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What Will Trump Do?

Posted by hkarner - 14. November 2016

NOV 13, 2016, Project Syndicate
All US presidents come to power – and exercise it – by assembling and sustaining a broad electoral coalition of voters with identifiable interests. Donald Trump is no exception. Trump’s stunning election victory, following a populist campaign that targeted US institutions, domestic and foreign policies, and especially elites, was powered by voters – overwhelmingly white, largely rural, and with only some or no postsecondary education – who feel alienated from a political establishment that has failed to address their interests.

So the question now, for the United States and the world, is how Trump intends to represent this electoral bloc. Part of the difficulty in answering it, as Project Syndicate’s contributors understand well, is Trump himself. “The US has never before had a president with no political or military experience, nor one who so routinely shirks the truth, embraces conspiracy theories, and contradicts himself,” notes Harvard’s Jeffrey Frankel. But, arguably more important, much of what Trump has promised – on trade, taxation, health care, and much else – either would not improve his voters’ economic wellbeing or would cause it to deteriorate further.

This paradox lies at the root of some unsettling scenarios. As Princeton University’s Jan-Werner Mueller points out, “[t]here is substantial evidence that low-income groups in the US have little to no influence on policy and go effectively unrepresented in Washington.” But Trump’s claim to represent his voters is not based on “demanding a fairer system.” Instead, says Mueller, Trump “tells the downtrodden that only they are the ‘real people,’” and that (as Trump put it during his campaign), “the other people don’t mean anything.” By persuading his supporters “to view themselves as part of a white nationalist movement,” Mueller argues, a “claim about identity is supposed to solve the problem that many people’s interests are neglected.”

In this respect, Trump is hardly unique. As Mueller points out, framing representation in terms of the “symbolic construction” of the “real people,” rather than in terms of a pluralist conception of equal citizenship under a shared constitution, is a hallmark of populism everywhere. In Hungary, Poland, Turkey, Venezuela, and elsewhere (even, to some extent, in the United Kingdom since June’s Brexit referendum), populist leaders have felt authorized by their claim to represent the “single authentic will” of a “single, homogeneous people” to erode constitutional and legal constraints on their power.

Can America avoid a similar fate? Project Syndicate contributors agree that the election’s outcome has badly tarnished America’s global image, and that Trump’s foreign policies are likely to imply serious risks for Asia, Europe, and Latin America. But there is reason to believe that his domestic policies will disappoint many of his supporters. That may tempt him to double down on identity politics, fueling division and possibly civil unrest. But it may also create an opportunity for his opponents to reshape the self-conception of those who voted for him.

Trump vs. the Constitution

Throughout their country’s history, most Americans have viewed the US Constitution as the ultimate guarantor of their freedoms. And, since the election, Trump’s opponents have indeed taken some comfort in the idea that the Constitution’s “checks and balances,” as well as other constraints built into the US political system, might inhibit Trump’s more wayward impulses. The US Constitution, after all, ostensibly places real boundaries on the president’s freedom to maneuver. This is particularly true for domestic policy, because it is the US Congress that must allocate the funds needed to pay for any presidential initiative.

But the idea that the US Constitution will protect the country from a fate similar to that of Hungary and Poland, where populist leaders have politicized state institutions, may not be as rock solid as many Americans believe. As Columbia University’s Alfred Stepan points out, the Republicans already control both houses of Congress, and “checks and balances generated by the judicial branch are certainly in danger.” This is partly because the Republicans “have a good chance of creating a conservative majority on the nine-member Supreme Court that could last for decades, especially if they win the presidency again in 2020.”

And the Court “may continue to erode democratic checks, such as the campaign-finance limits that were dealt a devastating blow by the 2010 Citizens United decision.” Likewise, with the Senate under Republican control, “Trump can now rapidly fill vacancies” on lower federal courts – which had risen to a half-century high during President Barack Obama’s second term, owing to Republican obstructionism – with “conservative judges who may well erode checks and balances further.”

