Trump misses big picture when it comes to economy

If Donald Trump could script his presidency, every week probably would look like the one just past. You get on the phone with some big shot who’s considering closing a plant in the Rust Belt. You offer some carrots, you threaten implicitly, you make a deal. (Nothing will make Trump happier than the day he gets Apple to open a minor widget factory in Wisconsin.) Then you hold a rally, brag about your dealmaking prowess, promise that CEOs won’t be shipping jobs overseas with impunity anymore ... and then fly back to Trump Tower and wait to do it all again.

Unfortunately, this is not an optimal approach to economic policy. It ignores deep Hayekian insights about the problems inherent in picking winners and punishing losers from on high. It expands an economy in which insiders will inevitably profit more than innovators. It embodies the crony capitalism that only yesterday Republicans opposed.

At the same time — well, it could be worse. Trump is putting a celebrity spin on something that happens under both parties. Trump will make the cronyism more personal and public, and his own conflicts of interest will bear watching. But if he sticks to jawboning individual companies — as opposed to instituting tariffs and starting trade wars — he won’t necessarily make the underlying sclerosis that much worse.

But strong-arming individual companies also isn’t going to do that much to help the mass of heartland voters to whom he promised a Trumpian New Deal. And it’s disappointment with wages writ large, and male-breadwinner wages especially, that’s crucial to the economic element in Trump’s populist appeal.

There is no single policy lever to pull that delivers higher wages, and the policies involved can be slow, subtle and uncertain in their effects. If the rest of his agenda is conventionally Republican, he could end up with a disappointingly conventional Republican result: rising GDP but stagnant take-home pay.

However: It is possible for policymakers to raise take-home pay directly even without big boosts in the underlying wages. Cutting payroll taxes would do it. The earned-income tax credit does it. Middle-class tax cuts do it. Child tax credits do it. A wage subsidy would do it. The list of possibilities is long.

Several of those possibilities are immediately available to Trump, if he wants to reach for them.

None would solve the long-term dilemma of slow wage growth. But it would make it immediately easier for Americans who aren’t employed by companies amenable to Trumpian jawboning to pay bills, raise children, take vacations and pursue the American dream.

It would also cost money — money that conventional Republican economics and Trump’s official campaign tax plan tends to reserve for upper-bracket tax cuts.

But it could be otherwise. If he bends the party’s tax orthodoxy, as well, he would be able to deliver something bigger than last week’s public relations win: not just manufacturing jobs for a fortunate few but more money for the many.

There is no single policy lever to pull that delivers higher wages.