Trump Tackles Problems in the Rearview Mirror

(Bloomberg Opinion) -- There’s a common thread uniting President Donald Trump’s policies: Most are designed to address problems that were much more severe in earlier years and decades. Trump, who just turned 72, is essentially living in the past.

One big example is violent crime. In the 1980s and early 1990s, U.S. crime soared. But since then, crime of all types has plunged. The easiest way to see this is to look at the murder rate, for which reporting is very uniform across time and from city to city:

Violence did rise in 2015 and 2016, leading some to worry that the bad old days were making a comeback. But crime, especially murder, began to fall again in 2017 — the two-year rise was probably just a blip.

The U.S. still has a high crime rate compared to other developed nations, and some cities like Baltimore and St. Louis are extremely violent. But Trump’s dark rhetoric about urban crime seems like something better suited to the world of three decades ago.

A second example is trade. Trump has repeatedly attacked U.S. allies Japan and Germany. These broadsides seem right out of 1987, when Republican congressmen smashed a Japanese-made boombox with sledgehammers in front of the Capitol Building. At that time, industrial competition from countries like Germany and Japan was slamming American corporations, causing panic that the U.S. was losing its industrial dominance.

But three decades make a big difference. Today, Japanese and German companies are huge sources of investment in the U.S. Most Japanese- and German-brand cars sold in the U.S. are now made in domestic factories. Japanese protectionism was mostly dealt with by trade talks in the 1990s. Now, Japanese consumers snap up American-designed iPhones. The U.S. still runs a trade deficit with these countries, but this is mainly caused by other factors, such as the dollar’s status as the world’s reserve currency, which encourages other countries to lend to the U.S, as well as the low level of U.S. savings. Meanwhile, the size of the deficit has shrunk somewhat:

And about half of the deficit that remains might be a statistical illusion created by U.S. corporations shifting profits to overseas subsidiaries.

The real industrial competition now comes from China. The last two decades have seen countries such as Japan and Germany lose manufacturing market share to China, just as the U.S. has. It’s true that Trump has directed a portion of his protectionist fire at China, but his feuds with Japan and Germany seem like a distracting holdover from the 1980s. Meanwhile, Trump’s focus on Chinese currency manipulation is also out of date — in recent years, capital outflows from China have put downward pressure on the yuan, reducing China’s need to use government policy to make the currency artificially cheap.

A third example is immigration. During his campaign and since becoming president, Trump has railed against what he perceives as the dangers of immigration. He has stepped up deportation efforts, experimented with draconian family separation policies, supported legislation to dramatically reduce legal immigration, enacted a travel ban on several mostly Muslim countries, and made life more difficult for immigrants in a myriad of small ways.

But immigration isn't a mounting crisis in the U.S. Even if you think (in spite of contrary evidence) that low-skilled immigration suppresses wages for the native-born working class, low-skilled immigration to the U.S. is at a low ebb:

Immigration from Mexico, the biggest source of cheap labor, has dried up in the decade since the financial crisis:

Central American immigration, a far smaller flow, is also likely to trickle off soon. Meanwhile, despite Trump’s claims that the border is out of control, illegal immigration to the U.S. is much lower than in the 2000s, and has actually been net negative since the financial crisis — meaning more unauthorized immigrants have been leaving (or dying) than have been coming in:

In other words, Trump’s immigration approach is a response to conditions in the 2000s, not the 2010s.

So on immigration, trade and crime, Trump’s thinking seems stuck in previous decades. There is probably a natural reason for this — economics finds that people’s beliefs about the world are deeply and permanently affected by their formative experiences. Trump’s business successes and setbacks came in the 1980s, 1990s and 2000s, meaning that events from those decades still probably loom large in his picture of the world. Reality has moved on, but Trump is getting old, and has spent much of his time in recent years feuding with political and entertainment-industry rivals instead of reevaluating his worldview.

This is a shame, because the U.S. has a number of more new and more pressing problems. The opioid epidemic continues to ravage the country, along with rising alcoholism and suicide. High costs for health care, education and construction have hobbled productivity and put a strain on many middle-class families. And upward mobility has disappeared for a very large slice of the country.

The world is a fast-changing place. New problems crop up as old ones fade away. It’s difficult to keep up with changing trends, but for the leaders of the country it’s a necessary job. Trump needs to stop focusing on old problems, and face the new ones.

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net

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