Nor is Stepan optimistic that state governments will provide a check on overweening federal power. “Republicans now control an all-time high of 68 out of the 99 state legislative chambers and 33 of the 50 governorships” of America’s 50 states, he notes, and this has serious consequences for the ultimate checks on government: effective political competition and free and fair elections. The state legislatures, after all, create the US House of Representatives legislative districts, which have already been gerrymandered to reinforce the Republicans’ majority there.

Worse, the threat to America’s democracy is stalking its grassroots. As Stepan notes, “Since 2013, when another close Supreme Court decision gutted the Voting Rights Act, many, if not most, states with Republican majorities in both chambers have enacted laws and regulations that suppress voting” in non-white areas. A Republican Party that is almost entirely dependent on white voters – and increasingly dependent on white identity politics – is likely to continue on this path.

Goodbye to the West?

It is not only American democracy that is at risk, but also the geopolitical West constructed by the US in the years after World War II. And, as Oxford University Chancellor Chris Patten points out, that construction “long provided the foundation for the global order – probably the most successful such foundation ever created.” Under US leadership, “the West built, shaped, and championed international institutions, cooperative arrangements, and common approaches to common problems,” Patten says. And, by helping “to sustain peace and boost prosperity in much of the world, its approaches and principles attracted millions of followers.”

Trump’s election, “threatens this entire system,” Patten continues. If he “does in office what he promised to do during his crude and mendacious campaign, he could wreck a highly sophisticated creation, one that took several decades to develop and has benefited billions of people.” After all, as Harvard’s Joseph Nye notes, throughout his election campaign, “Trump challenged the alliances and institutions that undergird the liberal world order.” And, although, as Nye remarks, “he spelled out few specific policies,” concepts and loyalties that have long been taken for granted, both by America’s allies and by its foes, no longer can be.

For starters, says Mark Leonard, Director of the European Council on Foreign Relations, “American guarantees are no longer reliable.” And that is true worldwide. “In Europe, the Middle East, and Asia, Trump has made it clear that America will no longer play the role of policeman; instead, it will be a private security company open for hire.” Not only has he “questioned whether he would defend Eastern European NATO members if they do not do more to defend themselves;” he has also suggested “that Saudi Arabia should pay for American security” and “has encouraged Japan and South Korea to obtain nuclear weapons.”

Moreover, says Gareth Evans, former Australian foreign minister, given that he has “little or no hard knowledge of international affairs, Trump is relying on instincts that are all over the map.” As a result, his rhetoric “combines contradictory ‘America first’ isolationist rhetoric with muscular talk of ‘making America great again.’” And Trump’s incoherence, Evans suggests, will not be compensated by his supposed business acumen (which he touted during his campaign). On the contrary, “while staking out impossibly extreme positions that you can readily abandon may work in negotiating property deals, it is not a sound basis for conducting foreign policy.”

Evans is not optimistic. “Trump’s dangerous instincts may be bridled if he is capable of assembling an experienced and sophisticated team of foreign-policy advisers,” he notes. “But this remains to be seen.” In any case, the danger to global stability is compounded by the fact that, whatever remaining checks and balances Trump might face at home, in foreign affairs “the US Constitution grants him extraordinary personal power as Commander-in-Chief, if he chooses to exercise it.”

Of course, some will benefit from the confusion that Trump is likely to sow. As former Swedish Prime Minister Carl Bildt puts it, “authoritarian rulers around the world” will no longer hear “harsh words from the US about their regimes’ contempt for democracy, freedom, or human rights.” On the contrary, the longstanding “goal of making the world safe for democracy will now be replaced by a policy of ‘America first,’ a sea-change in US foreign policy that is already likely arousing jubilation in Russian and Chinese halls of power.”

Trumping the Global Order

So just what form will an “America First” foreign policy take? How Trump deals with Russia, Nye suggests, will be a telltale early sign of the seriousness of his foreign policy. “On the one hand, it is important to resist [Russian President Vladimir] Putin’s game-changing challenge to the post-1945 liberal order’s prohibition on the use of force by states to seize territory from their neighbors,” as he has done in Georgia and Ukraine. “On the other hand,” Nye says, “it is important to avoid completely isolating a country with which the US has overlapping interests in many areas: nuclear security, non-proliferation, anti-terrorism, the Arctic, and regional issues like Iran and Afghanistan.”

