Trumponomics: Neocon Neoliberalism Camouflaged With Anti-Globalization Circus

By Thomas Palley

A key element of Trump’s political success has been his masquerade of being pro-worker, which includes posturing as anti-globalization. However, his true economic interest is the exact opposite. That creates conflict between Trump’s political and economic interests. Understanding the calculus of that conflict is critical for understanding and predicting Trump’s economic policy, especially his international economic policy.

As part of maintaining his pro-worker masquerade, Trump will engage in an anti-globalization circus, but the bark will be worse than the bite because neoliberal globalization has increased corporate profits, in line with his economic interests. He will also feed his political base’s racist immigration policy as long as that does not adversely impact corporate profitability.

Lastly, Trump expresses neocon unilateralist tendencies that play well with much of the US electorate. His neocon unilateralism is not a one-off temporary political aberration. Instead, it reflects intrinsic and enduring features of the current US polity. That has profound implications for the international relations order, and is something many Western European governments may not yet have digested.

How Trump Succeeded

Trump’s political success was based on a two-sided attack on the establishment. First, he ratcheted up the existing Republican “illiberal” cultural values agenda into full-blown racist authoritarian nationalism. Second, he captured the progressive critique of the neoliberal economy, especially the critique of globalization.

Trump’s ratcheting-up of the illiberal cultural values agenda enabled him to displace the Republican establishment. His extremism jumped him to the front of the Republican queue, which was critical in the primary process as that process engages the most extreme voters. However, his racist nationalism also has broader political appeal because racism reaches far beyond the Republican base, while nationalism has bi-partisan establishment support.

The other side of Trump’s success was his capture of the progressive critique of the neoliberal economy. For four decades, the US economy has short-changed working class voters via wage stagnation and manufacturing job loss. That has created discontent and disappointed expectations. Trump exploited that discontent and disappointment by masquerading as a critic of the neoliberal economy and promising to make the economy work for working class Americans.

In this regard, his capture of the globalization and deindustrialization debate is particularly important. That is because globalization and deindustrialization are the most public face of the neoliberal economy, being where the impact on wages and jobs has been most visible and tangible. By gaining credible ownership of the globalization critique (via his criticisms of off-shoring, China, and trade deals like NAFTA and TPP), Trump gained credibility for his claim to be on the side of working families.

Establishment Democrats handed Trump the opening to capture the globalization debate by pushing the Trans-Pacific Partnership (TPP) despite widespread voter opposition. For this, President Obama deserves special blame.

That capture enabled Trump to create a new twisted narrative about neoliberal globalization which blames “foreigners and immigrants”. The Trump narrative is that the US is a victim. The US has supposedly negotiated weak trade agreements and foreigners have cheated on those agreements. Simultaneously, illegal immigrants have flooded in and taken US jobs and driven down wages. The reality is globalization has been “Made in the USA” by corporations, for the benefit of corporations, working in tandem with Congress and successive administrations.

Trump’s new ‘blame it on “foreigners and immigrants”’ narrative of globalization complements and feeds his racist nationalist cultural values agenda. With foreigners and immigrants supposedly to blame for the economic difficulties of US workers, that provides the rationale for his xenophobic policies.

In sum, Trump succeeded by outflanking the Republican establishment with his racist nationalist values agenda, and outflanking the Democratic establishment with his anti-globalization economic rhetoric. These two political manoeuvres constituted a coherent political strategy that enabled Trump to connect with reactionary voters while masquerading as being on workers’ side.

Bait And Switch: Anti-Globalization Bait, Neoliberal Switch

Trump’s representation as being on the side of workers stands in complete contradiction to his own interests as a billionaire businessman whose metric of success is money and wealth, and who is devoid of charitable inclination or notions of public service. The reality is he is engaged in a skillful “bait and switch” befitting a con artist.

The bait was his critique of the economic establishment and globalization and the harm they have done to working class voters. The switch is rather than reforming the neoliberal economy, Trump substitutes racism, nationalism, and authoritarianism, while simultaneously doubling-down on neoliberal economic policy.

Given his lack of any history of government service, Trump could initially get away with this pro-worker masquerade. However, the realities of Trump’s economic policies have now become clear. All the evidence suggests he intends to worsen the neoliberal economy’s proclivity to deliver wage stagnation and income inequality by increasing the power of business and finance, and by intimidating workers and weakening unions.

