Tag Archives: 2016 Election

NAFTA’s Effects on the US

On his blog, Dani Rodrik comments on NAFTA’s implications for US manufacturing and jobs.

So here is the overall picture that these academic studies paint for the U.S.: NAFTA produced large changes in trade volumes, tiny efficiency gains overall, and some very significant impacts on adversely affected communities.

… Mexico has been one of Latin America’s underperformers.

So is Trump deluded on NAFTA’s overall impact on manufacturing jobs? Absolutely, yes.

Was he able to capitalize on the very real losses that this and other trade agreements produced in certain parts of the country in a way that Democrats were unable to? Again, yes.

Ayn Rand in the White House

In the Washington Post, James Hohmann reports that U.S. President-elect Donald Trump and his candidate for secretary of state, Rex Tillerson, share an affection for Ayn Rand’s “objectivist” philosophy. Trump

identifies with Howard Roark, the main character in [Rand’s] “The Fountainhead”

while Tillerson prefers “Atlas Shrugged” which I reviewed here. Other prospective members of the new administration also hold objectivist views while Stephen Bannon rejects “unenlightened capitalism” a la Ayn Rand.

Polarized Labor Markets

In the NZZ, Thomas Fuster and Jürg Müller interview David Autor. Autor on polarization:

Der Arbeitsmarkt wird immer polarisierter. Auf der einen Seite haben wir viele gutbezahlte, hochqualifizierte und interessante Stellen. Auf der anderen Seite stehen schlechter entlöhnte und niedrigqualifizierte Stellen, bei denen es quasi darum geht, dem Wohl und Komfort der Wohlhabenden zu dienen. Das ist keine gesunde Entwicklung. Sie schlägt Stufen aus der Leiter des wirtschaftlichen Aufstiegs. Das hemmt die Mobilität.

America: Many Open Questions

US voters have abandoned political correctness. Have they also abandoned decency?

They have clearly voted for “change.” Eight years ago, they did the same.

They have voted against competence according to common standards. Maybe because they perceived competence to be correlated with “no change.” Maybe because they viewed competence as a weakness. Picking non-competent leaders can pay off in specific bargaining situations. In general, it is unlikely to pay off in the longer term.

Race was key. Whites strongly favored Trump over Clinton, and non-whites strongly favored Clinton over Trump. Non-whites will continue to grow as a share of the voting population.

Voters were unhappier than ever with the two candidates. Are they sufficiently unhappy to trigger the beginning of the end of the system of presidential primaries?

Some members of the old elite have lost. Who are the new members to follow them? How will the elites respond to this experience? By becoming more inclusive? Or by protecting themselves from the mob?

The new vision of American foreign policy is less clear than ever. Will the traditional US-allies rise to the challenge? European aerospace and defense stocks. US aerospace and defense stocks.

We have seen in the past how major political shocks can affect a country’s attractiveness for foreigners, its role as a cultural and scientific center, and in the longer run, its international influence. Will we see the same in the US?

How will the American election affect how other countries view the case for or against democracy (see earlier post)?

In the New York Times, Paul Krugman fears that America is a failed state and society. He writes

There turn out to be a huge number of people — white people, living mainly in rural areas — who don’t share at all our idea of what America is about. For them, it is about blood and soil, about traditional patriarchy and racial hierarchy. And there were many other people who might not share those anti-democratic values, but who nonetheless were willing to vote for anyone bearing the Republican label.

The West’s Flight from Dignity

In the FT, Edward Luce worries about a loss of dignity that is reflected in contemporary politics.

Republicans generally favour liberty over equality and Democrats the reverse. Other people’s dignity is not up for grabs. Mr Trump’s hostile takeover of the Republican party has shredded that equation. … “You walked out of a Reagan rally in a spirit of optimism,” says Stuart Stevens, an adviser to Republican nominee Mitt Romney. “You leave a Trump rally ready for a fight.” …

… Luigi Zingales, recalls an event … The shocking part was not Mr Berlusconi’s boorishness but the audience’s wild applause. “Such approval would have been unimaginable before the rise of Berlusconi,” said Mr Zingales. “There is no way of measuring the degree to which he has debased public life in Italy.” The same applies to the Trump effect. But the quality of Italy’s democracy is largely an Italian affair. … What happens in America shapes the fate of democracy around the world. …

Mr Trump’s rise is bad news for our system of government on three fronts. First, he has shown you can rise to the top of the world’s most cherished democracy by scapegoating entire categories of people. … Second, he has made post-factual politics respectable. … Finally, Mr Trump has corroded faith that rules-based societies are self-sustaining.