The risks to this mostly favorable economic outlook are substantial. Statements made during the election campaign about foreign trade and immigration have not yet been translated into specific policy proposals. The large capital inflows implied by the stronger U.S. dollar would be reflected in an even larger current account/trade deficit. If that is misunderstood by a protectionist Trump Administration and its allies in Congress, tariffs and other anti-trade barriers would damage world trade and potentially abort the economic expansion.
To make his case Sachs also cites data showing that people don’t identify as happier today than a half-century ago. If true, that is perhaps evidence in favor of the “hedonic treadmill” theory of psychology, which claims that people quickly get used to improvements in their lives and take them for granted. A year after winning the lottery, for example, many people are no happier than they were previously. In a sense, just being alive right now means you’ve won the lottery—the average American today is richer in many ways than John D. Rockefeller a century ago.
Sachs is too quick to dismiss the incredible progress that humanity has made by practically every measure, and also too quick to assume that government intervention is the best way to bring about progress. You can find even more data showing how far humanity has come at HumanProgress.org.
Bill Easterly is always worth reading. A slice:
One of the greatest insights of economics is that individual incentives work while group rewards and punishments don’t. Collective guilt doesn’t work to change anyone’s behavior. In the end, collective guilt, fashioned from bogus analysis and delight in stereotypes, is mere slander. It’s a formula for constant antagonism and it’s poisoning American politics.