AND ASTONIA COMING INTO THE
UNITED STATES, THEY ARE ALL
INTERESTED PARTIES.
A BIG ONE TO WATCH.
LIZ: ABSOLUTELY.
CONNELL, THANK YOU VERY MUCH.
AS THE PRESIDENT FOCUSES ON THE
WALL AND ON TRADE, I WANT YOU
TO LISTEN TO THE QUOTE FROM WAY
BACK IN 1910.
HERE IT IS.
POLITICIANS USE ECONOMICS IN
THE SAME WAY THAT A DRUNK USES
LAMPPOSTS, FOR SUPPORT RATHER
THAN ILLUMINATION.
ILLUMINATION MEANS ADVICE OR
KNOWLEDGE.
ANDREW LANGE WAS NOT AN
ECONOMIST, HE WAS AN
ANTHROPOLOGIST.
PRESIDENT GEORGE W. BUSH
IGNORED ECONOMISTS SUGGESTIONS
TO BAIL OUT HOME OWNERS INSTEAD
OF BAILING OUT THE BANKS.
PRESIDENT OBAMA CHOSE TO FOCUS
ON HEALTH CARE INSTEAD OF
POURING ALL ENERGY INTO
REBUILDING THE U.S. ECONOMY
POST FINANCIAL CRISIS.
PRESIDENT TRUMP, WELL, WE DON'T
KNOW YET, PRINCETON ECONOMICS
PROFESSOR ALAN BLINDER MIGHT.
HE'S THE AUTHOR OF ADVICE AND
DISSENT, WHY AMERICA SUFFERS
WHEN ECONOMICS AND POLITICS
COLLIDE.
HE JOINS US NOW.
GOOD TO SEE YOU, THANK YOU FOR
BEING HERE.
>> THANK YOU, LIZ.
LIZ: FROM THE STANDPOINT OF AN
ECONOMIST IS PRESIDENT DONALD
TRUMP ON OR OFF FOCUSING ON THE
WALL AND FAIRER TRADE?
>> I'D SAY PRETTY FAR OFFPOINT.
TALKING ABOUT FAIR TRADE IS
FINE, WE WANT TRADE TO BE FAIR,
BUT AS YOU KNOW THAT'S OFTEN A
EUPHEMISM FOR PROTECTIONISM
WHICH IS NOT FINE IS.
STEEL TARIFF PART OF FAIR
TRADE?
MOST ECONOMISTS DON'T THINK SO.
LIZ: I'M HEARING YOU SAY THAT
WHAT COULD EVENTUALLY BECOME A
MULTIFRONT TRADE WAR IS NOT THE
WAY TO BE GOING HERE?
WHAT SHOULD HE BE FOCUSING ON,
THEN?
AND BY THE WAY, I WOULD SAY THE
ECONOMY DOESN'T LOOK THAT BAD
RIGHT NOW?
>> THE ECONOMY LOOKS QUITE
GOOD, ABSOLUTELY.
BUT TO THE CHINA POINT, RATHER
THAN TO THE STEEL POINT WHICH
IS THE BIGGER DEAL WHEN WE TALK
ABOUT A TRADE WAR, HE LOOKS
LIKE HE'S PROVOKING IT WITH
CHINA.
HE MISSED THE BOAT ON THE BEST
OPPORTUNITY.
THE REAL ISSUE WITH CHINA OR
THE MAIN ISSUE WITH CHINA IS
INTELLECTUAL PROPERTY
PROTECTION OR IN THE CHINESE
CASE, NONPROTECTION.
THEY GRAB INTELLECTUAL PROPERTY
IN THE WAY THAT WESTERN
COUNTRIES DON'T.
WE ALREADY HAVE THE TPP, THE
TRANS-PACIFIC PARTNERSHIP TEED
UP WITH MOST OF THE PACIFIC RIM
COUNTRIES, BUT JUST ABOUT ALL
OF THEM, IN IT.
AND CHINA OUT.
AND A LOT OF TPP WAS ABOUT
INTELLECTUAL PROPERTY.
A LOT OF IT WAS WHAT THE UNITED
STATES WANTED TO GET DONE ON
THAT FRONT, AND POOF, IT
DISAPPEARED ON THE FIRST DAY OF
THE TRUMP ADMINISTRATION.
THAT WAS THE WAY TO ATTACK THE
INTELLECTUAL PROPERTY.
LIZ: OKAY.
>> THAT ISSUE.
>> CAN I JUST SAY ON MANY
FRONTS, THE PRESIDENT HAS BEEN
-- HE'S BEEN LIKE MIKE TYSON,
PUNCHING HERE, AND PUNCHING
THERE, HE'S DOING A LOT, AND
EVERYTHING FROM RESIDENTIAL
PROPERTY SALES TO MANUFACTURING
SEEM TO BE PERKING UP.
