“Larry Kudlow, phoner!!”, Jim Cramer exclaimed, on Friday morning, misspelling “phony”.
We jest. Jim was excited. A little more than an hour previous, the November jobs report blew away estimates and his old friend-turned economic propaganda minister was about to bombard CNBC’s audience with the traditional post-NFP, raspy-throated advertisement for Trump’s brand of supply-side gimmickry.
Trump quote-tweeted Jim around 15 minutes later:
To be clear, the jobs report was, in fact, a blowout. And the US recession narrative has likely been banished from the discussion at least for the next month or so. But let’s be honest, this kind of brazen balderdash is wholly disingenuous and has no place in any serious discussion about the economy.
This wasn’t even the best jobs report of Trump’s presidency, depending on how you define “best”. That is absolutely not to take anything away from a great set of numbers, but Americans are being force-fed a silly narrative that serves to perpetuate the Trump mythology.
Importantly, it is that very mythology that emboldens him to continually undermine the country’s democracy, run roughshod over his critics and throw caution to the wind when it comes to America’s finances.
Trump has managed to juice the economy with late-cycle fiscal stimulus, but it’s hardly a surprise that piling deficit-funded tax cuts atop an already strong economy leads to a sugar high. A simple way to conceptualize Trump’s economic agenda is to think of it as a historical anomaly. Here’s the visual that illustrates the point:
This has no precedent. And it might be defensible if it were being orchestrated in a way that’s designed to benefit lower- and middle-income Americans, but it’s not.
The math on the tax cuts shows to whom the benefits disproportionately accrue – just ask CNBC.
Meanwhile, the incessant chatter from Kudlow (and Trump) about a possible tax package for “middle-income” voters is stone, cold proof that the administration is fully apprised of the extent to which regular people simply haven’t seen the same kind of prosperity gains as the wealthy over the last three years.
And indeed, how could they? The vast majority of financial assets are concentrated in the hands of rich people – people like Jim Cramer, who is roughly 1,000 times richer than the median American household.
As of the second quarter, the top 1% controlled as much wealth (basically) as the 50-90th percentile combined. You’ll note that this was not the case 13 years ago.
Quite a bit of that dynamic is explainable by rallies in financial assets which, again, are hoarded by the rich, who then champion policies that are likely to drive the value of those assets higher still.
Policies like corporate tax cuts which, in addition to inflating corporate bottom lines (thereby pushing up stock prices), incentivize buybacks, which push prices even higher.
Not all of this is Trump’s doing, of course. But there is a very real sense in which people like Larry Kudlow have been selling regular Americans a lie for decades.
Contrary to what you might be inclined to believe if you listened to Kudlow or Stephen Moore (neither of whom are economists despite CNBC and other networks referring to them as such), supply-side economics has a wholly dubious track record, unless you count exacerbating wealth inequality as a “success”.
It’s true that post-crisis monetary policy has played a (large) role in perpetuating that same inequality, but think about what kinds of policies contributed to the collapse of the system (i.e., what kinds of policies conspired to set the stage for a collapse so bad that monetary policy had to resort to extreme measures to avoid ATMs going dark). Deregulation and blind faith in the inherent wisdom of unbridled, unchecked “free markets” were in no small part responsible for the crisis. Period.
There’s no shortage of commentary in cynical opinion columns, on libertarian blogs and among the Twitterati maligning the Kudlows and Cramers and Stephen Moores of the world. But much of that criticism is based not on what they stand for, but rather on their penchant for abject buffoonery.
Where’s the outrage at the continual championing of policies that, frankly, are designed to make the rich richer and are, at best, agnostic towards the fate of the poor? Where’s the acknowledgment that no matter how much central banks have contributed to widening the wealth divide post-crisis, the proximate cause of the 2008 meltdown was, arguably, too much faith in free markets?
More to the point: Where’s the honesty when it comes to admitting that, pretensions to “leveling the playing field” (as Cramer says on his show) and enlightening the masses to “the truth” (as many libertarian blogs claim to do in their coverage mix) notwithstanding, the bottom line is that if you’re not rich (or what most people would consider “rich”) Trump, Cramer, Kudlow and anyone pushing supply-side economics and/or maligning policies aimed at redistributing wealth, is absolutely acting against the best interests of the vast majority of Americans?
“Hate him or like him–best number in 50 years”, Cramer tweeted on Friday morning, of Trump.
Well, “hate her or like her”, Elizabeth Warren is right. The system is rigged. It works for people like Cramer, which is why they work so hard to perpetuate it, even up to the point of implicitly endorsing people like Trump.
And even if it means mortgaging your grandchildren in pursuit of next quarter’s earnings numbers. (Because what, exactly, do you think taking on more debt to finance corporate tax cuts is?)
You can hardly blame these folks for looking out for themselves and for the best interests of their “kind”, so to speak. Human beings are, after all, inherently self-interested. But that shouldn’t blind you to the broader economic reality, just as liking Donald Trump shouldn’t blind you to the reality of his various misdeeds.
By all means, be greedy. Be selfish. And hell, do it at the expense of others. But don’t insult everyone else’s intelligence (not to mention your own), by pretending you don’t understand what you’re doing and the implications it has for the rest of humanity.