Radio debate on RSI taking stock of the economics of Mr. Trump
I had the privilege to be invited to a Radio debate on Radio della Svizzera Italiana with former IMF director Carlo Cottarelli to discuss the economic consequences of Mr. Trump’s (first?) administration. Listen to the debate (in Italian) here.
Here is the Upshot of my argument:
For the first three years of his mandate, Trump presided over a goldilocks economy which largely was not of his own making, even though he created a strawfire with an ill-timed and unbalanced fiscal reform that favors the rich and limited fiscal space. The economic consequences of his denial of the COVID challenge will pose the greatest threat to his re-election.
Regarding his America-first agenda, his promise to bring back jobs in the classical manufacturing sector remains largely unfulfilled. His unilateralism alienated European allies and led to a trade war with China which is ill-targeted in its focus on traditional trade in goods. More recently the focus has shifted to a strategic rivalry with China in high technology and the internet as well as to issues regarding IP protection and the level playing field in foreign direct investment. Here he has a point and this is a key issue that will stick around under future administrations, be they republican or democrat.
Future administrations will have to deal with built-in injustices of the tax system that have been reinforced by Trump’s reform. The focus here will not necessarily have to be on fiscal consolidation — the US can afford to borrow and , provided it is doing well economically, it can outgrow even very high levels of public debt — but on tackling economic inequality.
Mathias Hoffmann is Professor at the Department of Economics at the University of Zurich. His research focuses on the macroeconomic aspects of international financial integration and on the link between financial markets and the macro-economy more generally. His recent published articles include papers on the determinants of international capital flows and imbalances, the international transmission of business cycles, on international risk sharing, banking regulation, and housing markets. Prior to arriving in Zurich, he was Professor at the University of Dortmund in Germany and a Lecturer at Southampton University (UK). He holds a PhD in Economics from the European University Institute in Florence and obtained his undergraduate education in economics and mathematics at WHU School of Management, Brandeis University and the University of Bonn.
Mathias Hoffmann is affiliated with the University of Zurich’s research priority program in financial regulation (URPPP FinREG), a fellow of CESifo Munich and of the Centre for Applied Macroeconomic Analysis (CAMA) at the Australian National University, and has held visiting positions at the University of California at Berkeley, the Deutsche Bundesbank, the Bank of Finland, the Hong Kong Monetary Authority, the Bank for International Settlements, Norges Bank, Keio University and Stanford University.