We had an amazing 2016 US Presidential debate season. I should congratulate the debate organizers for organizing these debates and the moderators for being as unbiased as possible. It really helps in smooth functioning of a democracy and for an election that world is closely monitoring. We have finally come to an end of the presidential debates and now it is time for me to let you know my honest unbiased opinion.
There have been several issues like Fitness to be president, women’s issues, supreme court nominee, National Debt, Economic growth, Obamacare, Foreign Policies, etc. However, these have always been issues in the past elections too and then what makes this election special? What makes this election special is the anger of Americans with the politicians in Washington. There has been a history of corruption in Washington D.C. when it comes to lobbying by special interests. However, As long as these issues did not affect the ordinary Americans, they really did not bother much about it.
However, Since 2008 financial crisis, the lingering weakness of American economy which has been long ignored by experts has come to surface. The manipulation of not only the unemployment numbers but also of GDP growth, stock market growth, etc. has now become evident. If the unemployment was close to official claimed number of 5%, Americans would not have been so angry at their elected representatives. Who benefits from the growth in stock market? Ordinary Americans barely have sufficient disposable income to invest in stock market but such growth primarily benefits the wealthy few. The growth of GDP has been anemic and had it not been the cronyism in the financial industry, actually the GDP growth in US would have been negative.
Hence, the most important issue in this elections is the National economy. This includes growing the economy, controlling the spending and reducing the national debt. As an author of three volumes on macroeconomics, I would be glad to present to you my honest opinion about how both candidates fare on this crucial issue of US economy.
In his third presidential debate, Donald Trump said that he disagreed with Ronald Reagan’s trade policies and criticized it in an article with New York Times back in 1987. Trump was 100% right about it and it is a fact that economic policies since Reagan have increased the economic disparity in the US economy, led to exponential growth of national debt and led to offshoring of manufacturing to Asian economies which is making ‘American manufacturing’ an endangered species…and if nothing is done…that would soon become an ‘extinct species’.
However, The proposal that Trump puts forth of giving massive tax cuts to businesses to jump-start manufacturing needs to be carefully observed. Firstly, the businesses would take advantage of such a massive break to bring the money from their offshore accounts into the U.S.. However, No business will invest in such an anemic economy where there is massive unemployment and under employment which is leading to a poor consumer purchasing power and hence a poor economic demand. Hence, Trump’s proposal would not help in jump starting the manufacturing sector as what drives business growth is consumer demand and not just tax breaks. To elaborate this further, let me mention an important fact below –
As a result of huge tax cuts enacted during tenure of Ronald Reagan’s presidency in 1981, a major economic crisis hit in 1984–1985 and since then macroeconomic policies have resulted in boom-and-bust cycles that have plagued the US and global economy till date. Preparing for the rapid expansion of markets expected out of 1981 tax cuts, Intel Inc. licensed its 80286 microprocessor to other manufacturers, including AMD, Fujitsu, Siemens, and IBM. It was a big boom in 1983, into the middle of 1984—and then the semiconductor world suddenly collapsed in late 1984 and 1985. The resulting crisis caused Intel to lay off its workforce and shut down several factories due to lack of economic demand and resulting excess supply.
Now, Let us look at Hillary Clinton’s proposal for the same. Clinton plans to raise taxes on richest Americans and then use that money to pay for Obamacare, social security and reduce national debt. Well, One thing that needs to be pointed out that the sponsors of Hillary Clinton campaign are the extremely wealthy individuals and it is nothing but foolish that any rich person will pay Hillary Clinton campaign donations to raise his or her taxes. Just put yourselves in their shoes, the same individuals who had in past lobbied members of congress to give them all the economic benefits which have resulted in a huge economic disparity in America, would now all of a sudden pay her campaign to increase their taxes out of US national interests? Just too good to be true.
It has never happened in the history of US economy until the great depression of 1929. It was only after the great depression that FDR had to raise taxes on wealthiest up to 91% to pay for the world war II which eventually led to revival of US economy from its worst depression. Hence, Hillary Clinton’s promises of raises taxes on wealthy is nothing but just hollow promises. It will never happen as long as she were running an independently funded campaign…and she is not. Besides, What WikiLeaks has revealed about her campaign and Clinton Foundation has really damaged her credibility amongst rational voters.
