Misused Theories Behind Trump’s Economic Policies

Abstract

The fundamental economic problem in America and most of Europe, too, is the Great Western Slowdown and the ensuing symptoms: weak investment, generally falling rates of return on investment, enlarged markups, declining job satisfaction, and near-disappearance of exhilarating growth. This fifty-year decline is not addressed by our politicians—least of all by President Donald Trump. Recent economic policies, not just Trump’s, have relied on and misused Keynesian theory. Through a survey of 14 OECD countries, I analyze the effectiveness of fiscal and monetary stimulus on a country’s speed of recovery from the Global Recession of 2008. The results support my position that today’s politicians need to focus not on stimulating demand but nourishing economic dynamism.