After doing little but campaigning for re-election since entering the White House, Donald Trump has now announced his “official” entry into the presidential race. The good news was delivered in Orlando, Florida, from the stage of the 62nd rally he has held since January 2017.
His popularity rating is remarkably stable. A broad range of people now recognize that he is a flawed individual, a pathological liar, a bigot, an ignoramus and a narcissist. Nevertheless, they intend to vote for him based on the success of his policies.
I have written about Trump’s economic policies before. Trump is no Ronald Reagan. Reagan’s deregulation changed the nature of the US economy. His two terms in office marked the beginning of the end of the New Deal social democracy, when American workers shared fully in America’s economic wealth. On the other hand, his reforms created a financial system and entrepreneurial culture which laid the foundation for the hi-tech revolution of the past thirty years and underpinned globalization.
By contrast, Trump has done little, except remove a few not especially onerous business regulations, largely dealing with environmental protection (thus hastening slightly the already inevitable climate disaster on the planet). The economic expansion we’re seeing today is the function of a broadly based technology revolution which has nothing to do with Trump. If anything, he has hampered it by his nasty anti-immigrant rhetoric and unwelcoming stance toward foreign-born talent.
The recovery started on Barack Obama’s watch, but Obama was no FDR. He didn’t alter the US economy either. The 2008-09 global financial crisis was overcome with the help of a massive infusion of central bank cash and historically low interest rates. The effects of the bursting of a financial bubble were “cured” by inflating another, far larger financial bubble. Trump, if anything, put this bubble on steroids with his tax cut for the rich and the corporations, and with his jawboning of the nominally independent US Federal Reserve Bank into keeping its rates extremely low.
But economics is an esoteric subject, ordinary people are not expected to understand it and may be forgiven if they think that the overbought stock market or low gas prices have been brought about personally by Trump. Foreign policy is another matter, and here Trump’s America Furst approach of driving a hard bargain appears to be working.
Trump learned his negotiating techniques in the dog-eat-dog world of New York real estate. He inherited his position there from his father, so that from the start he has been one of the big boys. That allowed him to negotiate from the position of strength and to bully his partners into making major concessions. That was, however, strictly business. Only money was at stake in such negotiations and losing face was rarely a consideration.
In international politics the game is far more complex. Politicians can’t afford to be seen as weak, they can’t give the impression of surrendering national pride. They have their voters to please and political rivals to keep at bay.
Trump’s approach has been fairly effective thanks to the sheer size of the US economy and its political and military might. America’s traditional allies, trading partners and even foes want to avoid an open confrontation – for the simple reason that wars – shooting wars, trade wars, cold wars and even wars of words – are expensive and the cost for smaller economies is immeasurably higher in relative terms than for a behemoth such as the United States.
Thus Trump has been able to renegotiate NAFTA with Canada and Mexico. But it wasn’t as huge a victory as Trump claims. The truth is that the changes to the trade agreement were relatively minor and Canada and Mexico conceded from the start that a deal concluded nearly three decades ago needed adjustments. Trump didn’t need to threaten dire consequences to America’s closest neighbors and largest trading partners to achieve this result.
Canada’s Prime Minister Justin Trudeau doesn’t worry too much about saving face. He has adopted a detached, slightly mocking attitude toward the old bully south of the border and is willing to go a long way to compromise in order to avoid economic damage.
Mexico is a different case. Mexicans have always taken bullying by the Yanquis far more seriously. Trump treads the sadly familiar landscape when he calls Mexicans murderers and rapists. His virulent attacks in front of an angry mob of white supremacists and insistence on separating them behind a wall like so many savages don’t play well in their country. Andres Manuel Lopez Obrador, the country’s new president, is probably no fan of Trump. Trump’s recent threat to impose tariffs unless Mexico stops the flow of refugees from Central America must have stuck in his throat. For now, however, he has chosen to submit to Trump’s bullying – at least on paper.
But it is a fine line. If Mexicans feel that he’s caving in to Trump, their president may become far less compliant. Similarly, it is an open question whether Trump’s tactics will work with China’s Xi Jinping. China has a huge chip on its collective shoulder. A nation convinced of its civilizational superiority had had kowtow to foreigners for too long. It has come into its own and can’t wait to throw its weight around – not for the sake of expansionism (even though for that too), but to gain respect. For now, it is still more likely that a trade deal will be reached – China depends too much on American technology and the dollar – but the possibility of a prolonged and bitter trade war endures.
And if there is a miscommunication or miscalculation, all bets are off. The Trump Administration has no real strategy, only tactics. And the United States has no government in place in a traditional sense of word. The President’s cabinet and close advisors are family members and incompetent sycophants.
In the two years since he has been in the White House Trump has learned nothing. He operates the same way he always has in the New York and Florida real estate business – bullying, lying, swindling, bluffing, cutting corners, strutting his stuff. Just as in his career, the strength of his positions which allows him to get away with it were not earned but inherited. America has a huge amount of what accountants call earned capital: the military and economic strength, the huge market, the lead in technology, the alliances built around the world. That capital was accumulated by his predecessors in office, up to and including Barack Obama – all of whom Trump loves to denigrate.
Earned capital can be added to by a wise ruler, but it can also be squandered. Trump is busy doing the latter. Sure, America’s friends and allies depend on it too much to be able to stand up to Trump. But every time he bullies someone he loses a measure of trust and goodwill for America – not only among those he bullies but everyone else as well. Every time he unilaterally abrogates an international treaty – as he has done with the Iran nuclear deal, the Paris climate accord the Trans-Pacific Partnership and to an extent NAFTA – more nations will think twice before entering into the next pact with Washington. Every time he attacks NATO, America’s European allies wonder how they should prepare to defend themselves without American help.
More broadly, the fact the Americans have elected such an abominable buffoon makes the world distrust the entire nation.
There is one other aspect of Trump’s foreign policy that his supporters fail to appreciate. He is interested in a “win” – or rather, in creating a perception of bending his opponent to his will. This is why he is so keen on using tariffs in trade disputes – and even non-trade ones – and why he is quick to tweet threats of annihilating America’s enemies North Korea and Iran. He then overstate his achievements, touting modest concessions by Mexico and Canada in new NAFTA and the end of nuclear testing by North Korea as some ground-breaking successes. Even as Iran bombed Saudi tankers and shot down a US drone, Trump claimed that scrapping the nuclear deal was making Teheran ayatollahs behave.
Trump doesn’t want a war. He roars like a lion but turns meek as a lamb when stood up to. This is a typical bully behavior. North Korea refused to countenance nuclear disarmament and Trump backed down. Iran bared it’s teeth and Trump suddenly emerged as a voice of moderation in Washington. This is highly dangerous. After America’s slow-motion withdrawal from Iraq and Afghanistan, he is confirming the superpower’s reputation of a paper tiger.