Trump’s economic policy team is dominated by ex-Goldman Sachs personnel, who include Treasury Secretary Stephen Mnuchin and National Economic Council Director Gary Cohn. Trump’s Chief Strategist, Stephen Bannon, is also a Goldman Sachs alumnus.

Trump’s tax policy aims to cut the tax rate on corporations and wealthy individuals; his budget expenditure policy aims to slash social welfare spending and provision of public services to lower and middle class families; and all forms of regulation – consumer, labor market, business, financial, and environmental – are under profound attack.

The one area where the masquerade continues is international economic policy. That is because Trump is compelled to balance political needs and economic interests. As for politics, Trump needs to present himself as remedying globalization’s negative effects. Among working families, globalization is the most visible and economically understood issue, and Trump’s critique of globalization is front and center of his pro-worker masquerade. That makes it politically essential he preserve his image as critic of globalization.

As for economics, Trump’s own economic interests have him identifying with corporations and capital. Globalization has been “made in the USA” for the benefit of large American multi-national corporations which have been big winners from the process. Consequently, Trump is inclined to preserve the system, though he is willing to make changes if that increases corporate profitability.

The implication is one can expect lots of anti-globalization circus to address Trump’s political needs, but he will not rock the globalization boat unless something more profitable is possible.

Trump’s International Relations Unilateralism: The Neocon Factor

Trump’s international economic policies also signal the transition to a new era of US unilateralism in international relations. Part of this new unilateralism is Trump’s political posturing aimed at convincing his base that he is nationalist and anti-globalization. However, part of it may reflect the triumph of neocon thinking within the US.

The neocon project derives from the belief that never again should there be a power, like the former Soviet Union, capable of rivalling the US. Originally, the neocon project represented extreme Republican thinking, but it has become mainstream thinking. Both Republicans and Democrats now believe the US has the right to intervene anywhere in the world, any time it chooses, and it has the right to pepper the globe with military bases and military personnel deployments – including ringing Russia with these.

The bi-partisanship is evident in Democrats’ support for the Iraq war and acceptance of the war on terror as justification for intervention anywhere. It is also evident in President Obama’s continued investment in global military base expansion, expansion of NATO deployments into central Europe and the Baltics, and encouragement of the 2014 Maidan revolution in Ukraine.

Additionally, Democrats supplement the neocon rationale for intervention with the claim that the US has a right to intervene in the name of protecting democracy. That right derives from “US exceptionalism” whereby the US has a special mission to transform the world by promoting democracy, and it reinforces bi-partisan belief in unilateralism.

The neocon project was originally concerned with military supremacy and targeted Russia. However, it is about US power in general, which means it potentially implicates every country and every dimension of international policy.

Neocon unilateralism may now be now spreading into international economic relations. As the sole global super-power, the US inevitably feels increasingly unrestrained in all areas. Economic unilateralism is also politically consistent with popular hyper-nationalist sentiment that has been encouraged on a bi-partisan basis. Lastly, it also fits with the narrative constructed by Trump that “foreigners and immigrants” are responsible for US economic malaise.

The importance of the neocon factor is it dramatically changes the interpretation of Trump’s unilateralist international economic policy chatter. Instead of just being Trump bluster, such chatter is consistent with the neocon construction of international relations. That construction provides the over-arching frame for US foreign policy, and international economic policy must therefore conform with it. That explains why Trump’s NATO strictures have raised so few ripples within Washington, and why the Washington establishment has been so quick to engage the border adjusted tax (BAT) proposal despite its unilateralist character and inconsistency with the WTO. Trump has surfaced such thinking because it plays well with his nationalist domestic political strategy, but proclivity for such thinking was already in place within the establishment.

The implication is Trump’s neocon unilateralism is not a one-off temporary political aberration. Instead, it reflects enduring features of the current US polity which has entered a neocon era where tacit US global supremacy is the goal and unilateralism is a new norm. That has bigger ramifications for the international relations order that foreign governments, including Western European governments, will need to digest.

The Economic Consequences of Donald Trump

By Pavlina R. Tcherneva

Cross-posted at New Economic Perspectives

Economic consequences

A lot has been said already. For me, this was the culmination of a decades-long process where the Democrats sold out their progressive agenda and happily embraced the Republican’s neoliberal economic policies. For some of the best analysis, see here, here, here and here.

My own view is that the Democrats have not had an economic policy of their own for nearly half a century, just an ‘inferior’ version of what Republicans usually champion—tax cuts on the wealthy, dismantling the public safety-net, ‘fighting’ inflation by creating unemployment, market liberalization and deregulation across the board, which among other things brought us a colossal financial sector that has cannibalized the productive economy.

