President Trump. When the creators of The Simpsons predicted such a thing 16 years ago, they did so because it was the most ridiculous scenario they could imagine. No wonder comedians say satire is dead.
Trying to decide what the president-elect will do will keep analysts, consultants and journalists busy 24/7. Yet his Twitter page may offer the best evidence. “Job killer” was his succinct verdict on the Transatlantic Trade and Investment Partnership (TTIP), a deal to create a free trade area covering 46% of the world’s GDP. Such protectionist rhetoric, popular in the UK pre-Brexit, has sent stock markets reeling as they adjust to the unexpected reality of a Trump presidency.
Those experts who argued, as Barry Eichengreen, a professor of economics and political science at the University of Berkeley did in a recent issue of Prospect magazine that Brexit would merely lead to a recalibration – not a rejection – must think again. And “bigly” – as Trump himself would say.
To be fair to Eichengreen, much of his analysis still stands. If we define globalisation, he wrote, as “an era when flows of merchandise, capital and labour across borders grew several times faster than GDP, we can say this phase of global affairs is already over”.
Since 2010, global trade has grown half as fast as GDP. The trade-to-GDP ratio, the most straightforward index of globalisation, has been falling, not rising. Cross-border flows of capital stand at half their pre-credit crunch levels, a phenomenon known in finance as ‘The Great Retrenchment’. Even immigration isn’t as simple an issue as the US presidential campaign suggested. The wall that Trump keeps promising to build could end up being a lot smaller, if indeed it needs to be built at all – since 2005, 160,000 more Mexicans have left American than have entered it.
The fact that globalisation has been decelerating – and is probably now in reverse – has not yet placated those who feel it has damaged their lives. When Panorama asked broadcaster Adrian Chiles to return to his home turf, the West Midlands, and ask why people had voted so overwhelmingly for Brexit, the producer said to him: “Is it because these people feel they have ended up on the wrong side of globalisation?”
As Chiles said at a recent event on the future of work, “That’s not the kind of question you can ask walking down West Bromwich high street is it? You can’t go up to someone and say: ‘Do you feel you’ve been caught out on the wrong side of globalisation?’” So Chiles, for once, kept his mouth shut and listened. The message that came across most clearly – and a similar emotion among America’s white working class fuelled Trump’s success – was a feeling of being marginalised in their own country and ignored.
George Freeman, the Conservative MP for Mid-Norfolk, who is chair of Theresa May’s new policy board, tweeted that the US election was a “stunning demonstration of how disempowered low income Americans feel by Washington + globalisation”. For Freeman, this result – and Brexit – reflected a “broken contract through the failure of globalised market economics to serve the interests of domestic workers”. He urged mainstream politicians “to look harder, listen better, think smarter about the causes of popular anger and address them”.
How Trump addresses the causes of anger could define his presidency – and profoundly influence the global economy. As the Republicans who control the Senate and the House of Representatives will discover, Trump is a deeply unorthodox Republican.
In his victory speech, he offered friendship to other nations (traditionally a Democrat pitch); talked of massive, job-creating investment in infrastructure, the kind of interventionist policy in Franklin D. Roosevelt’s 1930s New Deal; and pledged to unite America, reaching out to the “forgotten people” in a way that had formed such an effective part of his oratory in the closing days of an extraordinary campaign.
These are all words, not deeds, but Politifact, tracking the 500 promises made by Barack Obama before he came into office in 2008, found that he had kept 45% of them and compromised on 22%. So we should expect Trump to try to follow through on his pledges.
That means giving America the “world’s best infrastructure”, cutting taxes, being tougher on trade, deporting more people, repealing Obamacare and, in the words of one Democrat insider, “blowing up the Environmental Protection Agency” which Trump sees as a brake on economic growth (currently at 1.1%) which he promises to double.
While politicians rush to decipher the 2016 Presidential election results, there is a message for business too. As Josh Green, CEO of Panjiva, a company that tracks global trade data, wrote in the Wall Street Journal: “If the business community is looking for someone to blame for this anti-trade fervour, they need only look in the mirror.”
Businesses, Green argued, had “focused on winning new trade freedoms without addressing the needs of those whose lives were upended by global trade”. Calling for companies to back education, investment in careers and a social safety net, he wrote: “Businesses may be uncomfortable advocating policies that don’t seem to offer them direct benefits. But if we fail to rally around an agenda that prepares and protects workers, we should not be surprised when voters follow voices that would roll back global trade.”
There is no single explanation for the popular revolts of Brexit and Trump but Jakub Grygiel, of the Centre for European Policy Analysis, is surely on to something when, analysing Brexit in Foreign Affairs magazine, he suggested that “European leaders’ intentions may be noble, but if a state fails to limit its protection to a particular group of people – its nationals – its governments risk losing legitimacy.”
Historians will be kind to Obama’s presidency, if only because the global economy did not melt down on his watch. Yet ultimately one of the most intelligent men ever to occupy the Oval Office failed to make millions of Americans feel protected, in a volatile, uncertain, complex and ambiguous world. And that created the opportunity for Trump to become the 45th American president.
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