At Fed conference,
Trumponomics draws a not so subtle rebuttal
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[August 26, 2017]
By Howard Schneider and Jonathan Spicer
JACKSON HOLE, Wyo. (Reuters) - President
Donald Trump's name was rarely mentioned as top central bankers and
economists spent Friday mulling the fate of the global economy at a
mountain lodge here.
But his presence loomed large at a Federal Reserve symposium, and even
without citing the man in the White House, the presentations - from Fed
chair Janet Yellen, European Central Bank President Mario Draghi and a
host of researchers - amounted to a broad rebuttal of many of the ideas
that carried Trump to office.
It was a day when the president's calls for financial deregulation and
"America First" economic nationalism were countered by Yellen's reminder
of how a deep financial crisis wrecked the economy a decade ago, and
economic research arguing that China and Mexico are less to blame for
job losses than forces like technology.
"For some, memories of this experience may be fading - memories of just
how costly the financial crisis was and of why certain steps were
taken," Yellen said in arguing for only modest changes to existing
Yellen is still in the running to be reappointed by Trump to a new term.
Draghi, traveling from Frankfurt and representing a group of U.S. allies
that the administration has sparred with over climate change, trade and
other issues, gave a broad call for free trade and stronger multilateral
institutions of the sort Trump has criticized.
"A turn toward protectionism would pose a serious risk for continued
productivity growth and potential growth in the global economy," Draghi
said in a lunch address that included a defense of the World Trade
Organization, the Group of 20 and other global groups he felt should be
The rise of Trump, the vote by Britain to leave the European Union and
the spread of opposition to globalization have worried central bankers
and many mainstream economists who feel that the problems associated
with globalization have overshadowed the benefits and morphed into broad
opposition to it.
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President Donald Trump waves as he walks on South Lawn of the White
House in Washington, U.S., before his departure to Camp David,
August 25, 2017. REUTERS/Yuri Gripas
Remedies for these issues may be outside the immediate sphere of monetary
policy, but they are concerned that new waves of protectionism or reckless
deregulation could threaten an economic system that is currently stable and that
has returned to growth across the world.
SKEPTICISM ABOUT TRUMP APPROACH
In a panel on trade, there was more direct skepticism of Trump's approach, even
as economists and central bankers here agreed they had ignored for too long how
difficult the adjustment would be for workers.
"We have lost the rhetoric on trade in terms of explaining to those who benefit
why they do, such as cheaper products, while all of the focus has been on those
who have lost," said Gita Gopinath, professor of international studies and
economics at Harvard University and financial advisor to the chief minister of
the Indian state of Kerala.
But they also agreed that Trump's seemingly singular focus on trade agreements
won't fix the problem.
"Renegotiating NAFTA and protectionist measures against China will not save
jobs," University of Pennsylvania professor Ann Harrison said, arguing that the
decline in manufacturing jobs was due to labor-saving management and
Policy, the economists here said, should be aimed at improving job skills, local
capital investment and safety net programs for displaced workers, the sort of
micro-level efforts that can be hard to organize and finance and take time to
"It is so much easier to bash China," Harrison said.
(Editing by David Chance and Cynthia Osterman)
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