January 12, 2017

Professors Discuss Economic Impact of Trump

An economist, a historian, and a political scientist met Tuesday to discuss the economic consequences of the impending Trump presidency.

Historian of American capitalism John Levy joined political scientist Robert Gulotty and economics professor Kevin Murphy for the panel discussion. The panel was organized by the Chicago Economics Forum.

The panelists first turned their attention to the populist grassroots movement Trump harnessed to win the election. Levy remarked that populism is ideologically flexible, an idea Gulotty echoed, calling populism, “such an amorphous concept,” which is not tied to a political ideology in the United States.

Murphy also examined the populist psyche in the United States, explaining that it was a product of the “visible” and “invisible.” As he explained, “When things are tough, people look for reasons why it’s tough.”

In response to a following question, Murphy attacked Trump’s immigration policies. He explained it was once again a problem of the visible and invisible. What was visible to most people was that immigrants had jobs, and Americans did not. But Murphy emphasized that immigrants “don’t just produce labor, they demand labor…. What’s invisible is the jobs that are created” when immigrants take their earnings and spend them.

The panelists also discussed Trump’s tariff proposals and how they aim to return overseas jobs to America. Levy explained that this was the wrong approach; the fundamental driver of the loss of manufacturing jobs in America was automation, and “those jobs aren’t necessarily coming back.”

The panelists generally agreed that trade agreements are simply “easy to attack” for Trump, as a “visible” sign of economic decline, but do little to solve the core problems in the American economy.

Instead of limiting trade and immigration, Murphy especially seemed to advocate for education initiatives as the solution to America’s current economic woes, explaining that the economy right now was experiencing a dearth of high skill labor.

The populist movement that elected Trump was part of a broader wave of populist movements across the world. “The clearest place [populism] is growing right now is in Europe,” Gulloty said, before cautioning that visa-free Schengen area might soon break up. Levy concurred, explaining that “nationalism has a lot of wind at its back,” and the current discontent isn’t likely to be alleviated soon.

Murphy offered one silver lining: the tendency of populism to latch onto the visible rather than invisible means populism cannot attach to real issues and become an enduring movement.

He also offered perhaps a more subjective view of Trump’s recent electoral success, explaining that “people don’t get nearly as mad at billionaires, as they do at young whippersnappers…. You guys don't know shit.”

Clarification on Jan. 14, 2017, 4:01 p.m. CST:

The article was updated with the name of the hosting organization.