Scott Sumner gets a B.
At first I was ready to give him an A, because he has repeatedly admitted he was totally wrong about Trump’s chances in the election. (Incidentally, I wasn’t predicting a Trump victory. I heard his speech in Florida the Friday [?] before and was texting some people saying, “Trump is kicking a$$,” and I thought his ad was great, but I was amazed he won too.) Now even here, Scott was still being a tad smug and sarcastic about it, but OK he was officially admitting he had been totally wrong, so I’ll give him that.
But then Sumner wrote 2 things that made me downgrade him to a B.
First, in this post Scott writes:
Before starting this post (which won’t interest most people) let me just reiterate that the big question going forward is whether Trump will govern as a populist or a GOP supply-sider. The markets clearly expect the latter–they think he conned the blue-collar workers to get their votes. Since I’ve been wrong about Trump before, I won’t offer an opinion—just wait and see.
Now I really don’t like Scott’s analysis above. I think he is smarting from being so totally wrong about Trump, and so he’s throwing out economics just to grab onto some way to validate his stance and laugh at the people who voted for Trump.
Specifically, there are two problems in the above. #1 is that it sure sounds like Scott is saying that GOP supply-side policies are bad for blue-collar workers. Is that really true? Do we have a Chicago School economist admitting that Geraldine Ferraro, Mario Cuomo, and Al Sharpton are right? The GOP’s tax cutting agenda is really just giveaways to rich people that won’t help workers?
#2, when Scott says “the markets clearly expect” he is referring to the surging stock indices on Wednesday. But on Tuesday, when the news of Trump’s victory first hit, stock markets around the world–and futures markets for the US–were tanking. Indeed, Scott himself predicted that the U.S. market would open up down 10 percent (and then he amended to 5 percent because of a math error) if Trump won.
In any other post, when Scott explains how to use the EMH to evaluate what “the market” thinks of a surprise, it is the initial response that matters. So even if we accepted Scott’s argument that blue-collar workers have interests diametrically opposed to stockholders, then “the markets” originally did NOT think these workers were conned.
Now on to my next major problem with Scott’s damage control. In a later post, he writes: “And I wasn’t quite wrong about everything. Take a look at this prescient post from a month ago, for which I got roundly criticized. What do my critics say now? Still don’t see a trend?”
OK, so in context Scott is leading us to believe that a month ago, he warmed us up to the possibility of a Trump victory, and then plenty of people were challenging his argument. So if you click the link, you see the title is, “Israel, Britain, Spain, Colombia . . . Trump?”
You read it and learn that Scott is saying there have been a lot of populist rejections of the elites, which were totally unexpected. So was Scott saying he thought Trump might actually win? Or at least, was Scott warning people not to trust the “consensus” view, and that Trump was not nearly the underdog that the “smart money” thought?
No, he wasn’t. In that exact post, he wrote, “This doesn’t mean I think Trump will win—I’m an EMH person and accept the current 25% odds—it’s just that even that risk seems unacceptably high to me.”
So Scott himself made clear in that post that he wasn’t questioning what “the market” thought of Trump’s chances. Hence, we should in no way give him credit now for being “prescient.”
Furthermore, just for kicks, go ahead and skim the comments, to find out what Scott meant when he said he was “roundly criticized.” Sure, he was criticized, but it was by TRUMP supporters. By my count, there are literally two comments, out of 45 total, that conceivably are challenging Scott’s premise that these other world events provide us insight into the Trump phenomenon. And I say “conceivably” because one of the comments is vague; it’s a guy saying, “Stick to your day job, Bro. Political commentary is not your forte!”
So, we have no idea exactly what that guy’s problem is. For all we know, he’s upset at Scott using the EMH to assess an election.
Anyway, I give Scott a B, and I think even that is generous. But I do want to reward him for saying in several posts (on MoneyIllusion and EconLog) that he had been totally wrong about Trump’s electoral chances.
P.S. Obviously neither Scott nor the guy I am going to fail (on Monday if I get a chance to blog) cares what I think about how bloggers handled Trump’s surprising victory. I am providing these grades mostly as an entertaining way to link to the different types of reactions from people who were extremely confident and then ended up being totally wrong. I love this stuff. With the Internet it’s so easy to check up on what people said before.
P.P.S. Before anyone else draws the analogy, here ya go.