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Publicat în 28 martie 2017, 20:50 / 370 elite & idei

Alexandru Georgescu: Trumponomics – A New New Deal for the American people?

Alexandru Georgescu: Trumponomics – A New New Deal for the American people?

by Alexandru Georgescu

Western political culture is adept at communication through soundbites and sloganizing. Adding suffixes (-nomics, -care, -ism) to names of politicians is one way of supposedly distinguishing their brand of ideology from that of another – Reaganomics, Thatcherism, Clintonomics, Romneycare, Obamacare. Echoing Bill Clinton’s famous campaign war cry, “it’s the economy, stupid!”, Trumponomics is possibly the most important component of President Donald Trump’s “greatness agenda” that won him a previously unthinkable electoral victory. His detractors have lambasted his views as being both heretical to current orthodoxies, as well as overly simplistic, which is another way of bemoaning Trump’s effectiveness as a political communicator and the current electoral revolt against the tyranny of the expert class consensus. However, Trumponomics is being shaped by dissident thinkers[i] encouraged by Trump’s anti-establishment ethos as a valuable and timely critique of past and current policies and how they have affected America itself, not just in the sense of abstract figures like GDP. While it may be a sign of the Trumpmania that swept stock markets in the period leading up to the inauguration, Deutsche Bank[ii] has already announced that Trumponomics will double yearly US growth and add another 0.5 percentage point to global growth by the end of his term, ending the worst economic recovery since The Great Depression:

trumponomics-a91

“This policy will be successful in moving the U.S. economy away from low-growth secular stagnation towards significantly more buoyant performance. We would not be taken by surprise by a doubling of the growth rate of real GDP in the U.S. over the next two years, nor by a further significant move up of equity valuations and a material further appreciation of the dollar […] This approach should produce a new order that will ultimately be more stable in the sense that ‘good fences make good neighbors’”.

Intellectual roots 

The rise of the bipolar world, the emerging US economic supremacy and the necessity of rebuilding Europe and confronting the Soviet Union to assert the primacy of the capitalist model over the communist one turned new generations of Republicans into internationalists. Coupled with globalization and the wealth that began to flow for key political constituencies, free trade became enshrined in party dogma.

In the abstract, Trumponomics reads a lot like a return to Republican roots of protectionism for “domestic manufactures” of which current liberal darling, Founding Father Alexander Hamilton[iii], was a powerful and persuasive supporter. It also adds Franklinite considerations, expressed in the pamphlet “Observations Concerning the Increase of Mankind, Peopling of Countries, etc.” in 1751 which attributes American prosperity to high wages and cheap land. A main conclusion of this pamphlet, which went on to inspire Reverend Malthus in his more famous observations, was that the limits to population expansion arrive by “crowding and interfering with each other’s means of subsistence”. Trumpian rhetoric posits that high immigration levels coupled with weak growth lead to a reduction in the wages of existing workers (native and prior immigrants) and their gradual exit from the labor force under the current welfare regime. This effect has been documented by sociologist Charles Murray[iv] and by Harvard immigration economist George P. Borjas, and constitutes an essential component of Trumpism’s worldview, of which Trumponomics is the economic branch. The Republican fixation with protectionism lasted until World War 2. Beforehand, Republican President Theodore Roosevelt (considered one of the best Presidents the US has had) had remarked that “pernicious indulgence in the doctrine of free trade seems inevitably to produce fatty degeneration of the moral fiber”[v]. The rise of the bipolar world, the emerging US economic supremacy and the necessity of rebuilding Europe and confronting the Soviet Union to assert the primacy of the capitalist model over the communist one turned new generations of Republicans into internationalists. Coupled with globalization and the wealth that began to flow for key political constituencies, free trade became enshrined in party dogma, especially after the unexpectedly successful Presidency of Ronald Reagan, whose Reaganomics remains a guiding light to Trump’s intraparty adversaries.

However, Trumponomics is not going to be a coherent program and ideology, since it has to be implemented with the help of multiple actors such as Congress and the business community, who are not going to be particularly amenable to many components. Reaganomics itself was the product of many fathers, and neither did Ronald Reagan hesitate to contradict his own platform when the situation called for it. One is reminded of how Reagan strong-armed Japan (the “Asian peril” of the day) into building car factories in the US if it wanted to sell its cars there, or how the Plaza Accords of 1985 led to the rise of the yen, kept low as a matter of state policy for export-based growth, further eroding Japanese competitiveness in favor of investment in the US and of existing American producers. Therefore, Trumponomics will be guided by expediency rather than airy principles. Should it be successful, its only likely principle will have been “is this good for the American people?”. This is in contrast with Reaganomics, which assumed that “the rising tide will lift all boats”, an assertion since proven wrong. It is this focus on citizen welfare which gives Trumponomics its populist character. Rather than a rejection of Reaganomics, whose namesake Trump has professed for decades to have admired greatly, Trumponomics is the logical continuation of it.

Read more: http://www.themarketforideas.com/trumponomics-a-new-new-deal-for-the-american-people-a91/

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