We have been told for months that he may be the sort of person who boasts in the locker room about grabbing women by the pussy but we shouldn’t really worry about such fripperies because he is on the side of the working man and knows how to run an economy.
Now the reality is emerging. He isn’t just a sleaze ball. He is incompetent as well. He has proved reasonably good at ripping up old agreements. Unfortunately he is absolutely terrible at building new ones.
After he personally intervened in North Korea he immediately proceeded to describe the outcome as the best peace treaty - ever. Then Kim went back to firing off missile tests and headed off to visit that nice Mr Putin. He promised us a new situation in Israel that would lead to peace. Instead he backed one side to the hilt and the murders increased in frequency. He gambled with the Iran peace deal and tried to bully his EU allies into agreement. The result is that he now only has one genuine EU ally and that is the unpleasant regime in Hungary. Then he began to try and intimidate China. Setting off a dangerous trade war between the two biggest economies in the world.
Raising customs duties is almost always a popular policy at home for a short while. It makes a leader look tough and it is easy to sell the idea to the workers in a factory or an office that is losing business abroad that the way to stop this is to slap import duties on “unfair” foreign competition. Unfortunately, economic reality almost always works to damage the country that imposed those tariffs every bit as much as the one that the nationalist rhetoric targets.
The immediate outcome of the tariffs is that imported items go up in price and people at home have to pay more for worse goods and services. Then there is the problem of retaliation. Exporters from the US are about to lose out very badly as China introduces its own list of extra tariffs. That will hit US farmers hard. All those mid-West red-necks who we are told turned out to vote for Trump in their pick up truck loads are not going to be best pleased at the drop in farm prices and the unsold crops. The car workers that we have also been told backed Trump are equally going to be unimpressed by their factories closing as they lose access to the fastest growing world market.
For a while a few domestic firms are going to enjoy a boost from the increased price of imports from China. So any electronics firms based in the US that have clung on and still exist will have a short term boost to jobs. Then they’ll encounter the next wave of innovation from SE Asia and discover that they simply cannot compete with the products that are on offer despite the tariff barriers.
What Trump has set off is a dangerous economic battle that has no winners. In the late 1920s and 1930s country after country raised tariff barriers to protect jobs and tried to keep as much business as possible safe from foreign competition. The results were impressive. Impressive failures. Unemployment in the US reached 28%. Fascists came to power in Germany on the back of the economic misery. We got a world war instead of domestic prosperity. As soon as one country raised tariffs the next retaliated and before long countries were staring at each other with hostility as the collective world economy crashed.
The world is now massively more dependent on international trade than it was in the 1930s and it is simply impossible for a trade war to take place without significant casualties. Within minutes of the news of the breakdown of the talks and China’s retaliation being announced markets were heavily down and traders were looking hard and long at the real economic situation of the US. What anyone who studied the realities saw will have worried them profoundly. The US isn’t in good shape. Trump has cut taxes without controlling spending so he is running the largest ever US budget deficit. He’s been encouraging government to spend beyond its means for two years without using that extra spending for investment in infrastructure. All he’s done is to fritter it on tax breaks and on increasing the incomes of the richest. The US is also running one of the biggest and longest deficits on its balance of payments that has ever been seen in human history. The whole country was already buying a lot more from abroad than it sold before it got into this trade war. On top of that there is a personal debt crisis. Credit cards and mortgages are maxed out in very similar ways to what happened in the run up to the 2008 crash. All the ingredients have been there for months for another even bigger crash to happen at a time when the world is much less capable of coping with the consequences.
In any rational world governments would have got together after the 2008 crash and worked out how they could collectively manage the world economy to ensure that we never again came so close to complete economic chaos. Instead of that happening we have elected politicians like Trump who only know how to increase the risks and promote extra chaos. A mild market sell off and a setback to the US economy is the least that Trump is likely to have to deal with in the run up to the 2020 Presidential elections. A major crisis is more than possible.
Either way Trump’s central narrative of being a uniquely gifted economic provider who cares deeply about the welfare of the ordinary American is going to take something of a pounding.
In writing this I am aware that I am likely to be accused of arguing for growth and for international trade in a world that needs to become more secure, more sustainable and more local. That is not my argument. I am saying that economic chaos and the associated misery cause deeply unpleasant impacts on ordinary people not that constant growth is always good. Our economy needs thoughtful management at every level just as our society does and there is a price to be paid when that management isn’t up to the job.
There is a very strong case for increasing economic localism. We need to help local business to compete with international corporations who avoid paying their fair share of taxes. We also need to help local farmers and local distributors. The best first step towards achieving that is to make the tax system fairer (e.g. on business rates). The worst step would be to trigger another international slump and to cast us all into even worse austerity than we got out of the 2008 free market collapse. Strong local markets are good. But so are strong national and international markets.
It simply isn’t possible in the modern world to make something sophisticated like a train without drawing on components and expertise from around the world. Technology knows no borders. Just as it is good for people to have the chance to move, work and live across large economic groupings like the EU so it is also good for ideas, services, products, and businesses to do so. We need to be able to easily access the latest new technological ideas about heat exchange units, solar panels or insulating wall paper from across a continent and across a globe. We gain from a free exchange.
What we don’t gain from is a chaotic unmanaged markets. We don’t gain from having a world economy without world leadership. Somehow, we have to learn how to run our society in ways that allow us to make local decisions that are strong powerful and immediate at the same time as making national, continental and world decisions that can be quickly determined and enforced. The same is true of our economy. Above all the same is true of our ecology.
The central challenge of our times is how to learn to manage a planetary society effectively without leaving local communities legitimately feeling disempowered. Internationalism must be accompanied by strong localism.
What we are seeing at the moment is the last gasp of reaction from the nationalists against the sheer impossibility of their vision of the world continuing now that borders are increasingly irrelevant. If they are allowed to succeed then they will drag us all down into a spiral of negativity with one country fighting another amidst a terminal failure to face up to the decisions we need to make on a planetary basis. Trump offers the politics and the economics of an era that has to pass away. The future lies with those who are trying to think out how we can operate a global society whilst still keeping our local communities strong and vibrant. That is one of the many reasons that, for all their occasional failures and the odd silliness I think the Greens represent the future. We may mess up from time to time in our thinking about the future but at least we are facing up to it and trying to articulate a hopeful way forward. All the Trumps of this world have to offer is slagging off neighbouring nations and starting trade wars that can never be won.