Trumponomics is failing on growth – Simon Johnson

MIT Sloan Professor Simon Johnson

From Project Syndicate

WASHINGTON, DC – US President Donald Trump and his Secretary of the Treasury, Steven Mnuchin, have promised an economic miracle. They argue that when the United States adopts their policies, it will consistently achieve annual economic growth above 3%, or even above 4%. After a year of being in charge, pushing hard on deregulation, and getting what it wanted in terms of tax cuts, how is the Trump team doing?

We are still in the early days, but the results so far have been disappointing. And the US’s medium-term prospects for sustained growth could be endangered if Trump pursues the policies he claims to want.

Trump has repeatedly argued that America’s overall economic performance in 2017 should be seen as the direct result of his policies, and he has made a big deal out of the third-quarter growth rate, which was initially reported as 3.3%, then revised down to 3.2%. Yet, in the fourth quarter, growth was down to 2.6%, and initial estimates suggest that overall growth for the year will not surpass 2.3%. That is lower than what was achieved under former President Barack Obama in 2014 (2.6%) and 2015 (2.9%).

In fact, under Obama, the quarterly growth rate surpassed 3% seven times, and even reached 4.6% on two occasions. From the third quarter of 2009, growth was positive in every quarter, save two. But not only was headline growth sturdy under Obama; his administration also presided over considerable job growth – the economy added more than two million jobs annually in seven out of his eight years in office – as well as falling unemployment and higher labor-force participation. Read More »

Here’s how workers would spend the corporate tax cut – if they had a voice – Thomas Kochan

MIT Sloan Prof. Thomas Kochan

From The Conversation

Over 200 CEOs have said they will raise wages or give bonuses as a result of the large corporate income tax cut passed late last year by Congress.

Some view their plans as simply a public relations move, others as a response to tighter labor markets or worker pressures. Pretty much everyone hopes that it might signal a new era in which corporate leaders share earnings with workers in ways they have not done in the past.

I’m among those who hold such a hope. Only if such profit sharing becomes the norm will the long-term trends in widening income inequality and wage stagnation be reversed.

But why should this decision be left to CEOs? Don’t workers have a legitimate claim and stake in what is done with the profits they help produce? New research I’ve been leading at MIT finally gives workers a voice on these issues and many others. Read More »

How Lies Spread Online – Sinan Aral

From The New York Times

The spread of misinformation on social media is an alarming phenomenon that scientists have yet to fully understand. While the data show that false claims are increasing online, most studies have analyzed only small samples or the spread of individual fake stories.

My colleagues Soroush Vosoughi, Deb Roy and I set out to change that. We recently analyzed the diffusion of all of the major true and false stories that spread on Twitter from its inception in 2006 to 2017. Our data included approximately 126,000 Twitter “cascades” (unbroken chains of retweets with a common, singular origin) involving stories spread by three million people more than four and a half million times.

Disturbingly, we found that false stories spread significantly more than did true ones. Our findings were published on Thursday in the journal Science.

We started by identifying thousands of true and false stories, using information from six independent fact-checking organizations, including Snopes, PolitiFact and Factcheck.org. These organizations exhibited considerable agreement — between 95 percent and 98 percent — on the truth or falsity of these stories. Read More »

How this MIT Sloan MBA is harnessing the new dominant force in politics—Millennials – Dan Kessler

Dan Jordan Kessler, MBA ’19.

From BusinessBecause 

America has been to the polls for the first time since Donald Trump was elected in 2016. And more than anything, the races were a testing ground for the 2018-midterm elections and the presidential race to follow in 2020.

In that election in 2020, for the first time ever, Millennials will make up the largest segment of the American electorate with 91 million Millennials composing roughly 35 percent of the voting population.

As a result, in just two years, Millennials will be poised to become a dominant force in politics—a force that can be harnessed effectively and decisively. Therefore, the time has come for campaigns to redirect their focus away from their long-standing focus on baby boomers and engage Millennials in a meaningful and lasting way.

Right now, Millennials are fairly likely to be disengaged with the political process. With the average age of members of Congress at 58-years-old and Congressional leadership in their late 60s and 70s, Millennials, who seek social impact, simply feel as if they cannot relate to government across this generational divide.

Only 32 percent of millennials report that they feel that “people like them” have a legitimate voice in the election,” according to the Center for Information and Research on Civic Learning and Engagement at Tufts University. Read More »

A year for leadership in America – Deborah Ancona

MIT Sloan Prof. Deborah Ancona

From The Hill

Let’s face it: 2017 was truly frightening despite being a banner year for the economy. So as we approach the one-year anniversary of President Trump’s inaugural it is worth pausing to reflect. His first year in office has been a difficult one for those seeking leadership role models. It is not just Trump’s inappropriate tweets, the rollback of environmental regulations, and the foreign policy gaffes that have posed a problem.

As a professor of leadership and a news junkie, I have been disappointed in the performances of our most visible leaders throughout the woebegone 2017. Given a never-ending array of unsettling headlines, including sometimes terrifying stories about Donald Trump, Rodrigo Duterte, Vladimir Putin and Kim Jong Un, we have been witness to corruption and toxic leadership that distorts truth and intimidates followers and critics alike.

But let us focus on the United States, where leaders on both sides of the aisle have noted this dysfunction. Worse still the negativity cascades from the top throughout the government, business and society at large. Toxicity is catching.

The narcissistic tendencies and fear-mongering tactics of our leaders, plus a series of revelations of noted sexual misconduct in many fields, made the events of 2017 read like a leadership Greek tragedy. In the past year, our political and business leaders have been exposed as both out of touch, unable to act on major issues like global warming and drug addiction, and, too often, acting badly if not outright bizarrely in support of their own self interests.

Yet surprisingly, psychologists and political scientists alike have shown that in uncertain times we often gravitate toward these Trump-like authoritarian leaders who promise a better future. When the promise is not forthcoming, however, or the pain worse than we feared, we flip-flop between two states: paralysis and over-reactivity. In doing so, we become ineffective in solving problems where real solutions might be available. Read More »