Wall Street might have taken a U-turn following Donald Trump’s surprising election win, but Nobel laureate Paul Krugman doesn’t believe he can make America great again.
On Monday, the Trump critic wrote an opinion piece for the New York Times to raise doubts about the president-elect’s infrastructure plan—one Wall Street and investors believe will strengthen the economy.
Following Trump’s election, markets rose as investors predicted that Trump would increase infrastructure spending and provide a tailwind to the economy. But rather than directly borrowing cash and paying for infrastructure projects, Trump’s infrastructure plan actually offers some $137 billion in tax cuts to private investors who are willing to back and own transportation projects.
As a result, Trump’s plan doesn’t guarantee additional spending in the economy, Krugman said. The Nobel Prize winner added that private investors may simply choose to privatize infrastructure projects that would have happened with or without Trump’s plan—only the private company would pay just 18 cents on the dollar, while taxpayers would cover the rest.
That “would enrich a few well-connected people at the taxpayers’ expense while doing very little to cure our investment shortfall,” Krugman said. “It’s hard to see any reason for a roundabout, indirect method that would offer a few people extremely sweet deals, and would therefore provide both the means and the motive for large-scale corruption. Or maybe I should say, it’s hard to see any reason for this scheme unless the inevitable corruption is a feature, not a bug.”
In a Twitter rant on Monday, Krugman warned that Trump could lead to corruption not only in the U.S., but also with the country’s relationships abroad.
Important to realize that the money stolen by the first family is a minor issue; $10 billion, say, skimmed off the top is rounding error 2/
— Paul Krugman (@paulkrugman) November 21, 2016
is just the start. Expect to see lots of privatization and a general shift from transparent to murky so that favors can be traded 4/
— Paul Krugman (@paulkrugman) November 21, 2016
And think about the pro-tyrant bias of foreign policy. Democratic regimes — say, in Europe — are by their own rules unable to offer 5/
— Paul Krugman (@paulkrugman) November 21, 2016
to the profiteer-in-chief. And that will cause a tilt of U.S. Policy toward authoritarian regimes. Stay alert 7/
— Paul Krugman (@paulkrugman) November 21, 2016
Krugman has also warned that installing Trump in the White House is “an epic mistake” with potentially “apocalyptic” consequences down the road.
Meanwhile, the S&P 500, Dow, and Nasdaq hit record closing highs simultaneously on Monday.