Democrats need to grapple with the reality that Bill Clinton completed the Reagan revolution, and what we got from both parties is rabid financialization, extreme inequality, corporate welfare, joblessness, and economic insecurity: precisely the conditions that fan the flames of social antagonism and deep-seated racism and bigotry. There are many ways to tell this story but, just think, the real incomes of the vast majority of US households have barely moved in the last two decades. Most of us live in stagnation (at best) and many communities are mired in an ongoing recession (even depression), while the economy is ‘officially’ growing.

Neo-liberalism on steroids

As vile as Trump’s campaign was, many of his supporters have legitimate gripes about the state of the economy and about big money in politics. Of course, the notion that Trump is the ‘man of the people’ who will deliver the kind of change they (we) need is preposterous. In fact, his entire economic platform is basically the one I already described above. Nothing has changed. It is the same old plain vanilla “trickle-down economics” we know too well.

And all of us, but especially poor working folk, will hurt even more if Trump repeals Obamacare and the Dodd-Frank Act, gives more tax cuts to the ultra-rich, cuts the budgets of the Department of Education and the EPA, and continues to weaken labor bargaining, to name just a few of his to-do items. All of this is a continuation of neo-liberal policies but on steroids.

The long-term prospects for the economy are dismal. While I do not foresee the economic Armageddon many are predicting in the immediate future, what we will see is another sequel of the structural forces that have brought us the economic ills, which produced this election result–outsized corporate power, unbearable inequality, and increased financial instability. The one bright spot could be his plan for over $Trillion in infrastructure investment. That is something we surely need. But remember, if it does not translate into genuine deficit spending, and Congress tries to ‘pay’ for these expenditures by slashing other Federal programs, there will be no ‘stimulus’. What one hand gives, the other will take away. And Mitch McConnel is already on record that infrastructure is not a priority. But if the deficit expenditure is there and Trump ends up “reviving our inner cities” and restoring infrastructure so “it’s second to none” (as per his acceptance speech), that will benefit the economy and create jobs (though it might come with a giant neon TRUMP sign on every new bridge).

But no one should have any illusions. America elected someone very much from the wealthy elite, a privileged member of the establishment, who happened to be a better salesperson.

A social plague

Unfortunately, it is impossible to discuss the ‘economic consequences of Trump’ in an objective way because he has unleashed a plague on our society, from which we will suffer for many years. Trump has brought white supremacy out of the shadows and has normalized bigotry, misogyny, and hate in ways we hadn’t seen in decades. He has now given permission for the resurgence of overt racism. And while this may well have been already underway, racism and economic anxiety are deeply intertwined, and both seem to be reaching a new fever pitch.

This cancer will stay with us for years to come and must be fought every step of the way. Whatever our gripes and differences about the economy, we must together collectively stand against acts of hate. Nothing will erode the social fabric more and undermine our ability to make progress on economic matters than this poison. Fear sells.

As FDR warned us long ago:

“We have come to a clear realization that true individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made.” (FDR)

Democracy didn’t fail. It did exactly what it was supposed to do. But:

“The liberty of a democracy is not safe if the people tolerated the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.” (FDR)

Looking ahead

So while the mainstream pundits are burning their batteries trying to sort out what went wrong, we need to get to work—do something useful, say something inclusive, stand up to a bully, be safe and keep advocating and working for social justice.

That’s what I intend to do. On Monday I will present at James Galbraith’s conference of the Economists for Peace and Security in Washington, D.C. (Register here). Peace and Security. Two things many of us do not feel right now. I cannot think of a better place to be, discussing more important topics, given these election results. I will be talking about youth unemployment. The election has exposed further our desperate need to design genuinely inclusive social policies.

What we have here is a crucial moment to mobilize, to start drafting a Democratic progressive agenda from scratch, to shed the destructive neoliberal policies so wonderfully championed by Democrats and Republicans alike.

An Economic Bill of Rights

What might that look like? My preference would be to take inspiration from Franklin Delano Roosevelt and design policies around the Economic Bill of Rights – policies that create jobs for all, boost incomes, usher in a Green New Deal, transform our energy system, complete the safety-net with paid family leave, universal child allowance, strengthened social security, guarantee healthcare for all, invest in public education, provide debt relief for families, renew anti-trust policies and aggressive financial regulation, to name a few.  And save the environment.  Because if we don’t, none of the above will matter.

Never let a good crisis go to waste.