There is a new phenomena rising in our economic group think. Let's call it "post-industrial economic confusion."
Never has this been so on display as in this week's presidential debate between Hillary Clinton and Donald Trump. We reached an all-time low in terms of economic incoherence from both nominees. This is an economic phenomenon in itself.
Partly this may of course reflect the poor quality of candidates we have before us, but it also reflects something more -- the rapid change in critical economic issues that these politicians have to grapple with and appear to have very little grasp of.
The most extraordinary element in it all is that while we are going through one of the most significant economic revolutions since the industrial revolution (the technology boom), neither candidate once mentioned the tech world and all it's benign -- and less benign -- consequences.
Let's start with Clinton. She told us the antique democratic cliche that she was going to raise taxes and everyone must be treated fairly. I guess she somewhere picked that up from Roosevelt -- perhaps from the 1930s. No clear reason how or even exactly why we raise these taxes, in what format, how the money would be spent or what to do with deficit challenges. She certainly did not distinguish say between the issue of monetary intervention versus fiscal intervention.
She then went on to tell us her experts could ensure us all quite definitively that her economic policies would be materially better than Trumps. She never told us why, or who these economic experts were or the basis of their analysis. In fact, as we all know, there is never consensus among serious academics on most macroeconomic issues.
What about Trump? He seemed to have just picked up the Idiots Guide to Friedmanite economics. So, he said let's cut taxes and complained about the deficit. Still he never explained how tax cutting would reduce the deficit without massive expenditure cuts (back to Reagan's voodoo economics). Then he slipped (by accident) into sounding like a Keynsian himself as he said he would spend heavily on infrastructure.
Trump had just about figured out that keeping rates low was probably artificially propping up the stock market and that we may have done too many rounds of quantitative easing, although he gave no solution as to how you wean yourself off such monetary drugs. He talked of jobs going abroad but only suggested protectionism to stop this happening further (hardly a free-market policy from our grand capitalist). Nor did he mention that increasingly the job shortage problem is one of technology generally taking jobs, overseas outsourcing or not.
And that really gets to the crux of it. We have a technology revolution that is transforming our means of production, but not necessarily producing material jobs (in fact it may be destroying them). It is also certainly increasing the Gini coefficient (the standard measure of national wealth inequality) as the very few owners of all the technology and intellectual property are benefiting disproportionately to the rest of the population. It may require a whole new set of political economics to meet these new challenges -- and opportunities.
Yet, not a mention by either candidates of this technology revolution. It was either because they were too frightened to even go there with no solutions at hand; or, I fear, more likely that they just simply have no idea of these central issues in the first place.
Whoever wins, good luck with future U.S. economic policy. We can only hope that it's directed by true experts at Treasury and the Fed, and not our future president.
Jeremy Josse is the author of Dinosaur Derivatives and Other Trades, an alternative take on financial philosophy and theory (published by Wiley & Co). He has spent over 20 years in the financial services industry with a range of leading firms -- including: KPMG, Schroders, Citigroup and Rothschild. Josse is also a visiting researcher in finance at Sy Syms business school in New York.
Josse has no position in the stocks mentioned in this article.