GOP banking policy bleg

For millennials, the 2008 financial crisis was the defining economic shock of their lifetime.  I believe I know how the Democrats think about his issue.  But what about the GOP?  For some bizarre reason, I have no idea what policy stance the GOP favors as a way of avoiding a repeat of 2008.  If a student asked me to describe the GOP position, I’d wouldn’t know what to say.  That’s not true of any other major public policy issue.  I may not always agree, but at least I know where the GOP stands on abortion, tax cuts, coal burning, etc.  I know they are split on trade.  But I know nothing of their views on banking reform.

The Dems seem to favor something like Dodd-Frank.  I don’t like that approach, as it’s overly complex and avoids most of the key problems (subprime loans, FDIC, the GSEs etc.)  But what about the GOP?  It would be nice if they favored a more sensible approach, which might include higher capital requirements for banks (or convertible debt), abolishing the GSEs, reforming or abolishing FDIC, more expansionary monetary policy during periods such as the Great Recession.  Another option is to adopt the Canadian (big bank) system, which doesn’t have crises every few decades.  But I never see any evidence for GOP support of any of those options.  They favored tighter money during the Great Recession.  (Oddly many Republicans are now calling for easier money, even as inflation is much higher than in 2009.)  I see no evidence that the GOP has any interest in abolishing the GSEs or reforming FDIC.  They seem to favor small banks, which are the biggest flaw in our financial system.  The FT says the GOP is opposed to higher capital requirements, an option that seems greatly preferable to Dodd-Frank.

So what does the GOP actually favor?  The 2008 financial crisis happened during a Republican administration.  What lessons has the GOP learned?

I’m not being sarcastic, I’d actually like to know the GOP position on banking crises.

PS.  The Mexico trade deal is good news, despite being a very slight net negative.  There is a tiny bit more protection for industries, as well as tighter IP rules.  I see those as small negatives.  There will be freer trade in digital goods. The stock market hates protectionism and is rallying on the (good) news that Trump only cares about symbolic “wins”, not content (something I’ve been arguing for quite some time.)  Let’s hope there is a similar agreement with Canada and China.

As far as the “downtrodden workers” in the Rust Belt—this agreement says the administration doesn’t care about you.  The steel and aluminum tariffs will hurt manufacturing by more than the rules of origin changes will help.

PPS.  Hopefully the Dems will take the House and refuse to ratify the agreement.  But I suspect they’ll cave.



37 Responses to “GOP banking policy bleg”

  1. Gravatar of Richard A. Richard A.
    29. August 2018 at 10:31

    Why a New Nafta Deal Could Mean More Expensive Automobiles

  2. Gravatar of Richard A. Richard A.
    29. August 2018 at 10:39

    Congressional Democrats on average have been worse than Republicans on the trade issue for the past few decades.

  3. Gravatar of Harrier Harrier
    29. August 2018 at 11:19

    I have nothing to say on banking reform, but I would point out that the Senate, not the House, votes on resolutions for treaty ratification.

  4. Gravatar of Benny Lava Benny Lava
    29. August 2018 at 11:22

    Republicans are Keynesians. They wanted tight money during the recession because they knew it would hurt the economy and they wanted to punish Dems at the ballot. Now that they are in control they want easy money to goose the economy and try and keep their electoral gains. The fact that they lie about their preferred policies is annoying and says a lot about their voters but it makes sense.

  5. Gravatar of Matthew Waters Matthew Waters
    29. August 2018 at 11:53

    There has been less movement to lessen the Dodd-Frank rules for very big banks than medium-sized, regional banks. Say, SunTrust or Fifth Third rather than JP Morgan or Goldman Sachs. Small to medium banks really have more power than the big banks, with more influence over individual Congressmen.

    The OCC did allow for accelerated charters for fintech, loan-only institutions, though that started under Obama.

