There is little doubt in my mind that Trump exists—nightmares don’t go on for this long.  But does Trumpism exist?  My biggest fear has not been Trump himself, but rather that Trump will take over the GOP and turn it into a neoreactionary party. And that still may happen.  But last night we received one tiny indication that voters don’t actually care about Trumpism, rather they are captivated by the man himself:

Since becoming the presumptive GOP nominee, Donald Trump has almost entirely ignored the down-ticket races in his party. But he did go out of his way to support Rep. Renee Ellmers, a Tea Party Republican running for reelection in North Carolina’s second district. Trump made robocalls for Ellmers, and she touted his endorsement in e-mails to her supporters. Early Tuesday evening, Ellmers lost her primary to George Holdings, a Tea Party-backed congressional representative who, thanks to gerrymandering in North Carolina, was drawn into the same district as Ellmers.

No coattails.  It’s still possible that Trump will eventually take over the GOP.  But last night it got a bit less likely.  More likely Trump will lose, and the GOP will recoil away from Trumpism, just as they recoiled away from Alf Landonism, and Joe McCarthyism, and Barry Goldwaterism.  People don’t follow losers, especially when the losers run on the platform of being winners.  Or Trump will win and fail to implement Trump policies, and also fail to Make America Great Again, disappointing his fans.

PS.  Why is North Carolina doing Congressional redistricting in 2016?

PPS.  No, President Reagan was a not another pro-nuclear war, anti-civil rights laws Goldwater.  Nor did he implement deep cuts in the (now much larger) welfare state.  So far the GOP campaign is eerily similar to the 1964 campaign—lots of GOP leaders wavered on whether to endorse Goldwater.  LBJ ran commercials of Republicans explaining why they could not support Goldwater.  I expect Hillary will do the same.

Update:

Now, it should be said that Trump brings this on himself. Many Republicans had hoped that the presumptive nominee would exercise more self-control and act more presidential after wrapping up the nomination. But the man cannot help himself — hence the petty bigotry about Judge Gonzalo Curiel, who is presiding over a lawsuit against the now-defunct Trump University. As Bloomberg reported this week, Trump even overruled his campaign advisers, urging his supporters to continue attacking the federal judge.

I’m tempted to ask if Hitler kept overruling his generals, but I guess I won’t. If I did then some fool would say I’m comparing Trump to Hitler.

My comment sections are loaded with Trumpistas denying that Trump is a racist, and justifying his claim that the American judge of Mexican descent, which he wrongly called a Mexican judge, is biased due to his ethnicity.

I’m afraid your Dear Leader has once again stabbed you in the back; he’s now agreeing with me that those views are unacceptable:

Trump, who had accused Curiel of bias because of his Mexican heritage, said in his statement that he does not believe “one’s heritage makes them incapable of being impartial.”

Next time before you defend Trump, keep in mind what I said in the previous post.  Trump only cares about himself, he’ll throw you under the bus at the drop of a hat.  And by the way, after decades of accusing campus identity politics leftists of engaging in “reverse racism”, it’s a bit late in the day for you right wingers to insist that there’s nothing racist about judging people according to the color of their skin.

Why did Trump cave on this issue, as he’s caved on Japanese nukes and defaulting on the debt and dozens of other issues? Because today Lindsey Graham “unendorsed” Trump, and called on other GOP leaders to do the same, citing the “Mexican” judge comments.  Trump got nervous. This about face will buy Trump a bit more time, until he once again makes a fool of himself.  He just can’t help it.

For years, I’ve been trying to convince the profession that inflation is not the right variable, it’s NGDP growth that matters. One example I frequently cite is the prediction of NK models that inflation caused by negative supply shocks can be expansionary at the zero lower bound.  The failure of the NIRA during the 1930s suggests that this is not true, and now a new NBER study by Julio Garin, Robert Lester and Eric Sims reaches the same conclusion:

The basic New Keynesian model predicts that positive supply shocks are less expansionary at the zero lower bound (ZLB) compared to periods of active monetary policy. We test this prediction empirically using Fernald’s (2014) utilization-adjusted total factor productivity series, which we take as a measure of exogenous productivity. In contrast to the predictions of the model, positive productivity shocks are estimated to be more expansionary at the ZLB compared to normal times. However, in line with the predictions of the basic model, positive productivity shocks have a stronger negative effect on inflation at the ZLB.

