at the Jewish preschool,” says Johanna Schreiber, a prominent Jewish journalist who lives in the country’s capital, Stockholm. “People of all ages are scared of going to synagogue, there are many people who are taking off their Stars of David because they are too scared to wear it.”
    ————–endquote————-

  57. Gravatar of ssumner ssumner
    22. February 2017 at 17:18

    Massimo, You said:

    “I’m waiting for Sumner’s pre-election prediction of Trump’s full blanket amnesty for illegal immigrants to materialize.”

    You are such an idiot, I never made any such claim. Even Obama was sending the “bad hombres” home.

    Jerry, Yes, inflation. Our tax system taxes nominal returns, not real returns.

    Ben, I’ve done lots of posts on helicopter drops. Have you read any of them? Ditto for Japan. Why keep asking questions that I’ve already answered?

    Lorenzo, You said:

    “Scott, while I can enjoy your outrage in its own terms, there is also rich philosophical irony in a Rortian appalled by the post-truth world and a utilitarian wrestling with many people having a sense of national (and/or civic) identity as.a powerful part of their utility.”

    No irony for a Rortian being appalled by a post-truth world, Rorty would be equally appalled. Indeed he predicted Trump before he died.

    I was thinking of your comment when I did my new post at Econlog, explaining why nationalism will fail in America.

    dtoh, Trump says he favors freer trade than Obama. That’s not what this post is about. It’s about pundits.

    Larry, I used to assume that Trump and Sanders could never win. I’ll never assume that again. Be careful what you wish for.

    Daniel, I keep commenters like you around so that I look good. If this is my enemies . . .

    Funny that so many of the idiots here are Trump supporters.

    Patrick, California’s government is a complete disaster. It’s what happens when you give Dems a monopoly and lots of money to spend. Soon I’ll be a victim.

    Phil, Thanks, I have a post.

    Kevin, I’m no good with commas, do I need one there?

    Patrick, You said:

    “Since Donald Trump is being blamed for anti-semitism in America now”

    It would help if our president wasn’t such a complete moron that when someone asked him about dozens of anti-semitic attacks across America, he assumed that he was being personally attacked for being anti-semitic. I mean, don’t you think basic listening comprehension should be a prerequisite for being president?

  58. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    22. February 2017 at 19:57

    ‘It would help if our president wasn’t such a complete moron that when someone asked him about dozens of anti-semitic attacks across America, he assumed that he was being personally attacked for being anti-semitic.’

    Actually, Trump was being very astute. That’s exactly what this is about, and it’s organized.

  59. Gravatar of Lorenzo from Oz Lorenzo from Oz
    23. February 2017 at 04:58

    Thanks Scott, I have posted a comment over there that, yet again, has run into the filter. No links, no bad words: it is getting to the tedious stage.

    Rorty’s approach smacks of “having your cake and eating it too”. However appalled he might be, it is the (general) outcome that various critics of postmodernism predicted.

  60. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    23. February 2017 at 11:08

    Comes forth two Swedish politicians;

    https://www.wsj.com/articles/trump-is-right-swedens-embrace-of-refugees-isnt-working-1487807010

    Reporting as eye-witnesses that Donald Trump was correct about their country.

    ———-quote———
    Trump Is Right: Sweden’s Embrace of Refugees Isn’t Working
    The country has accepted 275,000 asylum-seekers, many without passports—leading to riots and crime.
    ————endquote——-

    Making pretty much the points I’ve already detailed here.

  61. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    23. February 2017 at 11:16

    I also can’t resist commenting on this bit of cluelessness from Cato and Reason Magazine!;

    https://www.cato.org/publications/commentary/trumps-fake-news-attack-sweden-immigrants-crime

    I especially likedMr. Norberg’s big finish;

    ‘Was it safe to return to Sweden? I scrolled through the statistics on my phone when I prepared to check out from my U.S. hotel. Last year there were 135 homicides in Washington D.C., population 670,000. That’s 30 more than in the whole of Sweden, population 10 million.’

    Which would underline Donald Trump’s argument if he’d only thought about what he was admitting; or what does Norberg think would happen if several hundred thousand young, male DC residents were to suddenly emigrate to Sweden?

    That they’d immediately and seamlessly adopt the white Lutheran culture of Sweden. Or would he expect something darker?

  62. Gravatar of Massimo Heitor Massimo Heitor
    24. February 2017 at 09:22

    @sumner

    “You are such an idiot, I never made any such claim.”

    Is Sumner trying to imitate a childish taunt? Is this some kind of inside joke or troll?

    And of course you made exactly that claim.

    In August 2016, you posted a picture of Trump in a Mexican sombrero captioned “Amnesty Don”:
    http://www.themoneyillusion.com/?p=31918

    In January 2017
    http://www.themoneyillusion.com/?p=32253
    “I’m sure there’s an ingenious secret plan behind all this—run a campaign on the exact opposite of what you plan to do. I eagerly await Trump’s immigration amnesty announcement.”

  63. Gravatar of ssumner ssumner
    24. February 2017 at 10:50

    Massimo, Neither of those in any way support your claim.

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