1/n At the request of a fellow economist, I’m expanding my criticism of a recent tweet from @oren_cass as part of his @amercompass project. https://twitter.com/oren_cass/status/1286691198594359296?s=20

2/n Two points need expansion. First, a trade deficit is funded through capital inflows. But, @oren_cass, and he makes a bizarre critique of the form of capital inflow. He argues the form of the inflow has some important economic consequence. But, it doesn’t

3/n It doesn’t matter if these capital flows buy US financial assets (bonds), make direct investment (buy equipment or land) or purchase existing assets. Money is fungible. Foreign purchases of assets unleash investment in the same way direct investment does.

4/n There's got to be a German word for an attempt to make a sophisticated economic argument but failing b/c of ignorance of HS econ. But, I think it is increasingly intentional, not a mistake. Evidence for this lies in the rejection/ignorance of basic economics.

5/n For example, among the central tenets in @oren_cass The Once and Future Worker is that we’ve focused for too long on consumption, and not enough on production. This is the type of statement that sounds sophisticated and insightful, but is in fact meaningless.

6/n For ppl who care about footnotes. Production (Y) in an economy is Y=f(N,K), where in is workers an K is capital. Also, in accounting terms, Y=C+I+G+NX where, C is consumption, I investment, G gov’t spending and NX, is net exports. So, f(N,K) = Y = C+I+G+NX.

7/n So, Cass's book tells us we are focusing too much on C, and not enough on N. But, they are functionally linked. If you want more C, either you increase f(N,K) or you cut, I+G+NX. And, remember, NX has to be equal to the capital inflows in I (where investment > savings).

8/n A reasonably good understanding of AP econ would’ve shown a central thesis of @oren_cass book to be nonsense. I could go on, and on and on with what is wrong with this book, but @hamandcheese’s exceedingly charitable thumping of this nonsense is sufficient.

9/n In a better world, the @amercompass would be a non-partisan attempt to re-think economic policies that yielded populism . His inclusion of authors with diverse perspective like @chris_arnade, @hamandcheese, @LettieriDC
and @matthewstoller gives the impression that it is.

10/n But, the project is really an attempt to put together an economic framework of Trumpian populism. This has attracted a few intellectual grifters whose worldview conveniently bends to that of whoever holds power (e.g. Reno/Atkinson).

11/n As an enterprise it is doomed to failure. There is no underlying economic framework for Trumpism. You cannot build a structure from its policies, there is nothing there. It is an intellectual and economic wasteland, devoid of coherence, fact, or even internal consistency.

12/n @amercompass plays a role in the vexing badness of White House policy analysis. Just the astonishingly poor Cost of Thriving Index should’ve awakened the enterprise to the need to have read a bit of high school economics before embarking on broad re-write of economic policy.

13/n In the coming months, I suspect all things trump will be rejected, then despised and finally ignored. I hope @amercompass can free itself of this death spiral. It need not though. There are plenty other outlets for good new thinking about economic policy. None are worse.

14/14 And finally, the glowing reviews of @amercompass from the left make some sense. After all, if this is the economic vision that emerges from the center right in the wake of Trumpism, we should expect a generation of progressive economic policies to sweep the nation.