Even before assuming his duties in the Oval office President Donald Trump has made the finest nationalist rhetoric we have heard in decades and in so many ways he is following the steps of Leon Gambetta despite the obvious differences .
Leon Gambetta was an eloquent orator, well-spoken and a man of national vision who helped with his great influence defying and challenging Parisian imperialism during taught times.
He was a classy populist who rose to power laddering on the lower “corps legislative” then soon after reaching the top preferred moderate republicanism … you see a lot of common sense!
If the two men share anything it would be their autarky style approach and their skepticism about international trade practices and open economies.
Trump is fighting on all fronts to shred what he considers unfair trade agreements signed by unwise previous administrations causing a lot of damages, jobs losses and industrial degradation to the strong American economy, so he started his job throwing away the TPP , closing the US doors in front of entire populations from seven Muslims majority countries , shaking the pillars of NAFTA and the rest of the US international obligations .
The current prevailing Maganomics of the 45th American president looks pretty good on the economy in the short sight with effective trade protectionism in place, curbing immigration and very big bite for big corporations with the tax reform in a pursuit to reduce the unemployment rates which showed fabulous steady growth and everyone is happy, but the real question is will the trumponomics win the long term challenge!
Although the like of Gambetta’s Bource de Travail is far from his reach, trump will continue working hard to satisfy his electoral base with more tactical economic strategies eyeing 2020 elections in a race that is hiding a lot of surprises for the international trade.
The US is sailing difficult times bearing dramatic socioeconomic changes with the tremendous growth in its external debt, International trade losses to rising nations like china and expanding income gaps among working classes , slowing down in overall growth and core problems in its main industries .
Yet autarky , protectionism or even trickle-down economics aren’t the lasting solutions for these serious issues .
Trump is a nationalist who believes the race to the bottom approach and wants to fix economic problems by radical transformation in the international trade and anti-immigration policies. He won’t hesitate in applying available tools to disrupt other competing nations or withdrawing from international agreements.
In his days, Leon Gambetta challenged the real causes there at home; he followed his right gut feelings and the prevailing logic by pointing fingers at the imperialist government first before leaning to autarky.
In the days of trump, Gambettanism, Autarky or even Sovereigns of industry won’t help without targeting the cores and entirely redrawing the economic picture.
The US doesn’t need to disrupt international trade or the growth of china , allies or any other rising economic power to reclaim its economic eloquence and to carry on as leading power in the world , what the US really need is Universalism .
“Free international trade is often seen as desirable because it allows countries to specialize, in order to
produce goods that they are relatively efficient at producing, while importing other goods. This is the essence of the comparative advantage argument supporting gains from trade: exchange allows countries to “do what they do best, and import the rest”. Esteban Oritz-Ospina & Max Roser .
Yes true china is outperforming the US in bilateral trade but this is not a new phenomenon, it’s a persisting situation since 1985, the numbers don’t lie:
US Trade in goods with china in 2018
Month Exports Imports Balance
January 2018 9,835.3 45,788.0 -35,952.8
February 2018 9,806.1 39,067.6 -29,261.5
March 2018 12,382.1 38,256.7 -25,874.6
April 2018 10,268.0 38,230.0 -27,962.0
TOTAL 2018 42,291.5 161,342.4 -119,050.9
US Trade in goods with china in 1985
Month Exports Imports Balance
January 1985 319.2 293.1 26.1
February 1985 222.7 281.0 -58.3
March 1985 239.5 293.0 -53.5
April 1985 265.6 283.3 -17.7
May 1985 329.3 295.1 34.2
June 1985 280.9 348.7 -67.8
July 1985 383.1 344.4 38.7
August 1985 320.9 311.8 9.1
September 1985 339.1 391.8 -52.7
October 1985 377.1 385.5 -8.4
November 1985 316.3 327.5 -11.2
December 1985 462.0 306.5 155.5
TOTAL 1985 3,855.7 3,861.7 -6.0
Source : census.gov
The Juche era of president bill Clinton witnessed one of longest growth periods in the history of the American economy, during the time, the Americans were performing very well in international trade.