Likewise, effective US leadership in Asia, which has become both the center of the world economy and the scene of growing friction between the world’s two most powerful countries – China and the US – requires a capacity for nuance that Trump has yet to reveal. America, says Evans, “undermines itself when it noisily asserts its regional primacy, while ignoring China’s legitimate demand for recognition as a joint leader in the current world order.” At the same time, “when China overreaches, as it has done with its territorial assertions in the South China Sea, there does need to be pushback.” And here, Evans notes, “a quiet but firm US role remains necessary and welcome.”

Like Evans, the Vietnamese geostrategist Le Hong Hiep has little confidence in the US president-elect. As a result of Trump’s election, the “strategic rebalancing toward Asia that [US President Barack] Obama worked so hard to advance may be thrown into reverse, dealing a heavy blow to Asia and the US alike.” Success depends largely on regional countries’ participation in and support of the US-led regional security architecture. But, given that Trump may “focus overwhelmingly on domestic issues,” he could well ignore “strategic engagement with ASEAN and its members,” Hiep says, thereby “causing their relationships with the US to deteriorate.”

And, like Bildt, Hiep believes that “China may welcome the election’s outcome.” To be sure, Trump has accused China of “stealing American jobs – and even blamed it for creating the ‘hoax’ of climate change.” Nonetheless, “he may take a softer stance on China’s strategic expansionism in the region, especially in the South China Sea, than Obama did.”

Others, too, appear to have glimpsed – at least initially – something positive in Trump’s victory. “Trump,” says Palestinian analyst Daoud Kuttab, “attracted the support of the enraged and frustrated, and Palestinians feel even angrier and more hopeless than the working-class white Americans who supported him.” More important, because “Trump is a political outsider, with few ties to [America’s] foreign-policy tradition or the interest groups that have shaped it,” many Palestinians believe that “he could upend conventions that have often been damaging to Palestine, transforming the rules of the game.”

But Kuttab pours cold water on this hope. “Israelis,” he points out, “seem at least as hopeful that Trump’s presidency will tip the scales further in their favor.” Trump has already strongly hinted that he will move the US embassy in Israel from Tel Aviv to Jerusalem – something all US presidents have refused to do for 49 years. And, given that “inciting hatred against Muslims was a staple of his campaign,” there should be no “illusions that Trump will be the arbiter of fairness, much less a peacemaker, in the Israel-Palestine conflict.”

Latin Americans haven’t the slightest expectation of fair, or even civil, treatment from Trump. In fact, says former Mexican foreign minister Jorge Castañeda, “Trump’s election is an unmitigated disaster for the region.” Indeed, Castañeda calls Latin America the “one world region that cannot possibly adopt a forward-looking attitude.”

Mexico has more reasons than most countries to distrust Trump, given his promise to “deport all six million undocumented Mexicans living and working in the US, and to force Mexico to pay for the construction of a wall on the US-Mexican border.” Moreover, Trump has vowed to “renegotiate the North America Free Trade Agreement (NAFTA), scrap the Trans-Pacific Partnership (TPP), and discourage US companies from investing or creating jobs in Mexico.”

But Trump’s proposals would adversely impact much of the region. “Every Central American country is a source of migration to the US, as are many Caribbean and South American countries,” Castañeda notes. Likewise, “Honduras, Guatemala, El Salvador, Cuba, Haiti, the Dominican Republic, Ecuador, and Peru all have large populations of documented or undocumented nationals in the US, and they will all feel the effects of Trump’s policies, if they are enacted.” Then there are “countries such as Chile, which negotiated the TPP in good faith with the US, Mexico, Peru, and Asian-Pacific countries,” all of which “will now suffer the consequences of Trump’s protectionist stance.” And NAFTA is not the only bilateral free-trade agreement – the US has some ten FTAs with Latin America countries – which Trump might target.

