12 Nov 2016

Reactions to the Trump Victory: B

Scott Sumner, Trump 25 Comments

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.

25 Responses to “Reactions to the Trump Victory: B”

  1. Scott Sumner says:

    You said:

    “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.”

    Then why talk about my post? I must have said 100 times that I was not confident that Hillary would beat Trump. I said that over and over and over again.

    You said:

    “I thought his ad was great”

    God I hope you are joking.

    You said:

    “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.”

    Wow, doesn’t even know the different between “might” and “will”. Who’s substituting for Bob Murphy today over here? This is an embarrassingly bad post. You’d almost think it was written by someone so dumb they didn’t see through Trump. Someone who liked his ads.

    • Craw says:

      Is this comment intended to convince me you are not a snide jersey wallowing in confirmation bias and denial?

    • E. Harding says:

      Jeez, Scott, what’s wrong with you? What didn’t you like about the ad? It was the ad that won him Pennsylvania.

      Does this sound like “not confident that Hillary would beat Trump” to you?

      “Can someone tell me why the Trump odds are still at 10%? Is there a time lag in the betting odds website? Trump’s clearly lost, hasn’t he?

      I hear that Little Marco Rubio is dramatically outperforming Trump in Florida. Hmm, do you think the GOP primary voters picked the wrong guy?”

      • Andrew_FL says:

        He hates it because, like you, he’s an inflationist, but unlike you, he’s scared that Donald Trump is not also an inflationist.

      • Bob Murphy says:

        E. Harding in fairness to Scott, I think you grabbed that quote from pretty late in the game, right? Was that during election day?

        I mean, it’s awkward that he wrote that, in light of his testy responses to me, but in fairness, Scott is now talking about his thoughts say, the week before the election.

        • E. Harding says:

          Yup. That makes it worse, not better.

  2. David R. Henderson says:

    I disagree with Scott Sumner’s comment above that this “is an embarrassingly bad post.” But I was surprised that Scott didn’t defend himself on another point.
    Bob, you wrote:

    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?

    But there’s a simpler explanation. You and I both believe, and Ken Judd, Steve Landsburg, and many other economists have shown, that cutting taxes on capital helps workers. But workers don’t necessarily know that. So Trump could “con” them by advocating supply-side policies that those workers don’t believe in.

    • Bob Murphy says:

      David but look, you had to use quotation marks around “con” for your point to work. Scott didn’t mean it ironically, he meant that the blue collar workers had literally been conned.

      So, I think that’s nuts. The reason the markets soared (I claim) is that after everybody calmed down, they thought about how Trump had promised:

      a) huge income tax cuts for everybody
      b) repeal of ObamaCare
      c) rolling back climate change regulations

      …and they realized that was a heck of a lot better for business than the big tax increases, public option, and doubling down on climate regulations that Hillary was promising.

      So who got conned here? Factory workers didn’t know Trump was going to cut income taxes for everybody? They didn’t know he promised to repeal ObamaCare? They thought he wanted to strengthen the EPA?

      • David R. Henderson says:

        Ah, now I get it.

  3. Scott Sumner says:

    David, I agree that supply-side policies can be good for workers. But Trump promised to bring back industrial jobs with protectionist policies. If he does not do that (and tax cuts on capital will not bring those jobs back) then he has conned his blue color base.

    I didn’t bother defending myself on all his points because it seemed like a waste of my time.

    If Bob really believes that I was confident that Trump would not win then I encourage him to play Russian roulette, after all, with only a 16% chance of dying, we can be confident that Bob will survive. But just use one bullet Bob.

    Bob’s time would be better spent attacking Trump, not attacking people who criticized Trump, and then praising Trump’s vile ads.

    • Harold says:

      I agree with this. Trump is conning the workers if he does not pursue the policies he espoused in the campaign. After all, one more politician who knows better than the workers and enacts policies they don’t like for their own good is hardly the change they voted for.

    • Dan says:

      Vile ads? You spend too much time around college kids with their trigger warnings and safe spaces. Trump is a douche, but nothing about that ad was vile. Sounds like you’re projecting.

    • Major.Freedom says:

      By that logic your time would have been better spent attacking the voters who would vote in Trump, not criticizing Trump. After all the problem was that the voters believed in the ideas that Trump communicated. Trump did not elect himself, the voters did.

      This comment is weird and revealing:

      “If Bob really believes that I was confident that Trump would not win then I encourage him to play Russian roulette.”

      Weird because Sumner is imagining Bob killing himself, and revealing because it shows Sumner doesn’t understand that equal percentages that represent confidence or likelihood of outcomes does not imply equal subjective value judgments with respect to actions.

    • Craw says:

      This roulette fantasy seems a flaming non-sequitur. Bob did not talk about your assessment of the “expected value” of a Trump win, but its raw probability. Yet you reply with an example about the expected value. I believe you are smart enough and numerate enough to know that is not a sensible or cogent rejoinder. Yet you made it, and with a shot at Bob’s intelligence (“just one bullet”) thrown in. Do I have to ask why?

