Posted on Wednesday, October 30, 2024
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by Outside Contributor
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You may have heard that last week 24 Nobel economists wrote that Vice President Kamala Harris’ economic plan would be better for America than the Trump agenda. The joint letter was spearheaded by the hyperpolitical Joseph Stiglitz. Yes, the same Joe Stiglitz who infamously flew to Caracas to endorse Hugo Chavez’s economic policies in 2007.
The letter claims the Trump economic plan would “lead to higher prices, larger deficits, and greater inequality.” They also warn of the risk of a worldwide recession if former President Donald Trump wins. All that was missing was the prediction of dead puppies.
If these apocalyptic claims sound vaguely familiar, you have a good memory. Turns out this is exactly what many in this gang of leftist economists warned of in 2016. Here are a few examples:
Nobel laureate Paul Krugman fumed in The New York Times the morning after the 2016 election: “It really does now look like President Donald J. Trump (has won), and markets are plunging. When might we expect them to recover? … We are very probably looking at a global recession, with no end in sight.”
Larry Summers, former President Bill Clinton’s treasury secretary and former President Barack Obama’s National Economic Council director, warned: “Under Trump, I would expect a protracted recession to begin within 18 months. The damage would be felt far beyond the United States.”
There were many more of these end-of-the-world prophecies laid out.
They were all spectacularly wrong. The economy boomed under Trump, as did the stock market.
Then in 2021, many on this same list of Nobel economists signed a similar open letter assuring us that President Joe Biden’s policies wouldn’t cause inflation. Oops. Ten months later the inflation rate surged to its highest level (9.1%) since the Carter administration.
I too have skepticism on some of Trump’s positions. I’m not a fan of high tariffs or special interest tax carveouts. But what is undeniable is that the 2016 economic agenda worked like a charm — as measured by the record-breaking $4,000 to $5,000 gain in real incomes for average families. Conversely, incomes are down in real terms under Biden-Harris. Oh, and someone tells these ivory-towered economists that inflation and income inequality went DOWN, not up, under Trump.
It’s virtually impossible for anyone to bat 1,000 in their predictions, but what is remarkable is that when it comes to Trump and Biden, they have managed to record a perfect record with their crystal balls.
They have been wrong every time.
Their disregard for common sense may be due to a severe case of Trump Derangement Syndrome. As an example, they argue that Trump tariffs will cause inflation, then they worry that Trump tax cuts will cause inflation. Excuse me, professors, but tax cuts and tax increases can’t both cause inflation at the same time. And if supply-side tax cuts increase production and work, they lower prices — as happened under Reagan and Trump tax rate reductions.
As an economist who cares about our profession, I’d love for these Nobels to simply admit they have been wrong and steer clear of politics. They should acknowledge that the real world is very different from the diagrams they draw on the chalkboards — and then just shut up. Or, better yet, move to the workers’ paradise of Venezuela.
Stephen Moore is a visiting fellow at the Heritage Foundation. He is also an economic advisor to the Trump campaign. His new book, coauthored with Arthur Laffer, is “The Trump Economic Miracle.”
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