Republican presidential candidate Donald Trump pulled a stunner on Tuesday by defeating his Democratic opponent Hillary Clinton. Much ink will be spilled over why and how Trump trounced the Democrats. Suffice it to say, his victory was driven by rural White America voting against urban diverse America. Trump won the elder generation, while Clinton bagged the majority of young voters, an alarming trend for Republicans and their political future.
Until the future is here, America and the world will have to deal with a man who has not held any sort of governmental office, not even been elected as a member of a local council. This inexperienced Tump will be supervising the world’s biggest government and strongest military.
Trump’s supporters argue that his lack of government experience makes him an outsider and injects Washington with much needed new blood. They also believe that because Trump showed success in expanding his considerable inheritance, they expect him to show similar competence running America.
But America is not a company. While successful businessmen live by the rule of the “survival of the fittest,” governments mitigate individual greed and alleviate the suffering of the less fortunate.
Trump’s team has so far promised a throwback to the same tested-and-failed Lafer Curve voodoo economics: Cut taxes to incentivize capital, which goes to work, creating jobs and new revenues, which in turn will offset tax cuts. That’s in principle. In practice, such a scheme worked for America’s legendary President Ronald Reagan only because his government substituted its lost tax revenue with debt. As lower taxes delivered a short-term jolt and the government maintained its high spending — especially on defense — America’s economy under Reagan saw unprecedented growth and prosperity.
But no government, including Washington, can borrow endlessly. Reagan’s expansion was so short-lived that he had to raise taxes, and so did his successor George Bush Senior, a step that cost Bush reelection in 1992 in the midst of a recession.
One wishes, however, that Trump implements voodoo economics as planned. Instead, Trump cherry picks in a way that will make the Reagan plan go worse, faster. His amended Reagan economic plan creates contradictions.
Trump has promised to raise tariffs to balance deficits with America’s trade partners. Decreased trade means less revenue for the government. Trump has also promised to fine American companies that do not re-shore their factories (bring them back from overseas). How will American corporations be incentivized to unleash the power of their capital, and abandon inversion plans (relocation to other countries) if Trump forces them to re-shore manufacturing, even at higher cost? What kind of free market decides for American companies where to open factories or which workers to hire?
Because Trump is a businessman, not an economist, he is probably unfamiliar with the literature that blames the slowing down of the world’s biggest economies on their aging populations. In America, aging is believed to have subtracted one percent from GDP growth, from three percent in the 1990s to two percent over the past 16 years. With US national debt at around 100 percent, Trump will not be able to fund higher GDP growth with more government debt.
America’s economic problems are structural. Policies, short of fundamental changes in demographics and other factors, can only mitigate economic troubles to an extent. It is unlikely that the US economy — now nearing the time of its cyclical recession — will be humming and churning with high paying manufacturing jobs, like Trump promised.
Come 2018 midterm elections, without delivering on his economic promises, Trump will see his popularity nosedive, and Republicans might lose the Senate, leaving Trump’s second term in jeopardy.
Trump’s failure as chief executive does not, in and by itself, threaten America. The US has seen many messiah figures ride the horse of hope in an election and produce only disappointment while in office. Between his “election smile” and his “malaise speech,” former President Jimmy Carter lost favor with America, and eventually his bid for reelection. He might be the best example of how Americans can be duped by self-anointed messiahs, after which they regret their decision fast and throw their president out of office faster.
But knowing Trump, and judging by his character and campaign, the fear is that the man will revert to the only way he knows to keep his base fired up: Scaremongering and instigating his base against other Americans. Scapegoating others for one’s failures is a known autocratic policy in failing states.
If Trump turns criticism against him into identity politics and clings on to power, the same way Republicans unconstitutionally blocked the replacement of a conservative Supreme Court judge, America might be sailing into unchartered territory. That’s the scary side of Trump that threatens America, its democracy and the world at large.