For about 20 years, Ray Keating wrote a weekly column - a short time with the New York City Tribune, more than 11 years with Newsday, another seven years with Long Island Business News, plus another year-and-a-half with As an economist, Keating also pens an assortment of analyses each week. With the Keating Files, he decided to expand his efforts with regular commentary touching on a broad range of issues, written by himself and an assortment of talented contributors and columnists. So, here goes...

Monday, April 18, 2016

Trump’s Huge Recession

by Ray Keating

Way back in 1970, the late Nobel Prize-winning economist Milton Friedman wrote, “I have been impressed time and again by the schizophrenic character of many businessmen. They are capable of being extremely farsighted and clearheaded in matters that are internal to their businesses. They are incredibly shortsighted and muddleheaded in matters that are outside their business but affect the possible survival of business in general.”

This phenomenon has only spread over the past 45-plus years. We now are constantly berated by corporate executives and high-profile investors saying things about the economy and public policy that make absolutely no economic sense. These leaders in business turn out to be economic illiterates.

Unfortunately, one of these economic illiterate businessmen just happens to be leading the race for the Republican presidential nomination in 2016. Of course, I speak of businessman and reality TV star Donald Trump.

It’s not easy figuring out how Trump came to rise and stay atop the GOP field. But to a significant degree, the Trump train keeps chugging along due to the fuel of populism. Specifically, Trump has played on or ginned up people’s fears, in particular, irrational fears of foreigners. After all, Trump is the guy who is going to fix “bad trade deals,” apparently by imposing massive tariffs on products from nations with which we run trade deficits, like Mexico, China and Japan. Trump also plans to create a “deportation force” to move 11-12 million illegal immigrants out of the nation.

While this might be classic populist politics, it’s also classically wrongheaded populist economics. Trump misses simple economic facts.

For example, in the U.S., periods of higher economic growth usually coincide with shrinking trade surpluses or mounting trade deficits, while economic slowdowns and recessions coincide with declines in trade deficits. The U.S. trade deficit shrank dramatically during the 2007-2009 recession, declined during the slowdown and recession in 1990-91, and during the economic woes of 1979 to 1982, the trade deficit not only declined, but shifted to a surplus during two of those years. Indeed, the surest way to “cure” a trade deficit is with a recession.

For good measure, the last time the U.S. went down the path of protectionism, it did not turn out well, to say the least. As a result of protectionist tariff measures passed in 1921 and 1922, and, most egregiously, the Smoot-Hawley Tariff Act of 1930, trade declined. Most egregious, the Smoot-Hawley measure triggered the Great Depression. It took decades for trade to regain previous levels.

Make no mistake, free trade – that is, reducing governmental barriers and costs to trade – is a positive for economic growth; for increased opportunity for U.S. entrepreneurs, small businesses and workers; as well as for expanding choices and reducing costs for U.S. consumers.

And trade is increasingly important to the U.S. economy. From 2000 to 2015, for example, the growth in real U.S. exports equaled 22.5 percent of the growth in real GDP, and the expansion in real total trade (i.e., exports plus imports) came in at 41.6 percent of real GDP growth. Also, consider that in 1950, U.S. exports equaled 4.2 percent of GDP, and imports registered 4 percent, while in 2015, exports had jumped to 12.6 percent of GDP, and imports to 15.5 percent of the U.S. economy.

Donald Trump misses all of this, apparently.

As for immigration, few disagree that the current system, which allowed for 11-12 million people to be in the nation illegally, needs to be fixed. Indeed, respect for the rule of law demands immigration reform. At the same time, it must be recognized that most immigrants – both legal and illegal – come to this nation seeking a better life, and they contribute as workers, business owners and consumers. For good measure, immigrants also benefit the economy by overwhelmingly doing work that is complementary to the native born.

Given these economic realities, the Trump agenda of tariffs and deportation would inflict serious harm on the U.S. economy.