THE FED'S INFLATION AND YOU OF
COURSE HAVING BEEN VICE CHAIR
AT FED CAN SEE THE FED'S
PREFERRED INFLATION LEVEL, THE
PCE IS GETTING WITHIN STRIKING
DISTANCE OF ITS TARGET RATE OF
2%.
MAKE YOUR CASE AS TO WHY THE
PRESIDENT SHOULD BE LISTENING
MORE TO ECONOMISTS LIKE YOU?
>> WELL, I THINK TAKE WHERE YOU
JUST WERE ABOUT FEDERAL RESERVE
POLICY IN THE STATE OF THE
MACROECONOMY.
MONETARY POLICY PART OF THAT,
NOT THE FISCAL POLICY PART OF
THAT IS LEFT TO TECHNOCRATS.
MOSTLY ECONOMISTS, THOUGH AS
YOU KNOW JAY POWELL HIMSELF IS
NOT AN ECONOMIST.
JANET YELLEN, BEN BERNANKE AND
SO ON WERE.
THIS ONE IS OF THE FEW ASPECTS
OF ECONOMIC POLICY WHERE THE
POLITICIANS PULL AWAY AND LEAVE
IT TO THE TECHNOCRATS DO, WHAT
YOU THINK IS BEST WITHIN THE
LAW.
LOTS OF LEGAL CONSTRAINTS WHAT
THEY CAN DO.
FISCAL POLICY IS LEFT TO THE
CONGRESS AND TO THE PRESIDENT.
LIZ: I NEED PREDICTIONS FROM
YOU, ASSUMING YOU HAVE BEEN
FOCUSING ON THESE THINGS.
WHAT WEAK HOUSE OF CARDS IS
BUILT RIGHT NOW THAT YOU SEE
COULD EVENTUALLY TUMBLE THAT'S
A PROBLEM ON THE ECONOMIC
LEVEL?
>> I THINK WE'RE WORRIED ABOUT
A FEW THINGS HAPPENING.
I DON'T WANT TO SAY BENEATH THE
SURFACE, IT'S NOT LIKE IT'S A
SECRET.
FIRST OF ALL, BLOWING UP THE
BUDGET DEFICIT TO LEVELS THAT
IN PEACETIME HAVE ESSENTIALLY
NEVER BEEN SEEN IN THE UNITED
STATES.
NOW I'M NOT CRAZY, I'M NOT ONE
OF THESE NUTS -- NOT NUTS, I'M
NOT ONE OF THE FANATICS THAT
THINK YOU CAN'T RUN A DEFICIT.
YOU CAN RUN A DEFICIT THERE.
HAS TO BE A LIMIT AND WE'RE
PASSING THAT ONE.
SECONDLY, AS YOU PROPERLY SAID,
WE HAVE ECONOMY THAT'S
BASICALLY AT FULL EMPLOYMENT,
SORT OF RIGHT WHERE WE WANT IT
TO BE, LIKE 4% UNEMPLOYMENT
RATE, ALMOST 2% INFLATION RATE.
WHY SHOULD WE BE PUSHING A
LARGE FISCAL STIMULUS AT THIS
POINT IN TIME?
I DON'T HEAR AN ANSWER, I DON'T
THINK THERE IS.
LIZ: PEOPLE WOULD LOVE TO SEE
AN INFRASTRUCTURE PLAN.
TO THE POINT OF BOOK AS WE WRAP
HERE, ALAN, DON'T ECONOMISTS
INHERENTLY HAVE POLITICAL BIAS
THAT COLORS, OR SOMEHOW PUSHES
IN A CERTAIN DIRECTION THEIR
ADVICE TO PRESIDENTS, AND
THAT'S FOR THE PRESIDENT TO
DECIDE TO TAKE OR JETTISON?
>> SURE, SOME DO, AND
ESPECIALLY THE ONES THAT GO TO
THE WHITE HOUSE TO ADVISE THE
PRESIDENT WHETHER THEY'RE
DEMOCRAT OR REPUBLICAN, THEY
HAVE POLITICAL BIASES WHICH
USUALLY COINCIDE REASONABLY
CLOSELY WITH THAT OF THE
PRESIDENT.
BUT THEY'RE THERE NOT TO GIVE
POLITICAL ADVICE, THEY'RE THERE
TO GIVE TECHNICAL ADVICE, WHICH
THE PRESIDENT MAY THROW AWAY OR
LISTEN TO AT HIS WHIM.
LIZ: ONE OF MY FAVORITE FACTORS
IS WHEN YOU TALK ABOUT WHAT
DEMOCRATS DO WRONG AND
REPUBLICANS DO WRONG AND YOU
USE THE WORD SOMETIMES.