The following is from the San Diego Tribune
Trump policies not good for growth, says UCLA economist
On the eve of inauguration day, UCLA economist Lee Ohanian told a local audience Wednesday that President Donald Trump’s policies may not achieve his desired levels of economic growth and job gains.
Speaking to the San Diego Regional Chamber of Commerce’s annual cross-border vision lunch, Ohanian said restricting immigration, erecting trade barriers and imposing new import tariffs, as Trump has proposed, are just the opposite of what is needed.
“One thing that came from President-elect Trump was the trade deals weren’t working for us,” Ohanian said.
But he said numerous economic studies show that the average household actually benefits to the tune of $10,000 a year in lower prices paid for imported goods.
“That statistic suggests maybe they are working for us,” he said.
One example of counterproductive trade policy? Ohanian points to U.S. subsidies and import quotas for the sugar industry that date to the 1790s. American sugar prices range between 100 and 180 percent of world levels, he said, and consequently, candy makers have relocated to Canada where sugar costs less.
“For every sugar job we saved, we lost three confectionery jobs,” he said. “These are the types of indirect effects economic policies often have.”
On immigration, Ohanian said while Trump’s focus has been on keeping out unskilled, undocumented workers, it is the high-skilled workers the U.S. should be going after. He noted that half the Fortune 500 companies were founded by an immigrant or the child of an immigrant.
He also noted that many high-skilled immigrant workers are educated at UC San Diego, UCLA and other universities and then managed to stay legally in the U.S. to work.
Many others wish they could remain here permanently after graduation but unless they can exchange their student visas for work visas, they have to return to their home countries — and the U.S. economy loses out.
“We don’t make it very easy for them to do that,” he said.
Ohanian said Trump would like to create 25 million jobs over the next 10 years and double the GDP growth rate to 4 percent. But with the accelerating retirement rate of aging baby boomers and the declining educational attainment levels in American schools, he said a looming talent gap could make those goals unattainable.
“The only way we can replace those (productive workers) is by bringing in more people,” he said.
Fifty years ago, he said American education and California’s in particular were at or near the top of the world. High educational achievement translated into high productivity. But now in the U.S. 15-year-olds repeatedly rate below their peers in many other countries — a situation that bodes ill for future economic success.
“Since 2009 that’s really been the main challenge our country faces,” he said. “In particular this is going to confront our younger people, and the main challenge that faces President-elect Trump and Congress, as well as state and local government, is to improve productivity growth.”
Ohanian, who was an adviser to previous Republican presidential candidates, called NAFTA a “great piece of legislation” that reduced trade barriers with Canada and Mexico. But if NAFTA is renegotiated as Trump hopes, he said one benefit that Mexico might push for is an expansion of free-trade zones along the U.S. border.
“That would get more U.S. capital going to Mexico — and Mexico has a very bright economic future,” Ohanian said.
Trump speaks of bringing back manufacturing jobs from abroad. But Ohanian said the new reality in today’s world is that certain things can be manufactured at a lower cost outside the U.S. American workers can compete by demonstrating a higher productivity rate on other things here.
However, he did agree with Trump’s call for lowering corporate income taxes.
“That’s one of the reasons why we’re losing a lot of jobs,” he said, since companies find it more economical to expand where rates are lower.
As Trump settles into the White House, Ohanian said he hopes the new president will listen to his advisers and change course if necessary.
“I hope Trump is a guy that can pivot and change if something isn’t working the way he wants,” he said.