Ivanka Trump channeled economist John Maynard Keynes during an appearance on “Fox & Friends” on Monday morning. Promoting a cronyist piece of legislation and alluding to a small business boom in the U.S., Ivanka stated that “the animal spirits have been released,” a phrase coined by Keynes in the 1936 book “The General Theory of Employment, Interest and Money.” As the months go by, it is becoming apparent that the ghost of Keynes has infiltrated the White House and the Trump family.
It is widely known that there are only a few people who President Donald Trump listens to. At the top of his list are his daughter and her husband, Jared Kushner, two social justice proponents. Whether it is foreign policy or economic interventions, the president heeds their advice, and that spells trouble for the rest of the country.
This was showcased during the Syrian intervention and the paid family leave provision of the president’s proposed budget.
The administration is looking to spur bipartisan support for the reauthorization of the “Perkins Career and Technical Education Act” for another six years. It provides federal funding to technical and vocational programs and has been labeled by Ivanka as “a very good piece of legislation.”
On the surface, it is legislation to expand apprenticeships and rejuvenate job retraining initiatives, a bill that essentially supports alternatives to university. Once you dive deeper through the bill, you begin to see the crony aspects: allocating taxpayer dollars to well-connected businesses and sectors.Ivanka on Fox & Friends
For the past year, the bill has been lobbied by many technology behemoths, including IBM. Last year, for example, IBM CEO Ginni Rometty called for an update to the Act in a USA Today op-ed:
One major step would be to pass early in 2017 an update to the Perkins Career and Technical Education Act that governs federal support for vocational education. Next, leaders should focus more on connecting high-school graduates and others without four-year degrees to jobs. For example, we should modernize federal college work-study programs, which dispense nearly $1 billion to help students work to earn their college tuition. Currently, most of these jobs subsidized with federal funds are low-wage and in college cafeterias and libraries. Using this program to foster meaningful internships in private companies would help students build the skills they need for the new jobs and earn more for their tuition.
Most of all, to create new collar jobs we will need new kinds of collaboration – involving federal and state governments, public school systems, community colleges and private business, across multiple industries. We will not always agree, but progress in job creation will come from open discussion and engagement. Together, we must work to reform education, policy and strategic approaches – in the U.S. and around the world – for today’s job opportunities that will build a future of growth and prosperity.
This is cronyism at its finest – and conservatives should be outraged. Evidently, the workforce central planning agency has been pulling double shifts to get it through. It is being marketed to help the next generation of workers as well as small businesses compete in today’s economy. And that was the objective of Ivanka’s sales pitch when she made a pitstop at the Fox News headquarters.
Whenever a corporation speaks of public-private partnerships and federal or state funding, it is ostensibly never a good deal for the taxpayers. Unfortunately, it remains business as usual – Keynesian style.
What made the interview interesting was the fact that she, like her father last month, uttered a Keynesian reference. Whether it was intentional or not remains to be seen (a Freudian slip?).
Animal spirits is an economic term to describe human emotion that drives consumer confidence. It has also been given a 21st century update by describing the psychological elements that drive investors to take action when they come across high volatility in the capital market.
Legendary free market economist Murray Rothbard did not see it this way. Rothbard wrote in “Keynes the Man” that the animal spirits term was a part of Keynes’s reading of the business cycle:
But, alas, there is a hitch. Even though dynamic and full of free will, investors are erratic creatures of their own moods and whims. They are, in short, productive but irrational. They are driven by psychological moods and “animal spirits.” When investors are feeling their oats and their animal spirits are high, they invest heavily, but too much; overly optimistic, they spend too much and bring about inflation. But Keynes, especially in The General Theory, was not really interested in inflation; he was concerned about unemployment and recession, caused, in his starkly superficial view, by pessimistic moods, loss of animal spirits, and hence underinvestment.
Keynes even warned that the animal spirits could also generate an immense crash.
When former President Richard Nixon declared that “we are all Keynesians now,” he was correct. Everything from “priming the pump” to being a “low interest rate person,” the Trump administration will maintain Washington’s central planning philosophy, and the Perkins Act is further proof of that.
The Perkins Act isn’t the primary concern of the Trump White House, or even Washington on a grander scale, but it is a part of a much bigger pattern: Trump is a Keynesian disciple.
It doesn’t matter if the Republicans or Democrats are in charge, the spirit of Keynes lives on in the Oval Office, and Ivanka will continue to be the channeler in the Keynes séance.