    I would rather have banking and no loans, i.e. the OCC or the Fed (for BHCs) could charter pure custodial banks with 100% reserves in FedWire. Make it a purely IT security and anti-money-laundering question of regulation. Then abolish FDIC and the discount window. The Fed should signal its policy is unlimited, past ZLB, to NGDPLT. Not high chances of that though.

  6. Gravatar of Hmmm Hmmm
    29. August 2018 at 13:33

    Scott, offtopic.

    In line with what you said find interesting, nonfictionwise.

    You may want to check out Albion’s Seed. I believe Scott Alexander has a review somewhere.

    Shockingly prescient.

  7. Gravatar of Tom Brown Tom Brown
    29. August 2018 at 13:34

    Benny, I was going to write exactly that earlier today, but decided to let other people say their piece. Well said BTW. I think it’s a plausible explanation. It’s simple, and it explains what they’re doing.

  8. Gravatar of Kevin Erdmann Kevin Erdmann
    29. August 2018 at 15:26

    The memoirs about the period make it pretty clear that the GOP is opposed to the GSEs. Pressure on the GSEs was one force that led borrowers into more systemically unstable mortgages and it prevented the GSEs from filling in the funding gap when they collapsed. GOP opposition to GSEs is a primary cause of the crisis.

  9. Gravatar of Benjamin Cole Benjamin Cole
    29. August 2018 at 16:10

    The GOP is a confederacy of frauds and poltroons.

    Never reason from a publicly stated policy position.

    And no, the Donks aren’t much better.

  10. Gravatar of Christian List Christian List
    29. August 2018 at 17:28

    Republicans are Keynesians. They wanted tight money during the recession because they knew it would hurt the economy 

    As Scott implied, Republicans are a very heterogeneous group.

    I bet most politicians (from both camps) don’t even know what monetary policy is anyhow.

    And wasn’t the point of Keynesianism that monetary policy in a recession is not enough and that you need expansionary fiscal policy?

    And why easy money during a boom? That’s the opposite of Keynesianism again.

  11. Gravatar of Scott H. Scott H.
    29. August 2018 at 17:35

    There’s an unfortunate vocal minority that thinks going back to the gold standard will do the trick.

  12. Gravatar of Benjamin Cole Benjamin Cole
    29. August 2018 at 20:17

    Scott H:

    Ask the gold crowd why gold is any better than silver, which actually has a longer lineage as a monetary metal.

    The Chinese still call banks “silver houses.”

    Gold, in various epochs, has been regarded as slightly vulgar, the metal of women’s baubles, of fops, and brothel gilding.

    Of course, nothing will change the gold crowd. But it is worth pondering, why gold and not silver.

  13. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    29. August 2018 at 21:05

    ‘In 1938, the administration of Franklin Delano Roosevelt created a small agency called Fannie Mae. Intended to make home loans more accessible, the agency was born of the Great Depression and a government desperate to revive housing construction. It was a minor detail of the New Deal, barely recorded by the newspapers of the day. Over the next seventy years, Fannie Mae evolved into one of the largest financial companies in the world, owned by private shareholders but with its nearly $1 trillion of debt effectively guaranteed by the government. Almost from the beginning, critics repeatedly warned that Fannie was an accident waiting to happen. Then, in 2008, the housing market collapsed. Amid a wave of foreclosures, the company’s capital began to run out, and the U.S. Treasury seized control. From the New Deal to the administration of President Obama, author James R. Hagerty explains this fascinating but little-understood saga. Based on his reporting for the Wall Street Journal, personal research and interviews with executives, regulators and congressional leaders, Hagerty charts the course of Fannie Mae. With The Fateful History of Fannie Mae, he explains the politics, economics and human frailties behind seven decades of missed opportunities to prevent a financial disaster.’

  14. Gravatar of ssumner ssumner
    29. August 2018 at 21:15

    So no one can answer my question? The GOP has no proposal for preventing a repeat of 2008? I’m not asking for a sensible proposal, but don’t political parties typically have SOME position on the important issues of the day? Something?

