Thu | Oct 19, 2017

John Rapley | The Trump era begins

Published:Sunday | January 22, 2017 | 12:00 AM

Yes, the thing we all believed could never happened, has. Look at the bright side. Nobody in Jamaica will ever have to listen to another American lecture on how backward we are compared to them.

Donald Trump rose to power on a wave of the sort of post-imperial nostalgia that has long arisen periodically in some European countries, like Britain, but which has never really been relevant in America. That's because until quite recently, the United States has always been in the ascendancy. The British and French empires fell, the Soviet Union crumbled, all of which only solidified the US's dominant position.

However, since the turn of this century, that has changed. At the start of 2000, the US economy accounted for nearly a third of global output. Today, that share has fallen to a quarter, and the trend is downwards. This isn't because the US is decaying. Far from it, its economy is still growing, the country produces far more patents than any other, and its military remains unrivalled. Nevertheless, other countries, led by China, are rising, and America is struggling to grapple with this new reality.

The US is actually doing better than other developed countries, like Japan and Italy, which are declining not just in relative, but absolute terms. That's primarily because the US has always been much more open to immigrants than those countries, enabling it to renew its labour force and generate new ideas even as the native-born population declines. Donald Trump's pledge to cut immigration is thus a non-starter over anything more than the short term. As someone whose businesses use immigrant labour, he knows that.

His promise to stoke growth by cutting taxes and building new infrastructure is attracting more serious interest from economists, though. Yet even here, the new president is paddling upriver. The inescapable fact is that American labour productivity is no longer growing at the rates it once did, and labour supply is also expanding more slowly than the past. As a result, the underlying growth rate in the economy, which in Trump's childhood stood at around six per cent a year, has fallen to a fraction of that.

 

Unlevel playing field

 

That wouldn't be a problem if everyone just shared it out. However, some parts of the population still enjoy the income gains of the past, which means that others have had to bear the brunt of adjustment. By opening up to foreign trade and outsourcing to low-wage zones, the American economy was able to juice itself in the 1990s. But all the gains went to firm owners and the professional classes, while the working class, black and white, was hammered.

Had the Democrats offered an alternative globalisation to the neo-liberal model, they could have retained their working-class base. But they didn't. Led by the Clintonian wing, which was convinced that the future of the party lay in the better-educated, liberal-leaning chunk of the population, ordinary people were thrown under the globalisation bus and told to suck it up. Trump caught that wave of rage and rode it to the White House.

However, he can talk all he wants about tearing up trade deals and cutting immigration. If he actually follows through on his pledges, things will go badly. At first, a burst of infrastructure spending and the upward pressure on wages that cuts in immigration might give the economy a jolt. Conceivably, the next two or three years could be pretty rosy for America. But beneath the headlines, inflation will rise and competitiveness will decline. Any boom will be followed by another bust.

Thus, either President Trump breaks his promises and turns his own support base against him, or he keeps his promises and sets America up for another crisis. On the face of it, therefore, the coming years might seem to the American Left like a dark winter before a new spring.

Except that the Democratic opposition is in disarray. The very fact that a right-wing billionaire could pip them as the voice of the little guy shows how bad things have got for the party. Persuaded that demographics were on their side, the Democrats neglected the nitty-gritty of party-building and focused their energy on raising money among plutocratic donors.

However, while the Democratic birds were singing, the Republican squirrels were diligently gathering nuts in preparation for a return. When Republicans lost the 'culture wars' back in the 1990s, conservatives seemed to slink from the national stage. Talk of an emerging Democratic majority, as the population grew more diverse and people grew more liberal, seemed to find confirmation in the party's landslide victories of 2008.

Yet all this time, Republicans had been rebuilding at the grass roots. Running for school boards and municipalities, taking control of local parties, gunning for legislative victories in the states, and then using those to gerrymander electoral districts, conservatives built from the ground up. The result is that not only are all branches of the federal government today in their hands, but the prospects for the next congressional elections are that their control will only further strengthen.

It's a bleak time for Democrats, but they probably have nobody to blame but themselves for what may be a long exile. They will now need to embrace that exile, reconnect with ordinary Americans, and start a generation-long march back from the wilderness. America will need them. Donald Trump will not remake America the way his supporters think he will, and it's possible he could eventually make things a good deal worse.

Still, one should never underestimate the American capacity to surprise us all. The country elected a black man to be president in 2008 and in 2016 chose one most Americans can't stand, neither of which scenario looked at all likely. Donald Trump himself has been full of surprises, his victory in both the Republican primaries and the election providing a script you couldn't write. He may have a few tricks yet for us.

Nevertheless, it's unlikely the audience will buy the act forever, for he is about to discover that governing a country is very different from running a business, let alone a reality show.

- John Rapley, a long-standing Gleaner columnist, is a political economist at the University of Cambridge. His next book, 'Twilight of the Money Gods (Simon & Schuster)' , will be published in 2017. Email feedback to columns@gleanerjm.com and jr603@cam.ac.uk, or tweet @jarapley.