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Economists Aren’t Overreacting, Trump’s China Trade War Is A Terrifying Prospect (City A.M.)
May 14, 2018
From the article:
The Brexit vote hasn’t led to economic armageddon that some predicted, as Paul Ormerod rightly pointed out on Wednesday.
So are economists now overreacting to America’s potential trade war with China? And could such a trade war actually reduce inequality, as he hinted?
The answers are no, and no. If the US-China trade dispute escalates, it will hold back their economies, make people worse off, and put at risk the international trade system that has helped billions of people climb out of poverty and led to decades of growth in prosperity.
Alas, everything in the UK must be seen through the prism of Brexit. So, did economists overstate the impact of Brexit? I surveyed the economic studies before the vote.
A small minority – two out of 14 – predicted that the vote would trigger a recession. One of those was the Treasury – yes, the government was guilty of Project Fear. Almost all independent economists said growth would slow by around one percentage point a year until we left and, by 2030, the economy could be two to seven per cent smaller than otherwise. So far, the economy has slowed in line with these predictions – hardly proof that economists cannot be trusted.