  15. Gravatar of ssumner ssumner
    29. August 2018 at 21:16

    Thanks Harrier.

  16. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    29. August 2018 at 21:21

    Scott, the answer to your question is in Calomiris and Haber’s ‘Fragile By Design’. It’s the game of banking-political bargaining. Politicians (of any party) aren’t in the business of telling voters cold, hard truths about banking…or anything else. Here’s a link to Calomiris latest;

    A 2015 study by Jordà, Schularick, and Taylor shows that the proportion of real estate lending in bank portfolios in the countries in their sample has grown dramatically since 1980, from about 40% of loans to nearly 60%. In a new study, Sophia Chen and I analyze the extent to which the expansion of government protection of banks and the creation of protection rents for banks that this implies help to explain the increase in bank involvement in real estate lending. (Calomiris, Charles W., and Sophia Chen. “How Deposit Insurance Promotes Real Estate Lending. Columbia Business School Working Paper, June 2017) We find strong evidence that exogenous increases in bank protection will lead to resulting increases in mortgage lending.

    To identify causality properly, it is necessary to identify exogenous changes in protection – that is, changes that are not themselves a consequence of local banks’ condition or related political responses to their condition. We use Demirgüç-Kunt, Kane, and Laeven evidence that international political pressures – which cannot plausibly be explained by the developments in the countries adopting or expanding protection – explain much of the adoption and expansion of protection. Formally speaking, our econometric analysis occurs in two stages: First, we show that external political factors explain the expansion of protection; second, we show that changes in protection that can be traced to those factors also result in significant expansion of bank mortgage lending. As in the case of the U.S. as described above, protection of banks creates rents that political coalitions direct toward risky real estate lending.

    Not only has the subsidization of real estate lending risk helped to promote a wave of severe banking crises around the world, it has also reduced economic growth. A 2015 study by Cournède and Denk shows that the growth in bank consumer lending (which is mainly mortgage lending) has been associated with an economic growth-reducing expansion of bank lending.

    Together, these various studies show that the current pandemic of banking crises, with their unprecedented costs to taxpayers and adverse consequences for economic stability and growth, should be viewed from a broad political economic, rather than a narrow economic, perspective. Banking crises are not an inevitable consequence of business cycles or the structure of banks. Countries that make political choices that eschew government protection of banks and government subsidization of real estate lending risk can avoid the costly systemic risk increases that plague the world’s banking system today. Of course, that doesn’t mean that it’s easy to reduce systemic risk that arises from the two gorillas; it is easier to identify politically driven problems that to organize political coalitions to correct them.

  17. Gravatar of Zamba Zamba
    29. August 2018 at 22:36

    In Brazil we also have the big banks model. It’s a stable financial market, but the lack of competition apparently makes fees and the spread too large. I say apparently because the high risk of default also contributes for the spread, so it’s hard to know exactly how serious market concentration really is.

    We did not have any financial trouble in the country since reforms in the 90s.

  18. Gravatar of Kaye Kaye
    30. August 2018 at 01:27

    ssumner, Scott I’m curious since you are against Dodd-frank which i agree with you, If you are also against reintroducing the Glass-steagall act assuming we had a magic wand?

  19. Gravatar of George Selgin George Selgin
    30. August 2018 at 04:27

    Scott, as the Financial Choice Act is intended as an alternative to Dodd-Frank, it might be regarded as representing the GOPs ideas for banking system reform. Very roughly, those ideas include allowing higher simple capital rations to serve as a substitute for D-F’s more elaborate regulatory provisions, and placing limits on the Fed’s bailout capacity, among other provisions.