Trading Down

Such deals are particularly vulnerable because trade is the area where Trump’s “America first” foreign policy instincts meet his promise to bring high-paying manufacturing jobs back to America. Here he is likely to meet stiff resistance, not only from an increasingly self-confident China, but also from Mexico, whose leaders would not survive politically were they to cave in to an American president who has, says Castañeda, “dismissed Mexico’s national interests and maligned its people’s character.”

But NYU’s Nouriel Roubini thinks that Trump, having “lived his entire life among other rich businessmen,” will end up being more pragmatic. His “choice to run as a populist was tactical, and does not necessarily reflect deep-seated beliefs.” Whereas a “radical populist Trump would scrap the TPP, repeal NAFTA, and impose high tariffs on Chinese imports,” a pragmatic Trump will probably “try to tweak [NAFTA] as a nod to American blue-collar workers.” Moreover, those who “bash China during their election campaigns” often “quickly realize once in office that cooperation is in their own interest.” In fact, “even if a pragmatic Trump wanted to limit imports from China, his options would be constrained by a recent World Trade Organization ruling against ‘targeted dumping’ tariffs on Chinese goods.”

If Trump did press ahead with a protectionist agenda, he would meet resistance not only from America’s trade partners, but also from economic reality. The “case for tearing up free-trade agreements and aborting negotiations for new ones,” Patten notes, “is premised on the belief that globalization is the reason for rising income inequality, which has left the American working class economically marooned.” In reality, trade is no longer the culprit in displacing manufacturing jobs from the US.

Instead, Patten notes, the “sources of American workers’ economic pain are technological innovation and tax-and-spend policies that favor the rich.” And, unlike free trade, which has increased American households’ purchasing power, “the current wave of technological innovation is not lifting all boats,” notes Alex Friedman, CEO of GAM notes. “Even as the likes of Uber and Amazon, and, more fundamentally, robotics, add convenience, they do so by displacing working-class jobs and/or driving down wages.”

But what today’s protectionists fail to acknowledge is that America is no longer competitive in industries like coal and steel – and shouldn’t try to be. For policymakers, Friedman notes, “the problem is that it may take a decade or longer before robotics and the like” diffuse sufficiently to “feed a broader rising tide that lifts all boats.” But repealing free trade certainly would not help. Were Trump to do so, the jobs would not return, and import prices would rise, thereby reducing Americans’ purchasing power – and thus, in Patten’s words, harming “the very people who voted for him.”

Nobel laureate Joseph Stiglitz agrees. “Technology,” he says, “has been advancing so fast that the number of jobs globally in manufacturing is declining.” As a result, “there is no way that Trump can bring significant numbers of well-paying manufacturing jobs back to the US.”

Where the Jobs Are

How, then, is Trump to satisfy his supporters? One possibility, of course, is an option that Obama had embraced – clean tech and green energy. What are needed, says Columbia University’s Jeffrey Sachs, are “massive investments in low-carbon energy systems, and an end to the construction of new coal-fired power plants.” It needs similarly sized “investments in electric vehicles (and advanced batteries), together with a sharp reduction in internal combustion engine vehicles.” Moreover, a “carbon tax,” says Stiglitz, “would provide a welfare trifecta: higher growth as firms retrofit to reflect the increased costs of carbon dioxide emissions; a cleaner environment; and revenue that could be used to finance infrastructure and direct efforts to narrow America’s economic divide.”

But as Stiglitz notes, “given Trump’s position as a climate change denier, he is unlikely to take advantage of this opportunity.” Indeed, he is already staffing his transition team with similarly minded officials, and the Republican congressional caucus has deep ties to traditional oil and gas firms.

This implies that Trump is more likely to embrace large-scale infrastructure investment. British economic historian Robert Skidelsky notes that Trump has “promised an $800 billion-$1 trillion program of infrastructure investment, to be financed by bonds, as well as a massive corporate-tax cut, both aimed at creating 25 million new jobs and boosting growth.”

