The Economist interviewed Donald Trump, and I've got to say... it's pretty enlightening. Below follow some of the most interesting parts of the interview.

Economist: "What is Trumponomics and how does it differ from standard Republican economics?"

Trump: "We have nations where…they’ll get as much as 100% of a tax or a tariff for a certain product and for the same product we get nothing, OK? It’s very unfair."

This betrays his fundamental misunderstanding of trade between nations and competitive advantage. Of course trade deals work like this. It would be more of a shock if they didn't. Let's pick a nation out of a hat - Canada. (Ok, I guess I just picked America's Hat out of the hat.) Way back in the 90's, Canada got a really good deal on the tariffs for wool suits during the NAFTA negotiations. That happened to be a huge pain in the butt for US suit manufacturers. But that trade deal didn't exist in a vacuum. It was bundled with thousands of other tariffs. So what the US lost in suit manufacturing, they gained elsewhere (say, favorable IP and copyright rules that safeguard US companies' interests that are involved with entertainment and media). And of course, US citizens also get cheaper wool suits from Canada. (Yes, this is an actual real thing - Canada's exports of men's wool suits drove some US suit manufacturers out of business.)

It's impossible to look at a single product and say, "Hey, we're getting screwed here.", because that's not how trade deals are negotiated. Countries negotiate based on their own competitive advantage. So suits might have been really important to Canada, and car parts might be really important to the US. When we come together to negotiate, Canada will therefore want to make sure that they get the best deal on suits, while the US would try and get the best deal on car parts. Yes, there are losers (on both sides), but the key point is that both countries also win. Without understanding this principle of negotiation, it's hard to understand how Trump can see himself as any kind of expert in the field, no matter how many times he claims the contrary.

Economist: But beyond that it’s OK if the tax plan increases the deficit?
Trump: It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”*?

Economist: Yes.
Trump: We have to prime the pump.

*Note: "Priming the pump" refers to stimulating an economy through government spending, interest rate reductions and lowering taxes. It originated in the Depression when Hoover & Roosevelt were increasing government spending on public works in order to jump-start the economy.

Economist: It’s very Keynesian.
Trump: We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?

Economist: Priming the pump?
Trump: Yeah, have you heard it?

Economist: Yes.
Trump: Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

For a businessman to be unaware what the phrase means, that it's been around for longer than he's been alive (it originated in the 30's, Trump was born in '46) and that US fiscal policy has been doing this since 2007/8's recession is disturbing. What did he think the auto industry loans were? TARP? The historically low interest rates?

Trump most certainly did not just 'come up with it a couple of days ago'. It's much more likely that Mnuchin explained that monetary policy to him a week ago, and now he believes he came up with the idea.

Trump: And that has two barriers which you have to watch. It’s got a barrier of the tax, which we will take care of. We’re going to make it 10%. Now it’s 35%...

Economist: Sorry, 10%? The repatriation taxes?
Trump: The repatriation. Inversion. The corporate inversions, which is a disaster, with the companies leaving. But they want to bring back their money. Number one, the tax is too high but the other thing that’s too high is the bureaucracy.

Mnuchin: Correct.

Trump: I have a friend who said even if you wanted to bring it back in you can’t because you have to go through so many papers, so many documents, so many…

Here, I think Trump's "friend" is probably none other than Tim Cook, and I'll bet that Cook was cringing when he heard himself being referred as such. There is no company in the world that would benefit more from this kind of repatriation reduction than Apple.

Mind you, I think this is probably sound policy (maybe the only one that has passed through Trump's filter so far), and many of the economists who I've listened to on various podcasts tend to agree that the corporate taxes in the US are... archaic. It makes very little sense that companies are double taxed on their earnings; once in the country of sale, and once when bringing back that money to the US. This serves as a disincentive to bringing the money back to the US where it can be reinvested. Why a company should be taxed twice on the same earnings is frankly beyond me. If the government needs the revenue, it would be better to find a way to just increase the base tax rate than to double tax foreign earnings.

As a side note here, during this entire interview, Mnuchin keeps saying one little word interjections, like you see in the exchange above. It's as though he's prodding a small child, and offering encouragement when Trump gets the answer right.

Economist: "But some people will look at this bill and say, hang on, a lot of people are going to lose their coverage."

Trump: "But we’re putting in $8bn and you’re going to have absolute coverage. You’re going to have absolute guaranteed coverage. You’re going to have it if you’re a person going in…don’t forget, this was not supposed to be the way insurance works. Insurance is, you’re 20 years old, you just graduated from college, and you start paying $15 a month for the rest of your life and by the time you’re 70, and you really need it, you’re still paying the same amount and that’s really insurance."

Let's just unpack this a little bit. The US spent 3.35 trillion on healthcare in 2015. What, exactly, is 8 billion going to do? But more to the point, Trump is so out of touch with reality that he thinks that the average person pays $15 a month for health insurance? Garbage. According to the Kaiser Family Foundation, the average employee contribution for healthcare plans is $4,710 a year, or $392/month. Per person. That's 26 times what Trump thinks US citizens pay for health insurance.

And of course, 8 billion is nowhere close to the number needed to fund high risk pools. Even conservative estimates peg the needed funds at anywhere between 15-30 billion needed to cover them every year.