    As for more sweeping reform ideas, as the Heritage Foundation is the think tank with the greatest influence on Republican legislative endeavors, I also think that the recommendations of its chief banking policy expert, our good friend Norbert Michel, might be regarded as representing an alternative GOP reform program, albeit of course one that is far from being fully embraced by the GOP. Norbert has of course recommended many of the radical options you mention, including abolishing the GSEs (

  20. Gravatar of George Selgin George Selgin
    30. August 2018 at 05:38

    “I would rather have banking and no loans, i.e. the OCC or the Fed (for BHCs) could charter pure custodial banks with 100% reserves in FedWire…. Then abolish FDIC and the discount window.”

    Forgive me for not being able to resist responding to this suggestion, which is all-too representative of the conventional wisdom regarding the best way to make banks safe.

    (1) If deposits are fully backed by Fed balances, what need for insurance? Do people need suspenders AND a belt to keep their pants on?

    (2) What becomes of all the persons who presently rely on bank loans funded, in part, by demandable bank debt? The Fed won;t lend to them. Does that matter?

    (3) How would these reforms have helped during 2008? Would they have prevented the failures or near failures of Bear, Lehman, or AIG? Would they have kept Reserve Primary — a non-bank MMMF — from breaking the buck, and thereby causing investors in other prime MMMFs to panic? Would they have stopped other “wholesale” bank runs (

    The belief that the principal problem with the U.S. banking system consists of banks’ vulnerability to runs on retail deposits, and that the solution is to make such deposits run-proof, is the source of 99.9% of all bad or counterproductive banking reform ideas. That belief dates from the 1930s; yet even then it was of limited merit. It vastly exaggerated the extent to which bank failures were caused by runs, as opposed to the alternative of runs being rational responses to warranted suspicions of bank insolvency. In other words, it exaggerated the extent of so-called bank-run “contagions.” It also overlooked the extent to which U.S. banks then were uniquely vulnerable to failure, and also more likely to be interconnected with other failing banks, thanks to unit banking laws. The experiences of other nations during the depression should have made the role of unit banking in the U.S. case abundantly clear. Deposit insurance, the potential dangers of which were already understood, was implemented then, not as a first-best solution to the problem of bank failures, but as a way to shore-up a defective unit banking system.

    The “great myth” of the 1930s has since become conventional wisdom, not only in the U.S., but worldwide, and that despite the fact that unit banking is no longer part of the banking landscape anywhere. For that we owe thanks in part to the Diamond and Dybvig model, which is nothing but a model of the myth in question — a case of economists rather than journalists electing to “print the legend.” Though utterly destructive as a guide to banking reform, the D-D model is extremely useful for the light it sheds on the sociology of our profession, which values mathematical ingenuity above all, and especially so when the ingenuity assumes a form that lens itself to all manner of modest variations, thus serving as fodder for large numbers of dissertations and journal articles — the stuff of which economists’ careers are made!

    We need a name for this mistaken and hackneyed theory of the causes of financial instability. I propose the “tuppence” theory of banking crises, both because it imagines that such crises are like the one in Mary Poppins, started when a boy insists that his banker give his tuppence back so that he can feed the pigeons, and also because tuppence is as much as or more than the damn thing is worth. And we need to lay it to rest once and for all, if we are ever to have progress in banking reform.

  21. Gravatar of Benjamin Cole Benjamin Cole
    30. August 2018 at 06:01

    So no one can answer my question?–Scott Sumner

    I read through some stuff online, and it is blurry. Even read some stuff from the Bureau of National Affairs, a pretty good outfit.

    See Selgin’s comments.

    Somebody somewhere wrote that a weakness of Dodd-Frank is that it made illegal big bank bailouts, when a legitimate role of a central bank is as the lender of last resort. But now the Fed can’t do that, unless Congress changes the law, which probably would happen in a 2008 repeat.

    But, no one serious seems to think bank reserves are big enough to withstand another serious recession. Much larger capital cushions are needed, as in double or more (25% equity, and another 25% in convertible bonds instead of the current 12-14%).

    Brookings has smart people and they say not much has changed.

    In short, it appears difficult to know what is going on, although the Brookings article appears to say Dodd-Frank is intact.

