Epstein on Trump's Influence on the Economy
By David Henderson
My Hoover colleague Richard Epstein is a law professor, not an economist. Although law professors sometimes tell me to stick to economics and leave thinking about law to them (Richard has never done so to me, by the way), I have never responded in kind. I think law professors should feel free to think and write about economics but should subject themselves to criticisms by economists.
Fortunately, I don’t have a criticism of Richard’s most-recent piece on economics. Far from criticizing, I think it’s a first-rate analytic piece, especially given the difficulty of the subject he tackles. As he points out in the first few paragraphs of his recent Hoover article, “Not Obama’s Economy,” it’s hard to tease out the effect of one president on an economy when there are so many factors at play.
So to do so, Richard chooses a marvelously simple but powerful analytic approach. He looks at the major changes to policy under President Obama and considers whether each was likely to foster or hamper economic growth. His bottom line, using basic economics, is this: each policy was likely to hamper economic growth. So then when we see higher economic growth under Trump, and we can point to factors that are reasonably good candidates for causes of that growth, such as the tax reform bill in December and the ongoing deregulation of various sectors of the economy, there’s a good case to be made that Trump’s policies are much more responsible than Obama’s policies for the recent high growth.
Is it a slam dunk? No. But it’s the best attempt I’ve seen so far to address this important issue.
Richard cautions, though, as would any economist or economically literate law professor, that one factor that is undercutting growth and will undercut growth is Trump’s hostility, expressed in recent regulations, to free trade.
There’s one sentence in Richard’s piece that I don’t completely understand. He writes:
The passage of the Motor Vehicle Act, National Labor Relations Act, the Fair Labor Standards act, the Civil Aeronautics Act and the Agricultural Adjustment Act—cartels all—retarded economic activities for decades to come.
I get the bad effects of the last 4 of the 5 laws he names. I hadn’t heard, though, of the first one—the Motor Vehicle Act—and some googling didn’t return results that satisfied my curiosity.
Note: As Paul A. Sand points out below, Richard almost certainly meant to refer to the Motor Carrier Act, not the Motor Vehicle Act.