On trade, American Action Forum, a free enterprise group, has estimated that Trump’s plan for imposing significant tariffs on imports from China and Mexico would hit U.S. consumers with $250 billion in annual costs.

For good measure, the U.S. Chamber of Commerce has projected that the Trump tariffs on China and Mexico would bring about a significant recession: “The U.S. recession would set in within the first year under Trump’s proposed trade policies, which include a 35 percent tariff on imports from Mexico and a 45 percent tax on goods coming in from China. Over the next three years, the U.S. economy would shrink by 4.6 percent and the unemployment rate would nearly double to 9.5 percent.”

As for the Trump – as well as Senator Ted Cruz – deportation agenda, the story for the economy gets even worse. The American Action Forum offers the following points and estimates:

• To deport all illegal immigrants in the nation in two years, as Trump proposes, the federal taxpayer costs would be massive. These would include federal immigration apprehension personnel increasing from 4,844 positions to 90,582 positions; the number of immigration detention beds jumping from 34,000 to 348,831; immigration courts rising from 58 to 1,316; and the number of federal attorneys legally processing undocumented immigrants increasing from 1,430 to 32,445.

• As for the economic costs, they are even more frightening. AAF reports: “The result is a sudden and deep recession similar to what the United States recently experienced during the Great Recession. Let’s say that full immigration enforcement starts at the beginning of 2017 and the U.S. government successfully removes all undocumented immigrants by the end of 2018. At the end of 2018, the labor force would be 6.4 percent smaller than if the government had not removed those immigrants. Relative to CBO baseline projections, the labor force would decrease by 10.3 million workers. As a result, the labor force would fall to its lowest level since 2006. In addition, the labor force participation rate would fall from about 62.3 percent to 60.7 percent, the lowest level since the 1970s. The steep decline in the labor force would cause the economy to decline sharply. At the end of 2018, the economy would be 5.7 percent smaller than it would be if the government did not remove all undocumented immigrants. For purposes of comparison, note that the decline in real GDP during the Great Recession was quite similar – 6.3 percent. This suggests that real GDP would be about $1 trillion lower in 2018 than CBO’s baseline estimate, wiping out all economic growth that would have occurred during the previous three years.”

The most likely outcome of the Trump tariff and deportation agenda? A huge recession.

None of this should be surprising to anyone who understands the economics and history of both trade and immigration.

But maybe Trump has an excuse. After all, his business career seems to be best known for four high-profile business bankruptcies in a span of 18 years. Milton Friedman was bewildered by businessmen being “farsighted and clearheaded” in their own businesses but “shortsighted and muddleheaded” on matters outside their business. It can be argued that Trump is shortsighted and muddleheaded on matters both inside and outside his businesses.


Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel winning Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…

Wednesday, April 6, 2016

What's Being Said About Ray Keating's Thrillers?

A Lutheran pastor, former CIA, and onetime Navy SEAL stands at the heart of Ray Keating’s exciting and thoughtful Pastor Stephen Grant novels.

Not only does the host of KFUO radio’s BookTalk call Keating “a great novelist,” but Keating’s latest thriller, MURDERER’S ROW: A PASTOR STEPHEN GRANT NOVEL, was named KFUO’s “Book of the Year 2015.” And Kirkus Reviews says, “Action fans will find plenty to love here, from gunfights and murder sprees to moral dilemmas.”

For good measure, THE RIVER: A PASTOR STEPHEN GRANT NOVEL was a “Book of the Year” finalist in 2014. Regarding THE RIVER, Kirkus Reviews declares, “A gritty, action-stuffed, well-considered thriller with a gun-toting clergyman.”

There’s much more, including…

• From a Washington Times review of THE RIVER written by a pastor and former CIA officer: “What Ian Fleming's 007 series has probably done for ex-MI-6 agents and Tom Clancy has done for retired CIA officers, Mr. Keating has done for the minority of former CIA agents who have served their country by working in the intelligence community, but now wish to serve God.”

