President Donald Trump is synonymous with a “revolution” taking place in U.S. politics and society, according to Nobel Prize-winning economist Robert Shiller, but not in a good way.
Speaking to CNBC ahead of the World Economic Forum (WEF) where Trump will be a key attraction, Shiller, a renowned economist and academic who is also attending the Forum, said he was concerned about the changes in society and politics heralded by the president.
“Trump is a revolution unfortunately, (and one) who’s reaffirming nationalism and he’s showing that Americans are no better than anyone else,” Shiller told CNBC ahead of the Forum. “It’s troublesome to me. I’m concerned.”
“So far we’ve gotten through a year of him and we’re optimistic that Congress will switch to a democratic majority in another year so he might be defanged,” the Yale University economics professor added.
WEF aims to bring global leaders, policymakers and private and public enterprises together to find shared solutions to the world’s most pressing problems such as climate change, inequality and poverty – not areas that Trump’s anti-globalization “America First” policy has touched upon much in his first year in power.
Shiller said Trump’s reception by the Davos audience was going to be interesting to see.
“He’s coming to Davos this year and he’s going to try out his rhetoric on the least sympathetic audience I can imagine. He likes sympathetic audiences so I don’t know how he’s going to manage this one.”
While Davos does attract criticism, with some calling it a “talking shop” for the well-off that fails to bring about concrete change, Shiller was supportive of the event. He said the 2018 theme – “creative a shared future in a fractured world” – reflected the problems facing the world, namely what he saw as “the problems of the international growth of populism and nationalism, racism and religionism that is quite striking
right now.”
“Those fractures are re-assertions of traditional fractures and so it’s like we’re back to history again. We were in a period of enlightenment following the horrors of World War II and now the people who remembered that are disappearing so we’re going to go back and make the same mistakes,” he said.
Having won the Nobel Prize for Economics in 2013 for his work on asset prices and inefficient markets, Shiller is attending a Nobel Prize-winner dinner at Davos in 2018. The Forum is also hosting a session based on his 2017 work on “Narrative Economics” and the effects that narratives and stories can have on the global economy.
In his research, Shiller notes that “the human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing.”
“Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political economic situation of today, are considered as the results of the popular narratives of their respective times,” he notes.
“Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future,” he said.
Shiller told CNBC that economists were only just waking up to the power of narratives.
“News people know that popular narratives matter but economists don’t know that. They seem to think that everything happens because of some pretentious man who runs a central bank or government treasury.”
'Trump is a revolution, unfortunately, and I'm concerned,' Nobel Prize-winner Robert Shiller says