Paul Krugman Explains Why Small Cities Fail

Small cities in the US started out as centers for the agriculture industry.  Since agriculture has become more productive, they don't provide enough jobs to prevent small cites from collapsing.  Some small cities, like Rochester, NY, survived and prospered for some time because new businesses were formed that prospered for awhile after the decline of its agricultural base.  It has struggled since the decline of Eastman Kodak and Xerox which were central to its economy.  Large cities typically have more businesses so they are not as dependent upon the survival of a particular business activity.  They are typically located near educational institutions which seed new business formations or they have other geographical advantages such as nice weather or access to transportation centers.

Krugman concludes that the demise of small cities had little to do with globalization. They were primarily affected by changes in the agriculture industry.  He does not discuss the decline of large cities like Detroit which were dependent upon the auto industry which suffered from foreign competition.  More generally, he does not offer explanations for the shifting of our economy from a manufacturing base to a services economy.

What Would You Do If You Had Hired Donald Trump?

Suppose that a corporation hired Donald Trump because they were impressed by his success in the real estate business.  Things have not gone as well as they had hoped so the directors invite him to a meeting to discuss the erosion of his support among customers and the management team.  The directors would realize that they had made a mistake and they would have to fire him in order to save the corporation from ruin.  Ezra Klein reviews Trump's interview with a NYT reporter and concludes that he is not fit to occupy his job as our president.  Unfortunately, Trump was given a four year contract and he cannot be fired for poor performance. Republican members of Congress, and some who voted for him, may search for reasons to defend his presidency.  After all, he sold a tax plan that Republicans love, and he has used his position to put an arch conservative on the Supreme Court.  On the other hand, there are more important things that a president has to do.  Its pretty clear from this interview that Donald Trump is a clear and present danger to most Americans and to the rest of the world.  He believes that he is the greatest president in our history, and he finds a way to twist everything that happens on his watch to substantiate his self image.

I reached a similar position in the post below.  I was tempted to believe that most of his lies were intended for the poorly informed members of his political base.  The NYT interview was ostensibly about the number of lies that he told in a 30 minute interview.  Its really more serious than that. Donald Trump is both  incompetent and delusional.  He claims that he wants to defend America against the enemies that he imagines.  He spends much of his time defending himself from the media which exposes his weaknesses.  He turns on Fox News, which is part of his psychological support system, to convince himself that he is really as great as he believes himself to be. 

Why Trump's 30 Minute Interview With NYT Is Very Troubling

Donald Trump's interview with the NYT produced 24 lies or misleading statements about a number of topics.  We are accustomed to Trump's tweets, which are primarily intended for his base, that are less than truthful. Its hard to understand why Trump would attempt to mislead a NYT reporter.  He must know that the reporter will fact check the statements that he makes and that they will not filter down to his base.  Trump must really believe some of the statements that he made, and some of his comments indicate a profound lack of understanding about important topics like trade deficits.  In either case, it is very troubling. Trump has a deep need to interpret events in a way that bolsters his ego.  He is also ignorant about important matters. We can't expect him to make good judgements about important matters that every president faces.  We can no longer dismiss his comments simply as red meat for his political base which he understands very well.  His narcissism and ignorance is malignant.

UN Votes To Condemn Trump's Decision To Declare Jerusalem As Capital Of Israel

Donald Trump made a decision that appealed to his donors and parts of his political base. It also cemented his connection to the conservative government in Israel.  It was less popular at the UN. 138 voted to condemn the decision; 9 supported his decision and 35 nations abstained.  The US ambassador to the UN was not pleased with the vote.  Both she and Trump warned the UN membership not to condemn Trump's political decision.  Their warnings were unheeded.  Trump's America First policy seems to mean that Trump will do whatever it takes to please his base.  He has no interest in providing US leadership at the UN.  They don't vote in US elections and they don't donate funds to Republican campaigns.

