The folly of Trumponomics

DONALD Trump's remarkably successful US presidential campaign, like that of Bernie Sanders, has drawn much of its support from Americans aggrieved about the country's, and their own, economic condition. This is despite the fact that the US economy is today the world's most robust, having reached full employment with GDP growth (just) strong enough that the Federal Reserve has started raising interest rates to ward off potential inflationary pressures.

Like Mr Sanders, Mr Trump blames "unfair trade" for the stagnant median wages and rising inequality that have afflicted the US economy since long before the 2008-09 Global Financial Crisis and the ensuing Great Recession. There is certainly evidence that, while stimulating growth and employment overall, increased trade has produced losers as well as winners, as it always does.

A widely cited 2013 study by David Autor, David Dorn and Gordon Hanson shows that the high unemployment and reduced wages suffered by particular local communities hit hard by import competition from China between 1990 and 2007 have lasted much longer than usually assumed, requiring extended periods of reliance on government transfer payments.