  22. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    30. August 2018 at 06:03

    Speaking of banking myths;

    ‘If you are also against reintroducing the Glass-steagall act assuming we had a magic wand?’

    You don’t need a magic wand to restore something that was never repealed.

  23. Gravatar of Brian Donohue Brian Donohue
    30. August 2018 at 06:16

    Business people have an intuitively Keynesian view of the macroeconomy, while many thinkers on the right are beguiled by the Austrian intuition of reckoning for bad behavior.

    Friedman is still an icon on the right, but he is remembered more for his micro stuff or his views on taxation and the size of government, while has great achievements in monetary policy and banking crises have never been understood or appreciated, and are in fact viewed with grave suspicion of socialism by the Austrians.

    For all the success you have had promoting your views, these conversations just never translate to intelligent popular discourse, which may explain the desire to insulate the Fed from undue political influence.

  24. Gravatar of Benny Lava Benny Lava
    30. August 2018 at 09:19

    “And why easy money during a boom? That’s the opposite of Keynesianism again.”

    It is against Keynes’ countercyclical proscription but if you believe that fiscal policy will boost the economy then isn’t that what Keynes said?

    Scott, they do not have a policy to prevent another crash because they don’t think we should.

  25. Gravatar of bill bill
    30. August 2018 at 10:34

    One idea I’ve heard from Republicans is more skin in the game. I agree with that but an observation or two suggests that it isn’t enough. I recall reading that the employees of Bear Stearns owned 32% of all the equity in their firm and that the numbers were in a similar range for Lehman (like 25%). So I think leverage restrictions or convertible debt requirements need to be added to that to protect the system. It’s really a problem when the employees realize that they own 32% of what are really out of the money call options. In fact, maybe employees should be required to own a like % of the convertible debt as they own in stock.

  26. Gravatar of Kevin Erdmann Kevin Erdmann
    30. August 2018 at 11:31

    “So no one can answer my question? The GOP has no proposal for preventing a repeat of 2008?”

    It’s the wrong question. The GOP and its populist grass roots are pro-contraction. They think inflation is high (or is about to rise), stocks are too high, home prices are too high, people borrow too much, etc. The policy is monetary liquidationism and the removal of public institutions like the GSEs that would provide stability in the face of liquidationism. Broadly and explicitly, the complaint lodged about the 2008 crisis is that it should have been initiated in 2004 or 2005 so that it would have been smaller.

    This is the case from populist know-nothings to amateur or professional investors to many politicians, intellectuals, and pundits.

    This is frequently couched in worries about moral hazard, or Austrian business cycle, or Minskyism. Stability is seen as problematic. Look at the comment section in any conservative blog or finance message board. Nothing would please many of them more than seeing a stock market crash. They would consider it a confirmation that we should have heeded their warnings, and just like 2008, their only complaint will be that we didn’t engineer a contraction sooner.

    What evidence do you have that the support base for the GOP wants to avoid 2008? Or, put another way, that the thing they thought was bad about 2008 was the instability?

    This applies somewhat to the left, too, though it is more of a distributional issue with them. Of course, the source of all this liquidationism is because a growing economy leads to excessive costs in the key urban centers, so the idea that prices are inflated and that distribution of growth is uneven are based in real experience.

    Doing IOR in late 2008 and moving the average mortgage FICO score permanently up by 40 points at the same time, then demanding GOP policies about bank capital minimums as a salve is like tying someone’s legs to a concrete block, pushing them off the boat, and then having a conversation with the rest of the passengers about taking swimming lessons and being better swimmers.

    The primary policy aim is tying legs to a concrete block and pushing. Any other policy issues are sort of irrelevant until that policy gets changed.

  27. Gravatar of Benny Lava Benny Lava
    30. August 2018 at 12:13

    Kevin makes some good points. And not just because I largely agree with his thesis.