Trump Takes Credit For Repealing Obamacare With Tax Bill

In a moment of honesty, which he had been told to avoid, Donald Trump could not resist the temptation to brag.  During his victory speech he said that the tax bill also repealed Obamacare.  That was not one of his lies.  The tax bill repealed the individual mandate which is the glue that held Obamacare together.  Insurance premiums will increase dramatically and analysts estimate that 13 million Americans will not be able to afford to purchase health insurance on the exchanges.  Republicans accomplished with the tax bill what they could not get done with their failed attempt pass a healthcare bill that would have ended Obamacare and also disrupted our entire healthcare industry which accounts for 17% of the US economy.  Republicans stripped the individual mandate out of the tax bill because it also eliminated government subsidies to low income citizens which allowed them to purchase insurance.  Eliminating the subsidies helped to fund the corporate tax cuts which were the primary focus of the tax bill.  Trump, in another moment of honesty in his victory speech, also declared that the tax bill was not primarily designed to benefit the middle class.  He boasted that the primary purpose of the tax bill was to cut corporate taxes.  Republicans sold bill as a middle class bill under the assumption, which most economists do not accept, that corporate tax cuts will end up benefiting the middle class by stimulating economic growth which would increase jobs and wages for the middle class.

Trump's inability to resist boasting about his achievement will give Democrats lots of ammunition to use against Republicans in the 2018 elections. The huckster could not resist bragging about the product that he was really selling to his base.  The tax bill is all about cutting taxes for Republican donors and repealing Obamacare.  Trump made it available on video for Democrats to package into their campaigns.

A Weak Response To A Big Problem From David Brooks

David Brooks, like his counterpart at the NYT, wants to believe in reform conservatism.  He realizes that the Republican Party, under Trump, has not been good for most of the people who voted for Trump's populist agenda.  He runs through a list of conservative thinkers at conservative think tanks who have advocated policies that address many of problems that have been ignored by Trump and most Republican members of Congress.  He also argues that the Republican tax plan, which eliminates many tax deductions to help fund large tax cuts for businesses is a good thing and that it is wrongly criticized by his liberal friends.  He argues that corporate tax cuts are needed to make US corporations competitive with foreign corporations that have lower tax rates.  The good guys in his article are the reform conservatives who have had little impact on conservatives in Congress.  They are not visible to most Americans either.  In other words, he offers nothing practical in response to policies that don't help most Americans and which may be harmful to the economy and to our national interest.  Corporate profits and stock prices are at all time highs.  There is little reason to believe that they need lower taxes to be competitive in international markets.  There are good reasons to believe that cutting important tax deductions, in order to fund corporate tax cuts, will be counter-productive.

The Republican tax plan reduces the deduction for state and local taxes to help fund the corporate tax cuts.  The deduction is capped at $10,000.  Households in states and localities with deductions above that level will pay higher taxes to the federal government and they will be less willing to pay state and local taxes without the deduction.  States and localities spend most of their tax receipts on education.  It will be more difficult for states and localities to maintain funding for public universities and public schools as the net cost increases for many state and local taxpayers. In order to increase economic mobility we should be doing the opposite.  One of Brooks' conservative reform ideas is to increase access to education for low income citizens.  That will not happen as states and localities face a higher hurdle to fund education.

The Republican Party under Trump is doing what it has typically done since the 1980's.  Brooks understands this. He knows that they want to cut taxes for their donors, and he also understands that their policy proposals will not serve the interests of the populists who elected Trump. He claims that ignoring their interests will make them less well off and that will make them more likely to vote for Republicans.  Trump supporters, and many low income Republicans, have consistently been suckered by the hucksters who tell them that cutting taxes for the rich is good for them. GOP donors are willing to pay for their campaign promises.  The reform conservatives have no voice in the Republican Party.

How Trump Lies About His Impact On The Economy

One of the ways in which Trump lies or misleads us about the economy is that he changes his mind about important economic indicators.  For example, during the Obama administration he claimed that the low unemployment rate was meaningless because the statistic itself was faulty.  Now he brags about the low unemployment rate that his policies created.  The same thing is true about the performance of the stock market.  He claimed that presidents have no impact on stock prices when stock prices rose during the Obama administration.  Of course, now he takes credit for the performance of the stock market. When the stock market falls he will deny any relationship between his policies and falling stock prices.  If Trump managed a football team he would probably change the point system so that his team did well no matter how it performed.

For those who are interested in how the economy has performed under Obama and Trump, using the usual statistics,  this article contains the relevant data.