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26/01/2017 Point de vue

Understanding Trumponomics

Once a mere managerial notion attuned to the tastes of reality TV viewers (2004), Trumponomics has taken on a whole new meaning in the recent past. The term now refers more broadly to president Trump's economic policies, which seem to draw from distinct (and, in the eyes of some, potentially contradictory) intellectual traditions: (inward looking) supply-side economics, Eisenhower's praetorian policy mix (favorable to renewed infrastructure investment) and, more importantly, ‘Bull Moose' American progressivism associated with some measure of economic nationalism.

With the victory of Donald J. Trump on November 8 2016, the ‘neoliberal-neoconservative' policy consensus that had crystalized in 1979–1980 (Deng Xiaoping's visit to the United States, election of Reagan and Thatcher) finally came to an end. The reason why that era lasted so long in spite of the lackluster performance of some of its economic recipes (deliberate underinvestment in transportation and energy infrastructure, chaotic ‘free movement of people' and pauperization of the working class) probably has to do with the fact that center-left policy makers (Clinton Democrats in the US, New Labour in Britain and their many admirers among European ‘Socialists') have, to a large extent, adopted the main tenets of that policy mix – chief among them the notion that “uncoerced interactions of free people through open markets yield mutual benefits for all participants” (Milton Friedman).

From Managerial Theatrics to Modern Mercantilism

For years, liberal and ‘New Left' experts had predicted that a new economic doctrine challenging the established order would come from Europe (Soviet Russia, then Italy and France) or Latin American (Cuba then Nicaragua and Venezuela) or Asia (China and North Korea then Vietnam)… It is a testament to America's ideological inventiveness that such a profound policy renewal came from a ‘bourgeois' US entrepreneur: Trumponomics, a portmanteau of Donald Trump and economics initially spelled ‘Trump-Onomics' (2004) started out as a bland managerial concept on cable TV, meant to convey the notion that “impressing the boss” was the only way to “climb the corporate ladder” (The Apprentice, Season 1).

Twelve years later, the word acquired a whole new meaning: the term Trumponomics is now used to describe the unprecedented combination of ‘unorthodox' policies advanced by Donald Trump and his allies: supply-side economics associated with a measure of deregulation on the domestic front (‘Reformed Reaganism'), the centrist Eisenhower tradition of the late 1950s which saw the development of the federally-funded Interstate Highway System (IHS), and the more populist, ‘Bull Moose' brand of progressive Republicanism initially advocated by Theodore Roosevelt, thus repudiating in part the canons of globalization and the neoliberal economic orthodoxy of the past 36 years.

The End of Laissez-Faire Complacency?

Just like Teddy Roosevelt before them, Donald J. Trump, Lou Dobbs and other proponents of Trumponomics seem to admire the fierce economic efficiency of Wilhelmine Germany – notably the notion that only the coordinated efforts of a strong, centralized government working hand-in-hand with ‘big business' can generate trade surpluses over a sustained period: “anyone who has had the opportunity to study and observe first-hand Germany's course in this respect must realize that their policy of co-operation between Government and business has in comparatively few years made them a leading competitor for the commerce of the world.” (Section 9 of the Platform of the Progressive Party).

As predicted by the author of this article , the deliberate neglect of America's creaking infrastructure assets (notably public transportation and water sanitation) from the early 1980s on eventually fueled a widespread popular discontent that came back to haunt both Hillary Clinton and the Republican establishment. Donald Trump was quick to seize on the issue to make a broader slap against the laissez-faire complacency of the federal government: “when I see the crumbling roads and bridges, or the dilapidated airports or the factories moving overseas to Mexico, or to other countries for that matter, I know these problems can all be fixed” (June 22 2016 New York Speech: “We Will Build the Greatest Infrastructure on the Planet Earth”). Tellingly, just like President Eisenhower, Donald Trump also insists on the need to rebuild the nation's military infrastructure across the board, which will, in turn, bring benefits to society as a whole (job creation, spillover effects of military R&D, etc.)

Being a real estate developer himself, Donald Trump has always been close to some labor leaders from the construction industry – notably Ed Malloy, former president of the Building and Construction Trades Council (BCTC) of Greater New York, which sets him apart from other recent Republican candidates form the Post-Nixon era. As wealthy Wall Street donors deserted him for Hillary Clinton during the last months of the presidential campaign, Trump boasted he preferred the company of “carpenters, roofers and masons” and other construction workers whose social circumstances he claimed to know intimately: that bravado endeared him to millions of disenfranchised lower-middle-class voters across the Rust Belt and proved instrumental to his electoral victory in the fall.

As he prepares to take office, Trump has already received diplomatic ‘kowtows' from Canadian, Japanese, European Union, NATO and GCC dignitaries (many of whom had criticized him very harshly in the past…) and, more importantly, secured tentative foreign direct investment (FDI) deals with the CEOs of companies such as Carrier, Ford, Toyota, China's Jack Ma (Alibaba) and France's Bernard Arnault (LVMH), with promises to create “millions of jobs” in America in the coming quarters. Not coincidentally, when it comes to investment destination, the president-elect seems to have a preference for Pennsylvania, Upstate New York, Michigan, Wisconsin and Indiana: a new kind of capital stewardship for the era of self-seeking capitalism.

See Firzli, M. Nicolas. "The End of ‘Globalization'? Economic Policy in the Post-Neocon Age." Revue Analyse Financière 60 (2016): 8-10, and Firzli, M N., and Vincent Bazi. "Transportation Infrastructure and Country Attractiveness." Revue Analyse Financière 48 (2013): 67-68

M. Nicolas J. Firzli is Director-General and Head of Research of the World Pensions Council (WPC), the international association of public and private retirement institutions, Co-Chair of the World Pensions Forum (WPiF) and Advisory Board Member for the World Bank Global Infrastructure Facility (GIF). The data, conclusions and opinions expressed here are the author's and do not necessarily reflect the views of the World Pensions Forum, the World Pensions Council or the Global Infrastructure Facility

 Contact : revue@sfaf.com