• A Touchstone magazine review of MURDERER’S ROW says: “This is a fun read, though the embedded theology is real and salutary. There is death and life, adultery and commitment, friendship and betrayal, violence and victory over violence… Perhaps the best part of the book for the reviewer is that the clergy are good at helping people bring Christ into their vocations.”

• Marvin Olasky, editor-in-chief of WORLD magazine, lists Ray Keating among his top 10 Christian novelists. WARRIOR MONK also ranked as a Top 10 book on a WORLD magazine June 2013 list.

• On WARRIOR MONK, an Amazon reviewer observed, “Most Christian fiction leaves a lot to be desired. This book will appeal to non-Christians as well. Warrior Monk is about real people with real desires, emotions and feelings. I am anxious to read the other books in the series. Readers won't be disappointed.”

• And Lutheran Book Review says: “I miss Tom Clancy. Keating fills that void for me.”

Get all five of Keating’s thrillers – MURDERER’S ROW, THE RIVER, AN ADVENT FOR RELIGIOUS LIBERTY, ROOT OF ALL EVIL? and WARRIOR MONK – at Amazon in paperback or for the Kindle.

Friday, April 1, 2016

Trump, Clinton and Sanders: Welcome to New York, America

by Ray Keating

For some bizarre reason, I’ve chosen to live my entire life in loopy New York. From a political standpoint, that has meant suffering under a one-party system. This New York reality is now spreading across the nation in the current presidential race.

Hillary Clinton, former U.S. senator from New York, squares off with Bernie Sanders, originally from New York, on the Democrat side, and New York City businessman and reality TV star Donald Trump leads among Republicans.

But what do I mean by this “one party” comment? Yes, New York is a deep blue state, but there are Republicans in the state. In fact, Republicans still have effective control of the state senate – barely. The problem is that both parties, for the most part, are Democrats.

The New York Democratic Party ranks among the most hard core of Democrats. They are unabashedly left wing, whether on economic matters or social issues.

Meanwhile, New York Republicans amount to little more than Democrat-Lite. They love big government; are a mixed bag, at best, on most social issues; and are far too interested in pandering to keep some sliver of power. Notions that Republicans should be principled in any way, and work to change hearts and minds on the issues, are treated as an absurdity. Sure, there’s a real conservative here and there in New York, but they are the exceptions. There’s a reason why New York has a Conservative Party. It was created in 1962 to serve as a conservative check on the Republicans, and that need has not gone away for more than a past half-century. Apparently, few Republican Party leaders grasp the idea that if voters have a choice between Democrats and Democrat-Lite, they’re more likely to choose the real thing. And hence, the long decline of Republicans in New York.

Welcome to New York, America.

Turning to the current presidential campaign, the Clintons, of course, chose to move to New York as this Democrat state would give her an excellent shot at winning a U.S. Senate seat. In her 2000 victory, Mrs. Clinton was helped by the fact that Republicans made a complete mess of matters, with Rudy Giuliani dropping out of the race and being replaced by Congressman Rick Lazio, who ran an inept campaign.

Of course, Clinton is an unabashed liberal on nearly every issue imaginable, from abortion to taxes to foreign policy, and beyond. That’s no secret.

Meanwhile, Senator Bernie Sanders, a New Yorker for the first 27 years of his life before moving to Vermont in 1968, manages to stake out ground to the left of Clinton. That’s not easy. But, heck, the guy warmly embraces the socialist label. What else needs to be said?

Welcome to New York, America.

And then there’s Donald Trump. Given his flip-flopping on nearly every major issue, his being devoid of any principles, and his willingness to say just about anything to gain power, along with an inability to think and express himself clearly on issues, Trump rather nicely fits the New York Republican model.

Welcome to New York, America.

In fact, America has become New York. The Democrats serve up radical Lefties. The current leader among Republicans lacks any kind of commitment to or understanding of conservatism and conservative policies.

Funny, I thought New York long ago no longer mattered when it came to national politics. Silly me.


Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel winning Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…