Cognitive Dissonance

In what can only be characterized as a comical example of cognitive dissonance, two reporters, Binyamin Appelbaum and Jim Tankersley, for the NYT take the brave (for the Times) position that business optimism has improved significantly under Donald Trump:

WASHINGTON — A wave of optimism has swept over American business leaders, and it is beginning to translate into the sort of investment in new plants, equipment and factory upgrades that bolsters economic growth, spurs job creation — and may finally raise wages significantly.

While business leaders are eager for the tax cuts that take effect this year, the newfound confidence was initially inspired by the Trump administration’s regulatory pullback, not so much because deregulation is saving companies money but because the administration has instilled a faith in business executives that new regulations are not coming.

This is upsetting news for progressives, given that they predicted economic disaster after Trump's upset victory over Hillary Clinton. That's why the NYT reporters, when faced with the reality they themselves report, also feel the need to tell us that business leaders "have been publicly critical of President Trump’s approach to social and cultural issues," propounding on Charlottesville and the Paris Climate accords. And here I thought that this article was about business spending and economic growth.

Even more comical is that after presenting actual evidence the Trump's de-regulation environment has spurred business spending (a key element of economic growth), the reporters feel compelled to state: "There is little historical evidence tying regulation levels to growth." But then, as if whipsawed by reality, they write: "Regulatory proponents say, in fact, that those rules can have positive economic effects in the long run, saving companies from violations that could cost them both financially and reputationally."

Then, after lamenting the lack of regulations, the reporters state:

Only a handful of the federal government’s reams of rules have actually been killed or slated for elimination since Mr. Trump took office. But the president has declared that rolling back regulations will be a defining theme of his presidency. On his 11th day in office, Mr. Trump signed an executive order “on reducing regulation and controlling regulatory costs,” including the stipulation that any new regulation must be offset by two regulations rolled back.

That intention and its rhetorical and regulatory follow-ons have executives at large and small companies celebrating. And with tax cuts coming and a generally improving economic outlook, both domestically and internationally, economists are revising growth forecasts upward for last year and this year.

Even before it became clear that Republicans would pass a major tax cut, capital spending had risen significantly, climbing at an annualized rate of 6.2 percent during the first three quarters of last year. Surveys of planned spending also show increases.

Hmmm. I suspect there is concern among the big government crowd that once the impact of reduced taxation is combined with reduced regulation, there may be still another economic boomlet. Sooo ... they quote a past "economic advisor to Joe Biden, assuredly an unbiased observer, who dutifully states that: "The notion that deregulation unleashes growth is virtually impossible to find in the data."

Except that we're experiencing growth, new jobs, and documented wage increases that were elusive over the Obama years of heavy regulation and heavy taxation, aren't we? And here I thought that the Dems were oh-so concerned about jobs for the middle class and income inequality (mitigated by wage growth). Nevermind.

The economy is affected by many parameters and is an exceedingly complex system. And it's completely understandable that reporters for a news organization that is a leader in Trump Derangement Syndrome would suffer from cognitive dissonance when a president the NYT often characterizes as a stupid, incompetent monster somehow shepards through executive actions and legislation that lead to significant and undeniable economic improvement, while his exalted predecessor failed to do so at every turn.

This NYT article has the feel of a ping-pong match. Its authors grudgingly report excellent economic news:

The low unemployment in the United States may also be prompting increased spending, just as it did in the 1990s, as corporations invest in technology to make workers more productive, or replace them entirely. Wendy’s is adding self-service kiosks at 1,000 restaurants. [I guess it might be too much to ask that the reporters delve into the impact of a $15.00/hr. "living wage" and entry level worker "replacement."]

But business executives say the Trump administration deserves credit. Mr. MacDonald said home builders have benefited from the killing of regulations written by the Obama administration, including a rule that broadened the definition of wetlands, which could have restricted home building in certain areas. The National Labor Relations Board also reversed a decision that made builders more responsible for the working conditions of their contractors’ employees.

In some industries, the administration’s actions will allow companies to engage in activities they might not have been able to otherwise; electric utilities, for example, might be able to invest in upgrading power plants that run on fossil fuels, thanks to a promised rollback of Mr. Obama’s Clean Power Plan to fight climate change.

The Business Roundtable, a corporate lobbying group in Washington, reported last month that “regulatory costs” were no longer the top concern of American executives, for the first time in six years. Mr. Zandi said that regulation was still the top concern in Moody’s survey of business confidence, but that it was rapidly losing ground to concerns about the availability of labor.

The National Association of Manufacturers’ fourth-quarter member survey found that fewer than half of manufacturers cited an “unfavorable business climate” — including regulations and taxes — as a challenge to their business, down from nearly three-quarters a year ago.

Some industries have seen particularly clear changes in fortune. The Trump administration has reversed a number of environmental protections that would have imposed significant costs on energy companies. Mr. Trump’s appointees to the Federal Communications Commission voted last month to repeal so-called net neutrality rules, which treated internet services as a regulated industry, like power lines, and prohibited broadband providers from charging for faster internet service or from blocking or slowing some websites.

That decision helped prompt Comcast to announce that it would invest more than $50 billion in infrastructure over the next five years.

The banking industry, in particular, has been buoyed by a relaxed approach to financial regulation as the Trump administration moves to ease many of the postcrisis rules put in place to prevent another financial meltdown. The Treasury Department has issued a series of reports calling for sweeping changes to rules required under the 2010 Dodd-Frank law, and a council set up to designate firms that pose risks to the financial system is in the process of removing those companies from heightened federal oversight.

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All of this from the NYT, tempered, of course, with a disdainful tone and plenty of qualifiers that imply that the growth we see might not be what it seems—an outstanding achievement for Trump after only a single year in office and a validation that high taxes and suffocating regulation are NOT good for the economy.

Cognitive dissonance aside, it is what it seems—a major win for this president.