The Dunning-Kruger Presidency
From Wikipedia:
The Dunning-Kruger effect is a cognitive bias in which low-ability individuals suffer from illusory superiority, mistakenly assessing their ability as much higher than it really is.
On a related note, what I think was one of my best tweets ever -- with an immediate laugh for @CoyneOfTheRealm and a fly-over for the nitwit I was tweeting it to:
The Dunning-Kruger effect came to mind when I read economist Tyler Cowen terrific piece at Bloomberg on what he calls "Trump's Disastrous Pledge to Keep Jobs in the U.S.":
Using the law to forbid factory closures would have serious negative consequences. For one thing, those factories may be losing money and end up going bankrupt. For another, stopping the closure of old plants would lock the U.S. into earlier technologies and modes of production, limiting progress and economic advancement.An alternative policy would prohibit companies from cutting American production and expanding in Mexico within, say, a two-year window. But would that be effective? If a law is needed, it presumably means that Mexican production is more profitable, at the margin, than U.S. production. So if American companies couldn't shift production to Mexico, Mexican companies could expand production on their own. Or perhaps Mexico would look to non-American multinationals. The end result would be that Asian, European and Mexican investors would gain at the expense of U.S. companies.
American investors could also work around the law. If regulations prevented, say, Ford Motor Company from transferring its own capital funds to Mexico, what would keep it from using affiliates, subsidiaries, commercial alliances, or a complex web of foreign transfers to achieve more or less the same ends? The initial restrictions might prove as porous as the U.S. corporate income tax system.
Furthermore, if we limit the export of American capital to Mexico, the biggest winner would be China, as one of its most significant low-wage competitors -- Mexico -- suddenly would be hobbled.
Perhaps most importantly, a policy limiting the ability of American companies to move funds outside of the U.S. would create a dangerous new set of government powers. Imagine giving an administration the potential to rule whether a given transfer of funds would endanger job creation or job maintenance in the United States. That's not exactly an objective standard, and so every capital transfer decision would be subject to the arbitrary diktats of politicians and bureaucrats. It's not hard to imagine a Trump administration using such regulations to reward supportive businesses and to punish opponents. Even in the absence of explicit favoritism, companies wouldn't know the rules of the game in advance, and they would be reluctant to speak out in ways that anger the powers that be.
In other words, the Trump program for protectionism could go far beyond interference in international trade. It also could bring the kind of crony capitalist nightmare scenarios described by Ayn Rand in her novel "Atlas Shrugged," a book many Republican legislators would be well advised to now read or reread.
Chauncey Gardiner, at least, was kind of adorable. From Wikipedia:
Chauncey's simple words, spoken often due to confusion or to a stating of the obvious, are repeatedly misunderstood as profound; in particular, his simplistic utterances about gardens and the weather are interpreted as allegorical statements about business and the state of the economy.
Uhhhhh... guest worker visas and tariff deals are also "policy" - this article makes it sound like free markets are the natural order pre-Trump, when in fact most of the countries to which we've opened our trade impose layers and layers of protectionist regulation and tariffs on US-made goods.
Do you know what hoops a US programmer has to jump through to work in the European offices of the same multinational they're working for in Cali/Texas?
And as in most journalism of the new "Trump-horror" genre, it calls up phantom policy proposals that nobody in the Trump team is even entertaining.
Ben David at December 1, 2016 1:14 AM
Just as the immigration issue can be addressed by existing law, current tax policy can be addressed to achieve this result.
Radwaste at December 1, 2016 2:54 AM
I listened last night to the reports of how President-elect Trump and Vice-President-elect Pence have 'saved' 1000 jobs at a Carrier plant in Indianapolis, that were slated to move to Monterrey, Mexico.
How was this achieved, we ask ourselves? Well, come to find out that it was a combination of tax 'incentives' and (it was suggested) high-level pressure applied to United Technologies (the parent company of Carrier) which happens to have large defense contracts and hopes for more.
So let's recap.
In order to 'save' 1000 jobs
- all of the taxpayers of Indiana must pay more in taxes, to offset the tax 'incentives'.
- all 320 million Americans must pay more for their air conditioners.
- defense contracts will be awarded or withheld based upon the political whims of the President.
Hell of a 'savings', there.
It's a classic case of what is seen and what is not seen. And whenever government steps in to pick winners and losers in business and trade, the costs that are not seen will always outweigh the benefits which are seen. The 'deal' I described was presented as having 100% benefits - 1000 people kept their jobs. The costs to the rest of us are simply ignored. If this is how President Trump plans to run the country, don't expect things to get better anytime soon. Once it becomes clear that what decides how business shall be run is not the interests of the business and its consumers, but the interests of the President, the ways that will be found to persuade the President what his interests are will leave you breathless.
llater,
llamas
llamas at December 1, 2016 3:24 AM
As soon as China and Mexico abide by the same EPA and OSHA mandates as we do, we will have fair trade. Which is to say, never in my grandchildren's lifetimes. The taxpayers in Indiana were going to pick up the unemployment and welfare costs for those unemployed workers, another cost which is also ignored. The search for cosmic equality continues.
