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OpinionFrom Voodoo Economics to Evil-Eye Economics

18:10  23 august  2019
18:10  23 august  2019 Source:   nytimes.com

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For voodoo economics isn’t just a doctrine based on magical thinking. It’s the ultimate policy zombie, a belief that seemingly can’t be killed by evidence. Can opposition politicians really cause a recession with negative thinking? This goes beyond voodoo economics ; maybe we should call it evil - eye

From Voodoo Economics to Evil - Eye Economics . Paul Krugman, New York Times August 23, 2019.

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of MSN or Microsoft.

From Voodoo Economics to Evil-Eye Economics© Illustration by The New York Times; photograph by Doug Mills/The New York Times

Almost four decades ago then-candidate George H.W. Bush used the phrase “voodoo economic policy” to describe Ronald Reagan’s claim that cutting taxes for the rich would pay for itself. He was more prescient than he could have imagined.

For voodoo economics isn’t just a doctrine based on magical thinking. It’s the ultimate policy zombie, a belief that seemingly can’t be killed by evidence. It has failed every time its proponents have tried to put it into practice, but it just keeps shambling along. In fact, at this point it has eaten the brains of every significant figure in the Republican Party. Even Susan Collins, the least right-wing G.O.P. senator (although that isn’t saying much), insisted that the 2017 tax cut would actually reduce the deficit.

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Voodoo economics is a derogatory phrase used by George H. W. Bush in reference to President Ronald Reagan's economic policies, known as "Reaganomics." Voodoo economics has since become a popular, widely-used phrase to dismiss ambitious economic pledges made by politicians.

From Voodoo Economics to Evil - Eye Economics .

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During the 2016 campaign Donald Trump pretended to be different, claiming that he would actually raise taxes on the rich. Once in office, however, he immediately went full voodoo. In fact, he has taken magical thinking to a new level.

True, whenever tax cuts fail to produce the predicted miracle, their defenders come up with bizarre explanations for their failure.

My favorite until now came from Art Laffer, the original voodoo economist and recent recipient of the Presidential Medal of Freedom. Why did George W. Bush’s tax-cutting presidency end not with a boom, but with the worst economic slump since the Great Depression? According to Laffer, blame rests with Barack Obama, even though the recession began more than a year before Obama took office. You see, according to Laffer, everyone lost confidence upon realizing that Obama might win the 2008 election.

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What others are saying. From Voodoo Economics to Evil - Eye Economics - who new that we could do easily undo all of Trump's economic work? Debt Doomsayers and Double Standards Federal Budget (US) United States Politics and Government United States Economy News and News Media

Zombies of Voodoo Economics . By Paul Krugman. In other words, supply-side economics is a classic example of a zombie doctrine: a view that should have been killed by the evidence long ago, but just keeps shambling along, eating politicians’ brains.

But Trump has gone one better. As it has become increasingly clear that the results of his tax cut were disappointing — recent data revisions have marked down estimates of both G.D.P. and employment growth, to the point where it’s hard to see more than a brief sugar high from $2 trillion in borrowing — Trump has invented ever more creative ways to blame other people. In particular, he’s now claiming that the promised boom hasn’t arrived because his opponents are hexing the economy with bad thoughts: “The Democrats are trying to ‘will’ the Economy to be bad for purposes of the 2020 Election.”

Can opposition politicians really cause a recession with negative thinking? This goes beyond voodoo economics; maybe we should call it evil-eye economics.

To be fair, the claim that Democrats are hexing his boom is a secondary theme in Trump’s ranting. Mostly he has been blaming the Federal Reserve for its “crazy” interest rate hikes. And the truth is that last year’s rate increases pretty clearly were a mistake.

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From Voodoo Economics to Evil Eye Economics | NYTimes.

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But blaming the Fed for the tax cut’s fizzle won’t wash. For one thing, the Fed has actually raised rates less than in previous economic recoveries. Even more to the point, the Trump economic team was expecting Fed rate hikes when it made its extravagantly optimistic forecasts. Administration projections from a year ago envisioned 2019 interest rates substantially higher than what we’re actually seeing.

Put it this way: The Trump tax cut was supposed to create a boom so powerful that it would not only withstand modest Fed rate hikes, but actually require such hikes to prevent inflationary overheating. You don’t get to turn around and claim betrayal when the Fed does exactly what you expected it to do.

Aside from blaming everyone but himself, however, how will Trump deal with the failure of his economic promises? He has taken to demanding that the Fed roll the printing presses, slashing interest rates and buying bonds — the actions it normally takes in the face of a serious recession — even as he claims that the economy remains strong, and unemployment is in fact near a historic low.

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Voodoo Economics . 968 likes. Louisville diner-rock. Voodoo Economics shared an event. 8 January ·. Howdy ho y'all! We've been quiet for a while but it's about to get loud at Zanzabar on February 15th!

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As many people have noted, these are exactly the actions Republicans, including Trump, denounced as “currency debasement” when unemployment was far higher than it is today and the economy desperately needed a boost.

Since the Fed is unlikely to oblige, what else might Trump do? Officials have floated, then retracted, the idea of a cut in payroll taxes — that is, a tax break for ordinary workers, rather than the corporations and wealthy individuals who mainly benefited from the 2017 tax cut. But such action seems unlikely, among other things because top administration officials denounced this policy idea when Obama proposed it.

Trump has also suggested using executive authority to reduce taxes on capital gains (which are overwhelmingly paid by the wealthy). This move would have the distinction of being both ineffectual and illegal.

What about calling off the trade war that has been depressing business investment? This seems unlikely, because protectionism is right up there with racism as a core Trump value. And merely postponing tariffs might not help, since it wouldn’t resolve the uncertainty that may be the trade war’s biggest cost.

The truth is that Trump doesn’t have a Plan B, and probably can’t come up with one. On the other hand, he might not have to. Who needs competent policy when you’re the chosen one and the king of Israel?

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