Economic wishful thinking

Mick Mulvaney, budget director for the nasty guy, has unveiled his boss’s strategy for the economy, dubbed MAGAnomics. For those not up on the latest acronyms, MAGA is Make America Great Again, the campaign slogan the nasty guy had embroidered onto his red cap. This economic strategy will be used to justify such things as tax “reform,” the nasty guy’s infrastructure projects, and the nasty guy’s future budgets.

Danielle Kurtzleben of NPR invited several experts to comment on various pieces of what Mulvaney had to say.

* The whole thing is based on a sustained 3% economic growth rate. Joel Naroff of Naroff Economic Advisors doesn’t see how that is achievable, “the possibility of that happening is between slim and none.” The Congressional Budget Office agrees, saying this plan will create an economic growth of 1.9% – in an economy already growing at 1.8%.

* The growth of the labor force is a big factor in economic growth. But the boomer generation is retiring and the birth rate is down. So what is the source of labor force growth? Immigrants. Which the nasty guy is determined to make sure we have fewer of.

But wait! Mulvaney says we’ll build up the labor force by “encouraging people back into the labor market via welfare reform.” But that “encouragement” is, from a GOP Congress, all about slashing the social safety net and not providing the help these people would need to actually get a job. In addition, there wouldn’t be enough people leaving welfare to overcome the boomer retirements and get to a 3% growth.

Kurtzleben doesn’t go into the problem of disappearing jobs because of automation.

* Gains in productivity could help. But those gains are pretty low right now and policies that might help productivity might also increase federal debt, which would slow the economy.

Here’s that automation thing again – the usual route in gains in productivity is to automate and get rid of human workers. And it seems (though the Kurtzleben doesn’t say so) that for a 3% growth to happen a very large segment of the population must be involved, not just the 1% who benefit from automation.

* Another route to economic growth is trade. Yet the nasty guy seems intent on blowing up trade deals.

So, no, MAGAnomics is not something to build gov’t policy around.