The basic problem here is that expected inflation doesn’t matter, what matters is expected NGDP growth.  And while a positive supply shock does indeed reduce inflation, that sort of disinflation is the good kind.  What really matters is NGDP growth, which is not reduced by positive supply shocks.

Here’s one implication they draw from their study:

In the meantime, since our empirical results are difficult to square with the textbook theory, caution seems to be in order when advocating for policies such as forward guidance and fiscal stimulus, both of which are predicted to be highly expansionary when policy is constrained by the ZLB.

BTW, if economists seriously want to argue that inflation matters, they really ought to come up with a coherent definition of inflation.  So far they have failed to do so.

[Instead of reading the following trash, I encourage everyone to read Tyler’s brilliant post on neo-reaction.]

The Trumpistas are gradually coming around to the view that Trump is a buffoon, and that his policy proposals are nonsense.  Their last stand seems to be immigration.  “Yes, he’s a flip-flopping politician, but at least he’s anti-immigration, the only issue that matters for the future of the country.” Or something like that.  A few days ago I showed that Trump blamed Romney’s loss in 2012 on his hard line on immigration, and suggested we needed to be much nicer to all those good, hard working Mexicans who sneak into the country.

The Trumpistas were not fazed; they insisted that he’d had a sudden “road to Damascus” conversion on the issue, after reading a book by Ann Coulter.  That’s right, Trumps defenders view this source of information as a plus, and perhaps relative to Trump himself, Ann Coulter is another Ross Douthat or George Will.  But that was then and this is now:

Donald Trump has inserted himself into one of the most contentious House primaries in the country this weekend, endorsing GOP Rep. Renee Ellmers in her member-versus-member race in North Carolina.

So you probably think Ms. Ellmers is the hard-liner on immigration, the one issue that Trump “really cares about”.  Well she’s certainly an extremist on the issue, but in the opposite direction:

Representative Renee Ellmers of North Carolina was one of 10 Republicans who voted with Democrats on Wednesday against legislation that would roll back President Barack Obama’s executive actions on immigration.

The immigration provisions were attached to a bill that funds the Department of Homeland Security. The House of Representatives passed the bill, 236-191 along party lines. All but two Democrats voted against it.

While Ellmers criticized Obama’s executive actions, saying she would “fight tooth and nail to put a stop to his amnesty plan,” she said in a statement that the bill was “overly broad in scope, as it has the potential to have a real negative and lasting impact on jobs and families in North Carolina.”

“There are businesses in the Second District who contract with Citizenship and Immigration Services (USCIS) and many of these jobs could be put in jeopardy with the passing of this legislation,” Ellmers said in a statement. . . .

She also was one of 26 Republicans who voted against an amendment that would eliminate the 2012 Deferred Action for Childhood Arrivals program, or DACA, which has granted work permits and stopped deportation of 600,000 immigrants who arrived illegally as children.

And she was one of just two Republicans who opposed a measure that objected to the exemption of DACA immigrants from the employer mandate in the Affordable Care Act.

I warned you guys that Trump couldn’t care less about your issues; Donald Trump’s greatness is the only issue that matters to Donald Trump. Ellmers endorsed Trump, and that’s all that matters.  With Trump, everything is personal.   Here’s The Economist:

Short of designing himself a uniform involving ermine and red velvet, he could hardly make it clearer that he dreams of reigning over, rather than governing, America.