  28. Gravatar of Christian List Christian List
    30. August 2018 at 12:44

    I know I’m really bad at reading your intentions but didn’t you say for years that 2008 was caused by falling NGDP (expectations) and the wrong monetary policy? So what are you expecting? What’s there to fix?

    And doesn’t Kevin Erdmann say that the US government makes impressive profits because of their bailouts. So what’s there to fix?

    Members of Congress seem to be pretty independent (compared to other Western countries), so it’s really hard to find a common party position on many issues. In other countries every party has a program that can be looked up, not so in the US, every Members of Congress is, first of all, a representative of his constituency

    But the GOP did a “big Dodd-Frank rollback” this year and freed “thousands of small and medium-sized banks” in a “rare demonstration of bipartisanship” — because quite some Democrats voted with them — “handing a significant victory to President Trump”. All according to the NYT.

  29. Gravatar of Christian List Christian List
    30. August 2018 at 12:51

    @Benny Lava

    It is against Keynes’ countercyclical proscription but if you believe that fiscal policy will boost the economy then isn’t that what Keynes said?

    I’m not a Keynes expert, but as you said for yourself, he wanted expansionary fiscal policy only during a bust. But I understand know what you are saying. I guess, Keynes indeed thought that expansionary fiscal policy always works, but that it’s just not a good idea during a boom.

  30. Gravatar of John Thacker John Thacker
    31. August 2018 at 04:46

    The recent tax law took quite a few areas to discourage debt: on the individual side it decreased the mortgage interest deduction limit, disallowed the MID on non home improvement/home purchase debt (not sure how enforced that will be), increased the standard deduction and limited the SALT deduction (which together decreases the number of people taking the MID); on the corporate side the big one is it limited the deduction of net business interest expense (

    So I’d say that in general the GOP plan is “eliminate the bias of the tax law in favor of debt, thus encouraging more use of equity and decreasing the chance and magnitude of a future banking crisis.” This may be a good, bad, or ineffective policy for that issue, but I believe that is how they think of it.

  31. Gravatar of ssumner ssumner
    31. August 2018 at 07:07

    George, Thanks for pointing to the Choice Act.

    1. I’m no expert on this bill, but do understand its basic approach. Interestingly, I find it hard to find any explanation about how it makes the banking system safer. For instance, the Wikipedia entry does not even mention the higher capital requirements. If my understanding is correct, that’s the bill’s key provision for making banking safer. But the final bill that the GOP passed included some deregulation, but not the higher capital requirements. I wonder if the capital requirements were just a fig leaf for deregulating banking without removing moral hazard.

    2. One can argue that the GOP did not have the votes in the Senate, but then why do I read article after article saying the GOP is opposed to higher capital requirements.

    3. The GOP seems focused on providing regulatory relief to small banks, whereas they are the primary problem in our banking system. Moral hazard is a much bigger problem for smaller, less diversified banks.

    Kevin, I don’t think it’s the wrong question, I think it’s a very revealing question. The lack of a clear answer reveals a lot about the GOP. For them, the moral hazard is a feature, not a bug.

    Christian, I said it was made worse by monetary policy, but I have frequent posts on the excessive moral hazard in the banking system. In any case, the GOP opposes exactly the sort of monetary policy that would have made 2008 less severe.

    John, Good point, although that has only an incidental effect. It does not really encourage safer banking, it encourages a slightly smaller banking system. But yes, that’s an improvement. On the other hand, I don’t think anyone believes it’s enough to prevent another 2008, indeed the GOP did not even sell it on that basis.

  32. Gravatar of John Thacker John Thacker
    31. August 2018 at 07:22


    The GOP in general did a terrible job of selling even the very good parts of the tax bill. For example, the transformation of (going forward) alimony payments so that it’s no longer “the person paying always deducts it from his taxes, the person receiving has to remember to voluntarily put it as income on hers” was uniformly recommended by the Treasury after white papers recommended the change, especially since it was one of the most abused deductions (way more people deducting than people receiving remembering to add it), but the GOP was completely unable to make that point to most people (leading to some articles complaining that it must have been done for some nefarious purpose)

    Some people have attempted to sell it on the basis of preventing another 2008 (Dan Mitchell, the Tax Foundation (, even Noah Smith calling it a redeeming feature of otherwise bad plan- ).