I survived a much bigger layoff by the same company in Syracuse, NY, in part because political pressure was applied because the same company took advantage of tax breaks and incentives to create jobs. You can keep the money if you retain engineering and finance jobs was the deal. Level playing field, indeed - not. If you pay American workers like Mexican workers, they are going to have to live like Mexicans in Mexico. Among us. Your economic safety net is going to be the largesse of some gangster, whose Mercedes you wash from a bucket of water, so you can eat, today. Maybe you can hire someone to guard your house while you go to work.
Live long enough, pay attention, and you'll figure out that no one is telling the truth, the whole truth, and nothing but the truth. Except my drill instructor. "Life is unfair, and then you die."
MarkD at December 1, 2016 5:36 AM
http://blog.dilbert.com/post/153865618451/the-idea-you-are-least-likely-to-believe
I R A Darth Aggie at December 1, 2016 6:28 AM
So it's populism. Generally I distrust populism, but I admit that sometimes it's a necessary correction when everything else has failed. Mike Lee wrote a good article yesterday (I'll go find the link) about a new kind of fusion conservatism: populists who are good at pointing out problems that everyone else is ignoring, and libertarians who come up with solutions and discourage the populists from turning to authoritarianism.
One thing that a lot of free-traders (including myself) seem to be coming around to lately is the realization that you can't have free trade with a nation that has an un-free economy. China's economy is totally stage-managed by its government, and they can (and do) rig the rules in their favor. Mexico has gangster government, which isn't as organized but has much the same effect by means of, as MarkD pointed out, the cumulative effect of a whole bunch of banana-republic strongmen being able to compel things in their vicinity.
And, as noted, even the free economies that we trade with have often played us for the chump. The two major producers of regional jets in the world are Bombardier in Canada and Embraer of Brazil, both of which are heavily subsidized. They went through a rather amusing roundabout with the WTO about ten years ago, in which the two countries both accused each other of illegal subsidies. The WTO found both of them at fault, to which the both replied "Up yours" and doubled down on what they were doing. In the process they drove the non-subsidized American aircraft company Fairchild out of the market.
One thing that Trump voters are sick of is the traditional American civilized values that they believe in being viewed as weaknesses to be exploited, both by enemies and by the international ruling class. Now, they need to be realistic. $40/hour union jobs for semi-skilled labor aren't coming back -- they were a chimera in the first place. And automation is going to find its place. But as things exist now, there are a whole bunch of disincentives to hire American workers. The libertarian response to all of this is that we need to get rid of the minimum wage, cut a lot of regulations, and generally reduce the size and scope of government. Special-favor tax breaks won't have as much attraction if taxes are lower to begin with (although we should not eliminate states being able to compete on taxes). And we need to make free trade actually mean that -- free flow of products in both directions, with the products on both sides being produced in a free market. If a trade partner won't commit to that, slap tariffs on their stuff.
(MarkD, I'm familiar with the Carrier thing... I travel to Syracuse frequently on business, and I usually stay at one of the hotels off of Carrier Circle.)
Cousin Dave at December 1, 2016 7:21 AM
We already know Trump exaggerates in his own mind his business prowess. The failures of several of his ventures (Trump Air, Trump Wine, Trump Steaks, Trump University, etc.) and his refusal to admit or accept those failures indicate a man much too in love with his own branding.
However, at the core, is a man who does understand a few things about branding and general business. His failure was his refusal to learn the specifics of each industry.
For example, Trump Air failed because Donald Trump refused to learn the specifics of the airline industry, insisting that the Trump name alone was enough to lure passengers. His jets were aging and needed extra maintenance, a cost which was discounted in his business plan. His routes were limited, a drawback when trying to lure customers with air miles (customers want to use those miles on a flight to Hawaii for their vacation rather than to New Jersey). Losing the affiliation with a major carrier didn't help. Earlier labor strife with Eastern Shuttle before it became Trump Air sent many passengers to Pan Am Shuttle, never to return. In an over-saturated industry with high barriers to entry, a small airline flying older aircraft on limited routes with no affiliate relationship is going have a difficult time.
Conan the Grammarian at December 1, 2016 8:48 AM
One thing Trump understand better than his opponents and critics is political theater.
The Carrier deal, saving 1,000 families their livelihood, coming right at Christmas time is well-done political theater. And the cost, $700 per job saved, is considerably less than it would cost the state to provide unemployment benefits for those employees. The precedent of a president getting involved in a deal like this is worrisome, but precedence is a concern for later politicians and courts. Trump's got a show to put on. And, at the very least, it's a better show than the Beer Summit was.
Conan the Grammarian at December 1, 2016 9:01 AM
"The Dunning-Kruger effect is a cognitive bias in which low-ability individuals suffer from illusory superiority, mistakenly assessing their ability as much higher than it really is."
The Dunning Kruger presidency is the current administration.
Obama's cluelessness about the economy, the business world, health care and foreign policy is going to be tough to beat.
The fundamental skill of any president, restrained by the constitution, is hiring good people.
This is something Trump has lots of practice at. Obama had none, and he didn't * grow into* the job..
• “I think that I’m a better speechwriter than my speechwriters. I know more about policies on any particular issue than my policy directors. And I’ll tell you right now that I’m gonna think I’m a better political director than my political director.”
This quote was attributed to Obama by Patrick Gaspard, who was Obama’s first White House political director, in an interview with The New Yorker in November 2008.
Isab at December 1, 2016 11:53 AM
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