Trump Is Flirting With Quack Economics
More than 30 years ago, the economists Rudiger Dornbusch (one of my mentors) and Sebastian Edwards wrote a classic paper on what they called “macroeconomic populism.” Their motivating examples were inflationary outbreaks under left-wing regimes in Latin America, but it seemed clear that the key issue wasn’t left-wing governance per se; it was, instead, what happens when governments engage in magical thinking. Indeed, even at the time they could have included the experience of the military dictatorship that ruled Argentina from 1976 to 1983, which killed or “disappeared” thousands of leftists but also pursued irresponsible economic policies that led to a balance-of-payments crisis and soaring inflation.