To get a sense of the breathtaking scale of Trump’s paranoid illusions, let’s go back to the late 1980s.  It was the tail end of the Cold War, when the US towered over the rest of the world like a colossus, like the Roman Empire at its peak.  The socialist model was failing everywhere, and neoliberalism was on the march.  This was before the rise of China, and before NAFTA.  The US military budget had soared, and the rotten Soviet empire was beginning to crumble.  And how did Trump describe the US position?

Trump began by telling the people who were there that he wouldn’t run for president in 1988, which disappointed some, especially Dunbar. Then Trump railed, with no notes, and for roughly the next half hour, about Japan, Iran, Saudi Arabia, Kuwait, Washington, Wall Street, politicians, economists and “nice people” of whom he had “had enough,” he said. This country was facing “disaster” and was “being kicked around.” Other countries were “laughing at us.”

“It makes me sick,” Trump said.

“If the right man doesn’t get into office,” he warned the Rotarians, “you’re going to see a catastrophe in this country in the next four years like you’re never going to believe. And then you’ll be begging for the right man.”

This can only be described as a mental illness, a mind utterly removed from reality. All of these paranoid delusions push Trump to strike out at all his imagined enemies.  Again, here’s the Economist:

He has promised not to devolve power from Washington but to concentrate it in the Oval Office, where a President Trump would bully and browbeat global friends, foes and corporate bosses alike. At rallies he asks roaring crowds to imagine him lifting the telephone to impose punitive taxes on businesses or trading partners who defy him.

Trump is a sadist, who enjoys torturing others, just to see them squirm:

The Caligulan malice with which Donald Trump administered Paul Ryan’s degradation is an object lesson in the price of abject capitulation to power.

Trump has perfected the “big lie”, which he learned from his bedside reading of Hitler’s speeches.  (And admit it, isn’t that 1987 speech right out of Hitler’s playbook?)  But you neo-Nazis should not get your hopes up, Trump’s no Hitler. He’ll double-cross you just like he double-crossed the anti-immigration people in North Carolina.

One of the most comical strands of Trumpism is the view that he’s a pacifist on foreign policy.  Wars start when countries are provoked by real or (mostly) imagined slights from other countries.  Trump would be the anti-Obama, the most easily provoked President in all of American history. And yet his supporters think’s he’s the one that will keep us out of war, citing his opposition to the Iraq War (which he actually favored, another big lie.)

Another theme is that while Trump is indeed ignorant on policy, he’ll “hire the best people” to advise him.  How do we know? Because he says so.  The Trumpistas don’t seem bothered by the fact that Trump has actually been hiring the worst people.  His foreign policy advisors thought it was a good idea to suggest that the US become isolationist and then tell the countries we were protecting to get their own nukes.  So Trump advocates this plan, then has to back off when the experts tell him how idiotic it is.  His economic advisor is like something The Onion would have come up with, a man with no discernible background in economics, who doesn’t even understand the tax plan that he’s supposed to be defending:

However, there is nothing in Clovis’s academic background that suggests he has had the sort of formal training one would expect so see on the CV of a professional economist, much less a “professor of economics.” Additionally, some of Clovis’s interactions with experts in the field of economic and tax policy have left them puzzled.

During his appearance at the Fiscal Summit, he had a tense exchange with Harwood about the Tax Foundation’s analysis of the Trump Tax plan. Harwood pointed out that the analysis found a $10 trillion deficit even when it used dynamic analysis — taking growth effects into account — rather than a more conventional static model.

“That’s not entirely true. The Tax Foundation model is a static model, not a dynamic model,” Clovis said.

Harwood pushed back, saying, “They do it both ways but I believe the $10 trillion figure they came up with was in their dynamic model.”

Clovis replied airily, “Well, that’s not what they told me, and I’ve sat across the table from them just like this, John.”

Two things about that statement: First, the Tax Foundation analysis clearly and unambiguously used both a static and a dynamic analysis to look at the Trump plan. Second, one of the guys who Clovis “sat across the table” from distinctly remembers explaining that to the Trump advisor.

