Joseph Stiglitz is a Nobel laureate and a former chairman of the Council of Economic Advisers, from 1995 to 1997.
During an interview with Bloomberg News, the Columbia University professor was asked to speak of the impact of a President Trump on the economy, should that happen and if he attempted to do all the things he’s promised his supporters he would do.
Trump has continuously promised to put big tariffs on Chinese imports. Asked how that would affect the U.S., Stiglitz responded:
Tariffs on China would have two immediate consequences. One, American workers who depend on low-cost Chinese goods would see their standard of living fall immediately. The likelihood that these industries will return to the U.S. is very low. On the other side, there would be retaliation. China would have within the World Trade Organization the right to impose retaliation against buying all the things they buy from the U.S. It would be a trade war. China would only do it selectively and the probability is that there would be more jobs destroyed than would be created. The net effect on employment would be negative. I think the U.S. would find itself the big loser.
This goes decidedly against the narrative that Trump and his minions like to push, in their claim that as a “good businessman” he’ll bring jobs back to America. It shows a pointed weakness in dealing with the complicated mechanics of the economy that go beyond opening a few hotels.
Stiglitz was further asked about the validity of the concerns Trump raises about China and the trade relationship our nation currently has with them.
What he is identifying is a standard naive concern, when I say naive, I mean wrong, that foreigners can undersell us. Would he be any happier if they had a different exchange rate and lower wages? No, they would be selling their goods into the U.S. Trade is based on comparative advantage, we have lost comparative advantage partly because we didn’t have a good manufacturing policy. We still have a comparative advantage for high tech. No economist would ever say you look at bilateral trade. This is a global trade system, we might buy manufactured goods and have a trade deficit with China but then we sell goods elsewhere, you can’t look at it in a bilateral way. The whole framework in which he looks at it is something that would be given a student in a principles course in economics an F.
Asked if he would grade Trump an “F” on the economy, Stiglitz confirmed that, yes, he would give Trump an “F,” stating that he just doesn’t understand economics.
The problem is, neither do those who support him. He has pulled a massive con on the American people, due largely in part to a dumbed down society that lacks the intellectual curiosity to dig any deeper than the surface of their anger at the system.