Wednesday, November 9, 2016

Quote of the Day: The Economists' Letter That Foretold Trump's Victory

Today's quote comes from one of the few bloggers I read religiously, a gent who writes under the pseudonym Polemic Paine.

On the day the 370 economists wrote an open letter telling of great threat to the economy should Trump win, the British blogger predicted Trump would win -- based on a similar  pre-Brexit open letter from hundreds of economists predicting post-Brexit suffering.

Man, he was on the money! But, like me, he expected more of an initial reaction (notwithstanding the 800+ point fall in Dow futures last night):

Here's a snippet:
But probably the most frightening similarity and, indeed, most important indicator is 'the letter'. It appears to be de rigour for all polls now be accompanied by a blessing for one side or the other from, rather than a religious body, a conclave of economists. The latest proclamation is finally here

Prominent Economists, Including Eight Nobel Laureates: ‘Do Not Vote for Donald Trump’Some 370 economists sign a letter slamming Trump for promoting 'magical thinking and conspiracy theories'

Well that’s it then. Trump is going to win.
As we learned from Brexit (here), a letter of warning to voters from the cardinals of economics is the best possible news EVER for whoever or whatever they are warning against.  It's the black smoke to to those they support and the white smoke, champagne and party hats for those they decry. I am sorry economists, you may well be absolutely right in the long run, but the population gets too big a kick toking on the weed of Trump to care about warnings from Dr. Economics that it's bad for them. It's why people buy overpriced diet products, pay £750 for an i-Thing, buy popcorn in cinemas or small bottles of water for £1.50. It makes no economic sense at all, but they do it. And this is what happened with Brexit.
Even if economists are to be listened to, does that mean they will be followed. If we striped down the election to, say, a call on whether you want the stock market to stay the same or dump 20% the outcome is very dependent upon if you own stock or not and what your opinion is of people who do own stock. I would imagine that the non-stock owning poor may well outweigh the stock holding rich  and vote for a dump just for some schadenfreude equality leveling. Twitter seems to agree

And are economists really the right people to use? When did an economics Nobel Laureate ever cut the mustard with your average Trump voter? Now, get a letter together from a bunch of Nascar champions and you might be on to something, but an economist's letter is doomed to failure.


  1. Thanks Marty.

    It was a hell of a ride and a sleepless night trading post Brexit style price behaviour paid off well. If you look at the timings of the lows in stocks and sentent they were within the same hour. Herding and confirmation bias is so relevant in these days of social media reinforcement that I am beginning to think no one now thinks for themselves.

    Once again thanks for the reference and best wishes.