Paul Krugman: Trump Does Not Deserve Credit For "Booming Economy"

 This is an article by Paul Krugman, published in The New York Times on August 25, 2020, entitled "Republicans, businesspeople, and other bad economists":

The U.S. economy just experienced the worst slump in its history. It has partially bounced back, but employment and output are still far lower than they were at the beginning of the year. Furthermore, early data suggest that the partial recovery has slowed if not stalled, and there will be widespread distress soon as expanded unemployment benefits run out.

Yet Donald Trump still, according to most surveys, has a net positive rating on the economy. How is that possible?

Before I get there, a few points on why giving Trump positive marks on the economy is absurd.

First, a picture. Here’s total employment since the end of the 2007-9 recession, which was brought on by the collapse of the Bush-era housing bubble and the financial disruption that followed. As you can see, there was steady growth under Barack Obama, but with the election of Trump … absolutely nothing happened. The trend continued as before, and nothing in the economic data would lead you to suspect that there had been any change in management.

In 2017, nothing happenedBureau of Labor Statistics

The only change came with the coronavirus, about that more in a minute.

Second, the key point about Trump’s economic policy was that mostly he didn’t have one. Oh, he got us into a trade war with China, which seems to have had some negative effect on manufacturing. And he passed a huge tax cut for corporations, which basically seems to have, well, cut corporate taxes; there was no sign of an acceleration in investment, productivity, or anything else.

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Now, there was a huge policy response to the coronavirus: The CARES Act, which greatly cushioned the blow by expanding unemployment benefits. But that was basically a Democratic bill, designed by Nancy Pelosi and Chuck Schumer, that Republicans let by because they didn’t have any better ideas.

And when key provisions of the CARES Act expired at the end of last month, Trump responded with some executive orders that seem likely to do almost nothing to alleviate a sharp increase in hardship.

So what, exactly, are voters approving of?

Part of the answer is that the G.O.P. is still the party of big business and the wealthy, and the general public suffers from the persistent delusion that people who can run businesses and/or make a lot of money for themselves also know how to run an economy.

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The truth is that the knowledge and talents required for, say, being a successful CEO are very different from those required to make good economic policy. Corporations are command-and-control organizations in which executives can tell subordinates what to do; market economies aren’t. Corporations compete with each other, while countries mostly don’t, because they are their own main customers — my spending is your income, and your spending is my income. So the principles of good economic policy are nothing at all like the principles of good management, which is why even genuinely great businessmen like Herbert Hoover have made terrible economic leaders.

And don’t tell anyone, but Donald Trump is not, in fact, a great businessman.

I also suspect that there’s a form of media bias here that isn’t explicitly partisan but has the same practical effect. Where, after all, does economic policy get discussed most? In business publications, on TV shows catering to business audiences, and so on. And these venues naturally give more credence to politicians who praise business and promise to cut rich peoples’ taxes. So an innumerate Ayn Rand fanboy like Paul Ryan was long the darling of business media, while an infinitely more knowledgeable figure like Elizabeth Warren can barely get a word in edgewise.

So I’m disappointed but not surprised that Trump is still getting much better marks than he deserves on the economy. And I’ll be equally disappointed but not surprised if Joe Biden gets much less credit than he deserves if, as seems likely, he gets the chance to clean up Trump’s mess.