“About a month ago, Clovis asked us to walk him through how we came to our conclusion,” said Kyle Pomerleau, director of federal projects at the Tax Foundation. “He came into the office and we showed it to him, and ran a few simulations.”

I just don’t understand how Clovis could be so confused, after all, he has a degree from one of the most world-renowned PhD programs:

Okay, well is Clovis at least an economist? On that, the answer is somewhat less clear, but the weight of the evidence suggests that he is not, at least in the conventional sense of having extensive training in the discipline. In addition to a bachelor’s degree in political science from the Air Force Academy (1971), he holds a Master’s in Business Administration from Golden Gate University (1984) and a Doctorate in Public Administration from the University of Alabama (2006).

The doctoral degree appears to have been earned through a distance-learning program not offered on the University’s main campus, according to the school’s public affairs office. The school was unable to provide much information about the program, as it was discontinued the year after Clovis graduated, but an early course catalogue shows that the requirements for the degree include only one course in advanced microeconomics and another in public expenditures. The vast bulk of the program is dedicated to management and administration studies.

Well, at least it wasn’t from Trump University.  But then the article continues:

To be fair, when asked if there is any hard and fast rule about who can and who cannot claim to be “an economist,” Kristine Etter, a spokesperson for the American Economic Association, said, “No, there is not.”

See Sumner, don’t be such an elitist, anyone is entitled to call himself an economist.

Caligula appointed a horse to the Senate, to show his contempt for the Roman establishment.  Expect Trump’s cabinet to be full of people best described as the posterior section of a horse:

In an appearance at a fundraiser for New Jersey Gov. Chris Christie last week, Trump took the same tack on the economy. “A lot of you don’t know the world of economics and you shouldn’t even bother,” he told a crowd of wealthy donors. “Just leave it to me, I have so much fun with it. Just go and enjoy your life.”

I don’t doubt that Trump will have lots of fun.  But at whose expense?

PS.  The thing that makes me the most sad about this election is that one of the quotes above also applies to Hillary:

He has promised not to devolve power from Washington but to concentrate it in the Oval Office, where a President Trump would bully and browbeat global friends, foes and corporate bosses alike. At rallies he asks roaring crowds to imagine him lifting the telephone to impose punitive taxes on businesses or trading partners who defy him.

PPS.  One of the few nice surprises of the campaign is the revelation that left wing campus PC nuts and Trumpistas are clearly shown to be two sides of the same coin. People should not be viewed as individuals with agency, but rather as bundles of special interests, whose views are predetermined by their gender or skin color. A “Mexican” judge, for example. They only differ on one small point; are white males the good guys or the bad guys?

HT:  Mike Sax, Jim Geraghty

Yes, they can, or should I say “Fukien yes they can”?

Bi He Liu rested his head against the sun-baked window of the Happy Travel bus and tried to enjoy the rare sensations of motion and light. Six days out of seven, Mr. Liu works a 3 p.m.-to-3 a.m. shift as a cook in a suburban Philadelphia restaurant. He rarely sees the sun — or much else beyond the kitchen stove and the two-room apartment he shares with six other men.

”The boss and the pots and pans and the other workers,” said Mr. Liu, a stick-thin former farmer from Fujian Province on China’s southeastern coast. ”That’s it.”

.  .  .

Then a stop at the Bank of China branch to wire home most of his $1,900 monthly salary to pay down his smuggling debt. Finally, he said, he wanted an hour of ”relaxation” with one of the prostitutes waiting for the Monday crowds.

”Today,” said Mr. Liu, ”I feel alive.”