    I think I agree with you that it’s insufficient, though it’s hardly my area of expertise.

  33. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    31. August 2018 at 07:43

    Richard Epstein compares Obama v. Trump;

    Speaking more generally, I cannot think of a single mid-level Obama policy that counts as a pro-growth initiative. The same bad rap cannot be leveled against Trump, for, as the economists Edward C. Prescott and Lee E. Ohanian point out in the Wall Street Journal, the deregulatory cornerstones of the Trump administration are economically sustainable. Deregulation of labor and capital markets are not just a short-term shot in the arm, and the lower taxation of corporate income has worked to repatriate capital from overseas and to expand overall levels of investment. So long as these remain permanent features of the economy—a big “if” with an election coming up—private firms have the necessary time horizons to make much-needed long-term investments. That activity will in turn–as has begun to happen–rejuvenate labor markets. Youth unemployment hit a 50-year low, and the pace of hiring continues to rise. The stock market, always a leading indicator of future fortune, rose by about one-third in Trump’s first year in office and continues to hit all-time highs.

    This stock market performance is all the more impressive because it has occurred in the face of serious Trump-created obstacles. President Trump is no fan of small domestic budgets, and he has run a perverse rearguard campaign to reverse the declining fortunes of the coal industry. Most importantly, he has waged a series of foolish trade wars against our long-term trading partners. His astounding ignorance on the principles of comparative advantage led Trump to unwisely pull out of the Trans-Pacific Partnership, thereby giving China—a friend to no one but itself—an invitation to take the lead across the Pacific Rim. His negotiation stance put NAFTA into unnecessary jeopardy: even at the eleventh hour when a deal seems likely with Mexico, the corresponding deal with Canada still hangs by a thread. And why? Trump insists in securing large American content in automobiles, but that industry loudly protests his protectionist policies.

    Here is the bottom line: the gains from Trump’s (imperfect) domestic program look enormous, given the large economic drag of his trade policies. From this assessment it’s clear that classical liberalism with strong property rights, freedom of contract, and free trade is the only engine to economic prosperity.

    Epstein also gives Trump credit for undoing some of Obama’s blunders.

  34. Gravatar of ssumner ssumner
    31. August 2018 at 15:59

    Patrick, If you are talking about Trump’s economic record you are sort of missing the elephant in the room.

  35. Gravatar of BC BC
    1. September 2018 at 05:58

    Maybe, the GOP position is that a banking crisis with a big government bailout once every 30 years is better than the alternatives, i.e., the GOP position is that doing nothing is better than something? By the way, is once every 30 years the right frequency historically? We had the S&L crisis in the 80s, but were there any banking crises requiring a bailout between that and the start of FDIC?

  36. Gravatar of BC BC
    1. September 2018 at 06:19

    By the way, I don’t think it’s true that banking reform is the only major public policy issue about which the GOP position is unknown, or at least to maintain the status quo. As the conservative party, the GOP position on many issues often seems to be that doing nothing would be better than doing something. On health care, their position before Obamacare was to maintain the status quo. Their unifying position now is to prevent movement towards single payer. On school shootings, I think the stuff about arming teachers is mainly a defensive way to preempt additional gun control. Maintaining status quo is not necessarily indefensible if one compares life in 21st century America to life in any other country at any other time in human history.

  37. Gravatar of ssumner ssumner
    1. September 2018 at 14:30

    BC, The GOP does have views on how to address gun violence. (I.e. prisons). I see no position on how to prevent financial crises.

    You may be right to think they want to do nothing, but that’s a really sad comment on the party.

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