Over My Shoulder | Mauldin Economics

Over My Shoulder

Robert Shiller: “Donald Trump and the Sense of Power”

December 2, 2016

Robert Shiller has posted his latest essay on Project Syndicate. Lately PS has been a bunch of liberal elites whining about the Trump election, not really offering me much, so I don't think I've posted anything from them for three or four weeks, but I still read them to see what the political and economic leaders are writing about.

I'm going to make an exception today and offer Shiller's essay because his last two paragraphs, after he meanders around, really go to the heart of the power behind Trump's coalition. The Democrats have been about the redistribution of wealth, and Trump has been talking about the redistribution of economic power. The middle class do not want to see taxes raised on the rich merely to get themselves a handout. They want the economic power to make it on their own. Quoting:

To satisfy his voters, Trump must find ways to redistribute power over income, not just income itself, and not just by taxing and spending. He has expressed only limited ideas here, like subsidizing school choice to improve education. But powerful economic forces such as technological innovation and lower global transportation costs have been the main drivers of increasing inequality in many countries. Trump can’t change this fact.

If those who lack the skills that today’s economy demands refuse redistribution, it is hard to see how Trump will make them better off. The Trump revolution, as it has been presented so far, seems highly unlikely to deliver what his supporters really want: an increase in workers’ economic power.

I agree that is a challenge. But I think Shiller is looking past some rather obvious things and missing some of the technological solutions that will help bring that economic power back to those red states by changing the regulatory and tax environments. Give entrepreneurs and the American marketing machine a chance. I think we will be surprised at the results.

Download - Donald_Trump_and_the_Sense_of_Power.pdf

Charles Gave: “Investing by the (Wicksellian) Book”

November 29, 2016

My friend Charles Gave gives us his thoughts on Wicksellian models based on the natural interest rate. His conclusion is that the recent large moves in bonds are not a problem but that if the raid on Baa rates moves at the same magnitude in the future, then it's look out below. A different model for looking at the world but something that I will be paying attention to.

Download - Investing_By_The_%28Wicksellian%29_Book.pdf