The economy was so strong, sustainable and there was no (Sadae) or much reliance on other great powers.
President Clinton initiated his policies by introducing taxes on higher income taxpayers early in 1993 and reduced the defense budget, which led to a rise in revenue and decline in spending relative to the size of the economy.
Those were very correct economic policies to pursue at the time; the American economy benefited
from that and lived its dreamy defining momentum.
In the last three years of Clinton presidency, the US budget office reported budget surpluses of $69 billion in 1998, $126 billion in 1999 and $236 billion in 2000, . We saw budget surplus for the first time since 1969 caused mainly by wise governance, the balanced strategy of fiscal conservatism, technological change , globalization & relatively low military interventions (excluding the bombings in the Balkans, Sudan and Afghanistan), Globalization and trade openness toward the world played pivotal role in this strong economic performance,.
NAFTA was signed along with many other free trade agreements and the US was eager to indulge into the shattered world, Clinton even kept strong ties with Boris Yeltsin in Russia and was so keen on bilateral trade with the promising China.
External debt has been reduced, a remarkable stock market growth is registered and we saw incredible job creation pattern larger than any other presidency in the American history as more than 2.2 million new jobs were created and unemployment dropped from 7.5 percent to 4.0 percent, the poverty rate dropped to 11.8 % , the US economy outperformed other NATO members in all terms.
Therefore an in-depth analysis of the driving factors behind that exceptional performance of the American economy should not ignore the critical role of the Free International trade, the globalization phenomena and it’s the drastic changes to the basic structures of the economy.
It has influenced the American manufacturers and giant corporations on how to use the international economy as a very domestic commercial space utilizing the technological advantages in their favor and so harvesting amazing results.
The rapid internationalization, interconnections and modernization played well in the favor of the American economy, for the first time distant shores became consumers of American technology, international consortiums grew enormously and there was a massive westernization in business processes worldwide and noticeable waves of technology transfer that made the US corporations the real stars of the business world.
It was similar to a palace economy with the US in the central command distributing wealth globally through tunnels of MNCs and giant corps, archaic yes but very effective.
What needed was to build on this pharaonist system upgrading to economic universalism with more capital relocation and internationalization through more international trade agreements and other forms of mass economical detoxing efforts not accumulation of wealth or surpluses through banking arms , local corporations , or unaccounted for military adventures .
But that was not the case , soon after taking over Clinton’s legacy , president bush began his term with military adventures in Iraq ,Afghanistan and a lot of covert operations across the Islamic world under many unverified pretexts ( anti-terrorism campaigns) and from the economic point of view that meant jailing capital inside the US (mostly to the military complex ).
Imperfect financial channelization, the huge military spending, and the failure in the traditional banking system led to 2008 financial crisis. Consequently, instead of economic expansionism president Obama spent much of his tenure fixing Bush’s era catastrophes.
Trump doesn’t need to close the doors in front of immigrants or taking their babies hostages , he does not need to adopt cruel protectionist policies or a nationalistic approach to make America grate again, what he really need to help his country’s economy is more openness, more adjusted globalization ..A Universalist approach that is not very selfish in nature.
In our globalized world, Cultivating capital is very crucial economic activity in order to maximize national wealth and to build strong business organizations but without economic inclusion and global wealth redistribution through international trade agreements ,MNCs and other forms , more financial problems are expected to float starting from falling exports due to high production costs , ,excess of supply , competition , productivity , innovation and weak global purchasing abilities (part of it because of political problems created or ignored by the US, economic sanctions or political vacuum & failed states ).
That’s why a Hanseatic League style of policies won’t help trump achieve his economic goals and will cause structural damages to the US economy.
By | Abdallah Hussein
CEO , Global 2T Group