    • David R. Henderson says:

      Scott,
      I think what was vile about the ad was the anti-trade stuff. I gather you think it was anti-Semitism. I take that to mean that you don’t take seriously either Bob’s analysis of that ad or David Bernstein’s analysis in the Washington Post: both rejected the idea that it was anti-Semitic.

      • Craw says:

        I take it he simply wants to find everything Trump touches vile, and everything that might persuade people to support Trump especially vile.
        I also think it wrong to call misunderstanding vile, which is a term of moral judgment. I would hope that Libertarians can accept that error is not an infallible sign of moral failing, but apparently I hope in vain.

    • Capt. J Parker says:

      1) What a terribly destructive force Trump is. His election has three great market and freedom oriented economists blog-squabbling about who said what when about him and his populist nonsense instead of teaching us economics.

      2) Scott Sumner said: “If Bob really believes that I was confident that Trump would not win then I encourage him to play Russian roulette, after all, with only a 16% chance of dying, we can be confident that Bob will survive. But just use one bullet Bob.

      That’s a terribly weak defense of any prescience on Dr. Sumner’s part regarding a Trump victory. That’s because that statement is pretty convincing evidence of how meaningless probability forecasts of elections are. If Nate Silver said Clinton had an 84% chance of winning and Clinton actually went on to win then Silver’s fans would all be saying “Wow, way to go Nate! You nailed it again.” At the same time Dr. Sumner would have us believe a 84% Clinton 16% Trump forecast is not at all an expression of confidence in a Clinton victory. Once the actual results are in you apparently can spin the “meaning” of the 84% forecast however you want. Probability forecasts for unique non-repeatable events like elections are nonfalsifiable gibberish.

    • Bob Murphy says:

      Scott, I am pretty sure you didn’t watch that ad before talking about it on your blog. You got your info on it from Al Franken and CNN. (UPDATE: That’s not a glib putdown from me; I mean Scott literally got his take on that ad, from Al Franken and CNN’s Jake Tapper, as I explain here.)

      Have you watched it yet? Do you see it features a lot more than 3 Jewish people?

      • Craw says:

        Now be fair. He might have got the same message from Paul Krugman instead.

    • Craw says:

      I am interested in this notion of how Bob might better spend his time. Is this a rule just for Bob? I ask because Bob has attacked Trump and you criticized Bob.

      I also ask because when Paul Krugman criticizes Trump will your principle shield him from harsh words? If Bob or I or anyone else then criticizes Krugman will we suffer your chastisement? “Eyes on the prize boys, we’re hunting the wild Trump, not each other!”

      I am curious also how, in your classroom, arguments are refined. When I taught, a poor argument was criticized in hopes of sharpening it. Have you discovered a better method you can share with us?

  4. gienon says:

    I can’t wait for the analysis of Krugman’s reaction.

  5. Bitter Clinger says:

    Where is inflation? Its coming. As some of you may know I subscribe to “population demographics” as the underlying cause of what some economists call the “business cycle”. PD predicted that there would be a boom in 1994 to 1999, then a correction. After the correction we would have good growth till 2010 when we would have a recession followed by eight years of bad or negative growth followed by the next boom in 2018. Like the tides, PD is not absolute, even at low tide you can get a storm surge in a hurricane. I am anti-Clinton because her husband had the benefits of the 90’s boom and rubbed our noses in it. To have Ms. Clinton do the same was a bridge too far for me. I voted for Trump even though he is a Democrat and has always been one. But back to inflation, it is my prediction that within the next two years you will see a double digit combination of interest rates and inflation. (right now we have interest rate of 2% plus inflation of 2%, so the combination will be 4%) I was married, owned a house, had kids, a job back in the 70’s and got a raise every 3 months whether I deserved it or not. I bought a 1978 Chevy Nova because car prices were going up faster than I could save money. I had a CD (1980?) that was paying 15.5% interest. There will be no bust, it will be run-away inflation (PD doesn’t predict stagflation but I could be wrong) just like the 70’s. Having seen it I am prepared. I will miss my pensions but what can you do? You guys should read Steven Rattner’s NYT’s piece he just wrote. I mean, talk about racists, just because a man has an R behind his name does not make him a Republican. I am waiting to see Krugman’s head explode also. Nothing better than to see these guys eat their own. For last few weeks my joke has been, “Come the day after the election, win or lose, we will have another Democrat as President Elect!”

  6. Andrew_FL says:

    Based on the reaction you really struck a nerve with Sumner’s Smug Teacher of Dumb Students blogging persona.

  7. Mark says:

    Where does the EMH come in? I thought he was only programmed for medical emergencies.

  8. Craw says:

    No more grades?

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