Today’s round-up – 1st February 2017

1. Thinking of trying populist economics? Not so fast
Economic populism as practiced by governments has a long history. Many governments have tried to insulate their countries from economic realities by all manner of avoidance tactics and strategies, including price control, tariffs, financial import and export controls, and, if all else fails, printing of money to perpetuate the illusion of liquidity.
As this paper analyzing the results of populism in Latin America shows, most of these measures do not work in the medium-term.

2. The illusion that trade deals are bad for the USA and that the USA can do something about it
Another rhetorical flush that Donald Trump played consistently in his campaign was to claim that most of the bilateral and multilateral trade deals that the USA has with other countries and trading blocs are really bad deals. In the typical blustery braggadocio of the deal-maker, Trump promised to renegotiate those deals and get a better outcome for the USA.
Umm…no. This article explains why some of those deals were actually quite good deals for the USA at a time when the USA had a lot more economic leverage than it currently has. The USA will find that re-opening these deals will result in worse outcomes for the USA, unless Donald Trump is thinking of upping the ante by sending over the carrier groups, or some other form of threats. That would not be a good thing. The world economy does not like uncertainty.

3. So President Trump just claimed to have negotiated down the cost of the F-35 program? Yes, sure he did
The POTUS is apparently claiming credit for a $600m cut in the cost of the next batch of F-35 planes. Remember that this was a project he was distinctly uncomplimentary about a few months ago. Now, in addition to claiming the credit for the cost reduction, he now says it is a great program.
Which is a summary of multiple layers of uttered POTUS bullshit. As the article explained. The planes were always going to cost less.

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