Jim O’Neill, a former CEO of Goldman Sachs Asset Management and former British Treasury minister, sees little alternative to what Skidelsky calls “a modern form of Keynesian fiscal policy.” As O’Neill puts it, “[w]ith monetary activism past its sell-by date, an active fiscal policy that includes stronger infrastructure spending is one of the only remaining options.” At the same time, as eager as the Republicans are to slash taxes for the few, “policymakers cannot ignore the high levels of government debt across much of the developed world.”

The same argument that is made for spending on infrastructure can be made for technology. “Shockingly for a country whose economic success is based on technological innovation,” Stiglitz notes, “the GDP share of investment in basic research is lower today than it was a half-century ago.” But it is hard to imagine Trump becoming the kind of technology cheerleader that Obama became during his presidency. His estrangement from the US technology sector, whose leaders overwhelmingly opposed his candidacy, is one factor. Nor does his stance on immigration bode well. As Roubini points out, one of Trump’s proposals would “limit visas for high-skill workers, which would deplete some of the tech sector’s dynamism.”

Although Republicans have not favored large-scale government infrastructure spending since Dwight Eisenhower was president, they will most likely go along with it in exchange for tax cuts. This will undoubtedly result in some job creation. But, as Frankel points out, “income inequality will likely start widening again, despite striking improvements in median family income and the poverty rate last year.” Moreover, “budget deficits will grow.”

That presents a problem for Trump, given that he plans to finance infrastructure investment by issuing bonds. “Market participants,” says Harvard’s Martin Feldstein, “are watching the [US Federal Reserve] to judge if and when the process of interest-rate normalization will begin.” And “historical experience,” says Feldstein, “implies that normalization would raise long-term interest rates by about two percentage points, precipitating substantial corrections in the prices of bonds, stocks, and commercial real estate.”

This suggests an early clash between Trump and the Fed. Trump may try to bend the Fed to his will; but, as Roubini points out, there is one independent force that he will find impossible to control. “If he tries to pursue radical populist policies,” building up massive debt without any plans to pay for it, the response from international markets “will be swift and punishing: stocks will plummet, the dollar will fall, investors will flee to US Treasury bonds, gold prices will spike, and so forth.”

What Should the World Do?

Back in May, Bill Emmott, a former editor of The Economist, contemplating the prospect of a Trump presidency, argued that countries “must hope for the best but prepare for the worst.” Above all, they must bolster “their alliances and friendships with one another, in anticipation of an ‘America First’ rupture with old partnerships and the liberal international order that has prevailed since the 1940s.”

That moment, Leonard argues, has now arrived. Europeans must “try to increase leverage over the US,” whose new leader “is likely to resemble other strongmen presidents and treat weakness as an invitation to aggression.” And, whereas “a divided Europe has little ability to influence the US,” when “Europe has worked together – on privacy, competition policy, and taxation – it has dealt with the US from a position of strength.” Guy Verhofstadt, a former Belgium prime minister who currently heads the Liberals in the European Parliament, goes further. “The EU can no longer wait to build its own European Defense Community and develop its own security strategy,” he says. “Anything less will be insufficient to secure its territory.”

With liberal democracy, as Verhofstadt puts it, “quickly becoming a resistance movement,” his is a refrain now heard around the world. Australia, says Evans, “should have learned by now that the US, under administrations with far more prima facie credibility than Trump’s, is perfectly capable of making terrible mistakes, such as the wars in Vietnam and Iraq.” Facing the prospect of “American blunders as bad as, or worse than, in the past,” he says, “[w]e will have to make our own judgments about how to react to events, based on our own national interests.”

Patten calls for a more robust diplomatic response as well, praising German Chancellor Angela Merkel’s response to Trump’s election, in which she upheld bilateral cooperation on the basis of shared “values of democracy, freedom, and respect for the law and the dignity of man, independent of origin, skin color, religion, gender, sexual orientation, or political views.” That “eloquent and powerful” statement, says Patten, makes Merkel “one leader who seems to recognize how quickly the collapse of US leadership could bring about the end of the post-1945 global order.” And, he adds, it “is precisely how all of America’s allies and friends should be responding.”

