A leading economist explains why Trump is a 'placebo president'

Josh Barro: You say that you are optimistic that dynamism will return to the United States. Does it — how much does it matter whether we have good or bad public policies? Is that a thing that’s just cyclical and it’ll come back or does the government have to do something specific to cause that to happen?

Tyler Cowen: I think it matters a lot, but at this point I’m not optimistic about reform in many, if any, policy areas at all. I think we’ll make further progress by inventing new things that aren’t much regulated yet and outracing bad policy. I look at so many policy areas — regulation, regulatory reform, health care reform — it’s all failing, we’re not making improvements, we’re going backwards. As we were discussing before, the new Republican health care plan appears to be a step backwards. Trump’s getting rid of two regulations for every one passed. Maybe it’s better than nothing. It’s not going to be very effective compared to the total stock of regulation. It’s not going to work.

Barro: So does it matter that Donald Trump is president? Does that concern you about these trends? Setting aside his ideology, he does not seem like an especially competent manager of the government as a bureaucracy.

Cowen: I sometimes call Trump the placebo president. He will talk a big game, but for domestic policy I think change remarkably little. I worry much more about foreign policy, not the topic of my book, but there I think the president matters much more.

Barro: Can there be any benefits from Trump as a placebo president?

Cowen: Absolutely.

Barro: So, walk us through how that could help.

Cowen: Here’s a scenario, I’m not saying this is how things is, I’m just saying one possibility.

Barro: And so, first of all, explain what you mean when you say he’s the placebo president.

Cowen: That people feel better because he says all kinds of things no one else would say and we get certain tendencies out of our system. So if attacking immigrants, say, is a substitute for doing something worse, there’s at least a scenario under which that’s a better alternative than something else that might have happened. Here’s the positive scenario: that something has been going wrong in American society. You see it in wage growth, opioid abuse, many other social indicators, as you know. Sometimes it’s better to get the bad reaction to that over with quickly while your civil society still is strong and you can react and respond and protest, and you know, four or eight years from now, make another decision, and maybe it’s better to have that happen now than 20 years later when some of our problems are worse and our national mood is worse.

A leading economist explains why Trump is a 'placebo president'

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