S en. Elizabeth Warren has talked with very horrible plans in her bid for the presidency and tried to marry expansive and socializing economic policies with the nationalist rhetoric that confirmed the election college of President Trump. But while her hodgepodge of plans, ranging from that of "economic patriotism" and "green manufacturing", has reeked of opportunism, her post today has a warning of an economic crash actually diagnosing the very real, apolitical and often ignored problems that bubbles during our economy.
At each measurement, the Trump economy's tenacity is an exception to historical trends. We have retained the longest bull market in American history despite a very slow recovery from the major recession. Although our unemployment rate has fallen for half a century, our inflation rate did not agree with 2.0% in any month in 201
But even if the basic principles of the economy have lost the odds, Warren rightly diagnoses the underlying bubbles that threaten our status quo.
Important among Warren's warnings is the corporate debt that arises from leased loans, which packs the debt from companies with lower credit ratings. She rightly notes that $ 1 trillion the corporate loan market looks alarmingly "like the pre-primer premiums before 2008: badly signed loans with minimal protection then packaged and sold to investors."
Warren also diagnoses household debt as an imminent problem – even though she stops acknowledging that the student loan bubble is actually a bubble – and acknowledges our staggering manufacturing market leaving large country roads behind. But as usual, Warren explains the wrong solutions to the right problem.
Like Trump, Warren falls into the same inaccuracy to blame bleeding American manufacturing jobs on politics rather than automation. In practice, several studies have found that automation caused more than 80% of the loss of manufacturing jobs, and McKinsey estimates that in the future, technology can automate nearly half of all activities that people are currently paying to do. The solution to the creative destruction left in the wake of technological advancement is not to stop progress, but to invest in transforming workers with the skills required in our increasingly information-driven economy.
And, of course, this opposes Warren's favorite solutions to a large part of the household crisis, student loans. As it stands, the federal government effectively subsidizes extended college franchises through the promise of unlimited and almost unconditional student loans. Warren's dreams of free college and widespread student loan depreciation would only allow colleges to continue to jump up the prices and leave the taxpayers on the hook to pay the bill. And more importantly, Warren's plan ignores the growing skills gap created by a political class that has been increasingly high-school graduates and hindered the expansion of vocational training.
Warren's solution to the alleged loan bubble, increased regulation, may be justified. And her plan to spend away to keep manufacturing jobs is misleading, but it would probably simply not do anything.
But to take a series of personal debt categories and then nationalize them, one risks creating a systemic bubble problem that can undermine the economy.