My favorite Keynesian has another good piece on Trump and the media. In speaking to the Carrier deal and more broadly to employment in general Krugman argues that these interventions are in fact fake policy that have little effect and are getting far too much attention in the news media:
…it may have sounded as if Mr. Trump was doing something substantive by intervening with Carrier, but he wasn’t. This was fake policy — a show intended to impress the rubes, not to achieve real results.
A blog post by Paul Krugman suggests to me that Trump may know a lot about commercial real estate but not much about manufacturing.
What happens if the protectionist-in-chief goes ahead and does it, as I suspect he will? …But what would happen would be a global trade war, which would disrupt the existing economic structure, which is built on elaborate international supply chains. …In the long run, a new structure with shorter chains would be built. But in the meantime, some industries, some factories, would end up becoming sudden losers — in the US as well as in developing countries.
The China Shock and the Trump Shock
The Trump Carrier deal is about 800 workers, at most, in a nation of 145 million workers. It is hard to put big numbers in perspective. I struggle with this all the time. However to put 800 jobs in perspective consider the following:
- 1% (or 1 in 100) is 1,450,000.
- One in 1,000 is 145,000.
- one in 10,000 is 14,500.
- One in 100,000 is 1,450.
So saving 800 jobs is like saving something less than 1 in 100,000 jobs. Presidents usually focus on policies that move unemployment by 1% or 0.5% not in the range of .001% to .01%. Trump is indeed shooting small by a factor of 100 to 1000. And at what cost – could the money be better spent?