What Should America Do?

All is not lost. Stepan is right that the traditional checks and balances of American politics are under severe threat. But, as Roubini reminds us, markets are not the only barrier if policies go off the rails. The executive branch of the US government that Trump commands “adheres to a decision-making process whereby relevant departments and agencies determine the risks and rewards of given scenarios, and then furnish the president with a limited menu of policy options from which to choose.” Indeed, “given Trump’s inexperience, he will be all the more dependent on his advisers, just as former Presidents Ronald Reagan and George W. Bush were.”

In addition, says Roubini, “Trump will also be pushed more to the center by Congress, with which he will have to work to pass any legislation.” Trump’s election, after all, culminates his hostile takeover of the Republican Party, and now he will have to bring about a rapprochement with House Speaker Paul Ryan and Senate Republican leaders, who, Roubini notes, “have more mainstream GOP views than Trump on trade, migration, and budget deficits.” Moreover, “the Democratic minority in the Senate will be able to filibuster any radical reforms that Trump proposes, especially if they touch the third rail of American politics: Social Security and Medicare.”

Likewise, notwithstanding Stepan’s well-founded fears, institutions can fight back against populist subversion, as we have seen in the British High Court’s recent decision upholding the authority of Parliament to scrutinize and vote on the government’s decision to trigger the UK’s exit from the European Union. No one can be certain – least of all Trump – that all of the conservative members of the Supreme Court will march in lock step with his abasement of US democracy. His proposal to ban Muslim immigrants, Frankel notes, “would be struck down even by a right-wing Supreme Court.”

There is also the constraint of constitutionally protected citizen action, already seen in well-attended anti-Trump demonstrations held around the country in the days since the election. Protests are likely to continue, suggests IE Business School’s Lucy Marcus, in the wake of “a surge in hate crimes, including an alarming number of incidents being reported at schools and on college campuses.” If Trump “hopes to be anything remotely close to a responsible leader,” Marcus says, “he must move urgently to address the deep divisions that he so enthusiastically fueled during his campaign.” Equally important, “community leaders must not allow their constituents to be manipulated or goaded into behavior that risks dangerous knock-on effects.”

The long-term challenge posed by Trump, however, is to find the means to decouple white identity politics, in which the Republican Party has become deeply invested, from economic grievance. As Mueller argues, members of “today’s Trumpenproletariat are not forever lost to democracy, as Clinton suggested when she called them ‘irredeemable.’” Mueller quotes George Orwell: “If you want to make an enemy of a man, tell him that his ills are incurable.” Instead, anti-populists must “focus on new ways to appeal to the interests of Trump supporters, while resolutely defending the rights of minorities who feel threatened by Trump’s agenda.”

Skidelsky agrees: “it is economics, not culture,” he says, “that strikes at the heart of legitimacy.” In other words, “it is when the rewards of economic progress accrue mainly to the already wealthy that the disjunction between minority and majority cultural values becomes seriously destabilizing.”

Trump ruthlessly exploited that disjunction, and, in doing so, “obviously made a successful claim to represent people,” says Mueller. “But representation is never simply a mechanical response to pre-existing demands,” he notes. Instead, “claims to represent citizens also shape their self-conception,” which is why it is now “crucial to move that self-conception away from white identity politics and back to the realm of interests.”

Whatever happens, Americans should be mindful of what they have lost – perhaps forever – by electing Trump. His victory has “deeply undermined the soft power the US used to enjoy,” says Shashi Tharoor, chairman of the Indian parliament’s foreign affairs committee, by bringing “to the fore tendencies the world never used to associate with the US – resentment and xenophobia, hostility to immigrants and refugees, pessimism and selfishness.” In the world’s eyes, “fear has trumped hope as the currency of American politics,” laments Tharoor. And in the world’s eyes, “America will never be the same again.”

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