Many Americans, myself included, will not be sorry to see the
end of Barack Obama as president. The victory of Donald Trump, arguably, owes
much to Obama’s many arrogant failures, including prominently the Affordable
Care Act (ACA), known unaffectionately as Obamacare. To say the least, Trump is
an unlikely candidate for president, and an even more unlikely winner. So, how
should we feel about America’s next president, what should we expect?
Clearly there are grounds for some optimism. Trump has
promised, and appears to be actively preparing for, a major reform of the ACA;
for a significant change of course on environmental and climate policy to
remove stupid, debilitating regulations on manufacturing and energy production;
a change in education policy to allow for parental choice so kids can escape
from the failed public school system; a change in labor policy (where Obama had
acted arbitrarily and illegally to support labor unions); and most importantly,
a reform and reduction in corporate and other taxes. These and some other
proposed initiatives are promising. Some of the people he has nominated for his
administration appear committed to following through on these. Let us hope they
do.
Also significant for readers of this blog, is the fact that
Trump promises a 180 degree turn on Obama’s barely disguised adversarial
relationship with Israel. Trump seems to understand the hypocrisy of most of
the world vis a vis Israel as evidenced through the actions and
deliberations of the United Nations. And on this, I believe he joins the
majority of the American people. Going forward the BDS movement and the UN will
not find it as easy to pursue their anti-Israel/anti-Semitic agendas as it was
under Obama.
But, there are also grounds for concern. Trump is nothing if not unpredictable. It is hard to know what he really believes or on what he will follow through. Some of his nominees seem to have opinions at odds with his, and with other nominees. So will we have an administration that lacks coherence? This would not be good for the American economy, where the biggest problem for private investment has been uncertainty about government policy.
In addition, Trump articulated some specific policy agendas
that strike me as very problematic. He promised to rebuild America’s
infrastructure in a way that echoes old-style Keynesian demand-side stimulation
policies – policies that have been tried and have failed in every generation
since Keynesian economics was born in the 1960’s. One of his closest advisors
describes himself as an ‘economic nationalist,’ which is very troubling. And
this relates to trade policy, the most troubling of all his proposed policies.
From what he says, Trump seems not to understand the most basic of all economic
truths, the truth that trade is a win-win proposition, both parties to a
voluntary trade gain from it. When he talks about trade with China and about
reneging on America’s recent Atlantic free trade agreement and NAFTA, he
implies that somehow America is losing from free trade. He emphasizes the
losses that some Americans suffer by being unable to compete with foreign
competitors and ignores the huge gains to others – producers, workers and
consumers – that result from trade. He promises to impose trade barriers that
protect local workers. This is known as Protectionism, a policy, like Keynesianism,
that has been tried many times and failed, but just refuses to die.
Protectionism has the potential to destroy economic dynamism and growth
completely. Also, his stated position on immigration is very troubling to me.
How much is talk and how much will translate into significant
policy remains to be seen. Trump cannot act alone. He will need the Congress to
legislate and fund. I am hoping for the best and fearing the worst.
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