Trump won because of a cultural issue that flies under the radar and remains stubbornly difficult to define, but is nevertheless hugely important to a great number of Americans: political correctness.
Read the whole essay. I was not persuaded.
After the financial crisis, it was remarkable how many economists found their world view confirmed by it. Keynesians said that it proved Keynesianism, Those who thought that loose monetary policy is the root of all evil felt vindicated. Scott Sumner and others put the blame on tight money. Economists on the left blamed neoliberalism and deregulation. Economists on the right blamed government-sponsored enterprises and affordable housing goals.
I’m getting the sense that last week’s election is going to have a similar follow-up. Everyone is going to use it to climb on to their favorite hobby horse. It proves that America is racist. It proves that the economy is not working for some people. It proves that nationalism is more popular than globalism. It proves that elites have failed. It proves that the American political process is flawed. It proves that new media have altered the electoral landscape. It proves that Obamacare is not working. It proves Hillary Clinton is unpopular. It proves that the American people do not care about facts. It proves that Americans are still mad at Wall Street. It proves that Americans want to get out of the Middle East. It proves that terrorism is a major issue. It proves that issues don’t matter, and that it’s all identity politics. Americans wanted anyone but another Bush or another Clinton. It was a repudiation of Barack Obama. It shows that democracy is flawed.
I am going to climb on to my own hobby horse in order to offer a meta-interpretation. We face a blooming, buzzing confusion of interpretive frameworks for the election. Because it is only one event, we are not going to be able to sort it out.
I would argue that the same holds true for many economic phenomena. There are many plausible interpretive frameworks. If we are looking at singular events, like the financial crisis, we have no chance of definitively sorting them out. When we look at macroeconomics in general, too many factors change to enable us to draw firm conclusions. With microeconomics, there is enough similarity across markets and across time to develop more confidence in crude interpretive frameworks, such as basic supply and demand. But attempts to get more refined and precise are likely to fail.