And here’s Scott Alexander:

I can’t even really believe that a rising tide will lift all boats anymore. Not only has GDP uncoupled from median wages over the past forty years, but there seems to be a Red Queen’s Race where every time the GDP goes up the cost of living goes up the same amount. US real GDP has dectupled since 1900, yet a lot of people have no savings and are one paycheck away from the street. In theory, a 1900s poor person who suddenly got 10x his normal salary should be able to save 90% of it, build up a fund for rainy days, and end up in a much better position. In practice, even if the minimum wage in 2100 is $200 2016 dollar an hour, I expect the average 2100 poor person will be one paycheck away from the street. I can’t explain this, I just accept it at this point. And I think that aside from our superior technology, I would rather be a poor farmer in 1900 than a poor kid in the projects today.

In 1900, poor people were packed tightly into tenements in the Lower East Side of Manhattan.  Immigrants from Fujian province (aka Fukien) are still willing to live that way, and can save the vast majority of their incomes.  They are even willing to work the 72-hour workweek that was common in 1900.

And yet Scott’s also right.  The average poor person who is born in America doesn’t save anything.  Indeed lots of middle class, and even upper middle class Americans don’t save anything.  And I believe he’s right that someone in the year 2100 earning a legal minimum wage, even if $200/hour in 2016 dollars, will still be considered poor. The Children’s ISA has a guide on saving money for your children’s future.

In one sense, Scott is making a point I’ve frequently made, that inflation is a meaningless concept.  He’s basically defining the cost of living as “the cost of living the way we live now.”  That’s not at all what economists mean by the term, but I’ve argued that this is how most people understand the term.  Thus if the price of a RCA color TV set was $300 in 1966, and the price of a 50 inch Samsung HDTV is $600 today, then most people would say that the “cost of furnishing your house with a state of the art TV has doubled”, whereas economists would say the price of TVs has fallen by 80% or 90%.

Why will the poor always be with us?

1.  Because we think of poverty in relative terms.

2.  We are very good at noticing subtle differences in status.  Make the differences smaller in objective terms, and they’ll still seem just as big in subjective terms.  If everyone in my department had a salary within $1000 of each other, then differences of just $50 or $100 would drive people insane.

3.  Government quality regulations are set based on average living conditions.  Hence societies tend to criminalize poverty. It’s illegal to provide goods and services at Bangladesh levels of quality to Americans.  Even SRO apartments have been regulated away; we prefer our poor to be homeless and without medical care, rather than living in substandard housing or getting treated by someone who is not a certified MD.

4.  In any society, some people are less competent than others.  By no means are all poor people incompetent, but people who are incompetent often end up poor.  (I don’t mean ‘incompetetent’ as a pejorative, rather as someone who struggles with the demands of the modern world.)  The cynical conservative says that if you completely equalized wealth tomorrow, a year from now there’d be lots of billionaires and lots of homeless people.  And unfortunately that’s true.

5.  Items 3 and 4 interact in a particularly nasty way.  I have a PhD in economics, and yet often feel incompetent when trying to deal with the complexities of government regulations (or private utilities).  The regulatory state makes things especially difficult for the poor.  Some poor people are in and out of jail for being unable to pay various government fines for violating various regulations.

What can we learn from the story of Mr. Liu?  Why could he save a large fraction of his income?  Because he wasn’t poor in the American sense of the term.  He was a culturally middle class person who happened to have a low wage job.

Should the rest of America’s poor behave like him?

I’m going to dodge that question. (At age sixty I’m too old to fall into that trap.) If you insist, I’ll just say people should do whatever they want—it’s their life.  As for public policies; that’s simple—maximize aggregate utility.  In my view you do that with low wage subsidies and progressive consumption taxes.  Not a guaranteed basic income.  But I have an open mind on this issue.

PS.   I knew that Taiwan had a few small islands, but didn’t know that they were also called Fujian province.

PPS.  I understand that Mr. Liu was not technically poor, especially in 2001 terms.  But he had the sort of low wage job ($6/hour) that people associate with the poor.  He simply worked more hours than most Americans, and spent less.  And it wouldn’t be hard to find lots of examples of Chinese immigrants who save money, despite being technically below the US poverty line.

Or about a billion people in China, for that matter.

PPPS.  I have a loosely related post over at Econlog.