Given the fact that three presidential debates are over and neither candidate has provided a blueprint for revival of US economy so that the economy would grow while keeping the national debt in control, it is not a question about who has won the debate but is a matter of concern that America has lost the debate. As suggested by Chris Wallace as a moderator, With independent economists claiming that Trump’s policies would lead to 105% growth in national debt ( from the huge tax cuts planned by Trump ) while Hillary Clinton campaign will lead to 86% growth in National debt (given the fact that it will be very difficult for her to please her wealthy donors by raising their taxes), I am of the conclusion that whoever wins this elections in November, the US National debt bubble will surely explode.
Just imagine that you own a credit card and that you default on your card payment. Now, If you go to the bank to raise your credit limit so that you can borrow more, will the bank increase you credit limit? The similar is the situation of US economy and hence I believe that American economy has lost in these presidential debates.
While I am certainly in favor of Donald Trump because of his stand on getting rid of government corruption because of lobbying, I wonder how he will make it possible when he may not be able to get anything done from the congress ( as he has promised to limit the term of members of congress …which I do agree is very much needed). Besides, US needs a real change and in next 20 days Americans have to decide what sort of path they would adopt for their country’s progress. I have both a short term and long term solution to help Trump as I do agree in eliminating government corruption, reducing national debt, creating jobs with higher wages, jump starting manufacturing, eliminating trade deficits, destroying ISIS and maintaining healthy relations with other nations. However, I am of the opinion that Trump’s policies are going to aggravate the crisis as giving massive tax cuts and cutting size of government drastically is NOT a solution to the problem of unemployment in America.
The jobs are created by a co-operative action of producers and consumers and hence economic policies have to ensure that both producers and consumers prosper. The consumer demand comes from wages of workforce and that helps the producer as well as it helps increase the market share for a producer. Besides, Technological progress if used properly can immensely help the present stagnating economy. Given the fact that if my unbiased macroeconomic analysis comes true and Trump’s present economic policies do aggravate the crisis in US economy, after he gets elected, I would appreciate if Trump can look into what me and economist Ravi Batra have proposed in our volumes to help solve myriad America’s economic troubles and lead to a robust economic recovery.
About the author
Apek Mulay is a Business and Technology Consultant at Mulay’s Consultancy Services. He is also a senior analyst and macroeconomist in US Semiconductor Industry. He is author of books Mass Capitalism: A Blueprint for Economic Revival andSustaining Moore’s Law: Uncertainty Leading to a Certainty of IoT Revolution. He pursued undergraduate studies in Electronics Engineering (EE) at the University of Mumbai, India and has completed master’s degree in EE at Texas Tech University, Lubbock, TX. Mulay authored a patent ‘Surface Imaging with Materials Identified by Colors’ during his employment in Advanced CMOS technology development team at Texas Instruments Inc. He chairs technical sessions at International Symposium for Testing and Failure Analysis (ISTFA). USCIS approved his US permanent residency under the category of foreign nationals with extraordinary abilities in science and technologies even though he did not pursue a PhD degree in engineering or economics.
He has been cited as an ‘Engineer-cum-Economist’ by superstar economist Professor Ravi Batra in his 2015 Volume ‘End Unemployment Now: How to Eliminate Poverty, Debt and Joblessness despite Congress’. He has appeared on National Radio shows, made Cover Story for Industry magazines, authored articles for newspapers as well as several reputed blogs & industry publications. He has also been invited on several Television (because of his accurate macroeconomic forecasts) for his ideas about Mass Capitalism. He is also an investing partner in an ecommerce business calcuttahandicraft.in which he started to envision his ideas about Mass Capitalism.
He has also authored a monograph on technology with Lambert Academic Publishing entitled “Improving Reliability of Tungsten Plug Via on an Integrated Circuitry: Process Flow in BiCMOS and CMOS Technology with Failure Analysis, Design of Experiments, Statistical Analysis and Wafer Maps“. www.apekmulay.com