Trump Economic Policy not 'Business as Usual' for Neo-Liberalism - But Clinton offers real change for the Working Poor

above:  The Economic Policy Contest between Clinton and Trump is more interesting than a first glance may suggest

Dr Tristan Ewins

This week I begin my blog post with a correction.  In an earlier article I described Donald Trump as ‘a neo-liberal’.  Based on corporate welfare policies – such as cutting corporate tax by more than half , as well as cutting other taxes affecting corporations  – this may have appeared accurate.  But upon closer inspection this election is more interesting than it first appears.

Yes, Trump wants to hold minimum wages down to the existing miserly rate of $7.25 an hour.  Yet Democrats are campaigning for an increase to $15 an hour. For the American working poor this could prove to be a real watershed.  Though Clinton has only absolutely committed to a rise to $12/hour she will be under significant moral and political pressure to go further.  That could result in a defining moment for social justice in the workplace at ‘at the lower end’ in America.  But the centre-piece of Trump’s economic policy is a reversion to protectionist policies.  Hence Trump's position is NOT 'neo-liberalism as usual'. He has talked about a 25% tariff on Chinese goods and a 35% tariff on Mexican goods.    The immediate effect of this may well be to shore up some American jobs ; but there’s the prospect of economic retaliation as well.  If that happens it could hurt everyone.

Trump is assuming massive growth in jobs and investment – and that revenue from tariffs will pay for the massive tax cuts ; as well, perhaps, as reductions in some military expenditure – pressuring NATO allies, and East Asian allies such as Japan and South Korea to invest more into their own defence.  Hence Australian commentators such as Paul Kelly suggest (I paraphrase here)  a ‘US withdrawal from the world stage’ , and the end of the US as ‘world’s policeman’, ‘enforcing a liberal political model’, including in our region.  (though In reality the US was often concerned with its diplomatic and economic hegemony more-so than ‘enforcing liberalism’)  Conservative commentators such as Greg Sheridan fear US partial withdrawal from the region and what it might mean for Australia.  (eg: pressures to increase our Defence budget)

Hillary Clinton’s economic policies contrast quite starkly with Trump’s economic policies.  She is proposing  big investments in infrastructure, child care,  and in boosting women’s economic participation.  Also borrowed from Bernie Sanders – she is proposing policies to cut back student debt and hence make tertiary study more accessible.  Further she supports profit sharing with workers, collective bargaining rights for organised labour, and investment in the broader education system – both academic and vocational training.   She’s also supporting longer-term investment by taxing short term investment more severely than long term investment .

Other authors are also pointing to the malaise amongst layers of the US working class – still scarred by the process of deindustrialisation which took effect from the 1970s to the 1980s and 1990s.  Authors observe the loss of certainty and security.  Often there have been much lower wages.  Losses of health benefits.  Loss of respect, working class identity, organisation and social networks.  And where the US Democrats have increasingly pitched their message to ‘the middle’ , working class Americans are sometimes left to wonder ‘if they really matter anymore’.  Many modern middle class liberals have a lot to say about the privileges of being white and male, but have had little to say about the working class ; or about class more generally.   These ‘blind-spots’ have left many working class Americans disoriented ; and at least Trump was speaking to their experiences, fears and insecurities.  Even if his ‘solutions’ are dubious.  Sometimes working class Americans even feel patronised by a ‘middle class liberal establishment’ which hasn’t taken class seriously enough ; which sometimes have disrespected or misunderstood them, or subjected them to caricature.

On the other hand Clinton’s policies do offer more social mobility through greater access to tertiary education.  And while she won’t restore the industrial working class jobs which many look back to as representing a kind of ‘heyday’ ; some working poor Americans could see  close to a doubling of their hourly wages rate.   Some jobs might go ; but others will be created by the increase in consumption power.  Clinton has some good economic policies – obscured by the never-ending mud-slinging ; the constant emphasis on ‘dirt’ and ‘denigration of character’.  (which has become the defining feature of the campaign for both sides)

That said Clinton needed to do more and say more to win over great swathes of working class America. 

US industrial working class music icon, Bruce Springsteen has called Trump a ‘conman’ with ‘glib’ and ‘superficial’ ‘answers’ to a problem which has spanned over several decades.  Massive tariffs on China and Mexico are a very blunt instrument.  Again, they may provoke retaliation which ends up hurting everyone.  What jobs are created will possibly pale in comparison to the collapse in corporate tax revenue , with a loss of public sector jobs.   

But a more nuanced industry policy – such as the Nordics have experimented with over the decades - should not be considered ‘out of the question’.   Furthermore: The age of retirement must not rise – either in America or in Australia – in order to buoy the economy.  That’s the wrong approach – which depresses rather than improves real living standards. (ie: with a ‘work/life balance’)  Neither should labour market deregulation aim to ‘clear the labour market’.  

Strategic economic intervention makes more sense.  Targeted education and training linked with job creation for existing/sympathetic skill sets.  More extensive retraining where necessary for those deemed capable.  Perhaps even government support for workers co-operatives – providing tax breaks and co-investment to help maintain jobs, and improve economies of scale without dependence on take-over capital. 

The US government needs a PLAN for a far more balanced and equitable labour market and economy.   Clinton’s increase in the minimum wage is a good start ; as are her plans for accessible education and greater economic and social mobility.  But depressed regions cannot just be left ‘to carry the can’.  Durable jobs need to be created and maintained over the long term.  And communities need to be reinforced around the necessary social infrastructure.   Where the loss of well-paying working class jobs in manufacturing and heavy industry saw the loss of private sector benefits in areas like health – the State needs to step in and fill the gap.  The social wage is potentially the answer for both middle income and lower income Americans.   And the working class needs to return to ‘the front and centre’ of Democrats policy and rhetoric.

The real danger now is that Trump is gathering enough momentum to deny the Democrats control of BOTH Houses ; ie: the House of Representatives AND the US Senate.  SOME of the truly progressive policies emanating from Hillary Clinton have been derived from Bernie Sanders ; and enshrined in the Democratic Platform.  With control of both houses and massive political and moral pressure to implement that platform – we could see some truly meaningful gains under a Clinton Presidency.  But failure to speak to the fears and insecurities of the US working class – including recognition of the dignity of labour – have undermined the Democrats position ; and left these people exposed to Trump’s demagogic posturing on the home front.   

Even on parts of the Left some are also fearful that Clinton may prove to be too ‘Hawkish’ on the foreign policy front.  Trump is seen by some as ‘the lesser evil’.   Julian Assange will likely never forgive the US Administration’s pursuit of him under Obama.  L.B.Johnson implemented ground-breaking ‘Great Society’ social and welfare policies – but will be remembered by most as pursuing the war in Vietnam.  We need a United States which doesn’t just ‘roll over’ in the face of aggression.   But which at the same time goes to extraordinary lengths to maintain peace as well.  And which appreciates the concerns of other Great Powers where they are legitimate.  Yet a vacuum from any US withdrawal within our own region could create more instability, not less.  (though no I am not making excuses for past US policies, such as support for the Suharto regime)

The US Presidential Election is almost upon us.  Let’s hope for a Clinton victory.  But also for a reformed Democratic Party which speaks to – and shows clear respect for – the United States’ working class.

https://www.thebalance.com/hillary-clinton-2016-economic-plan-3305767

http://money.cnn.com/2015/07/28/news/economy/donald-trump-polls-taxes-wages/index.html

http://money.cnn.com/2011/04/17/news/economy/trump_china_trade_war/index.htm

http://money.cnn.com/2016/09/15/news/economy/trump-tariff-ford-mexico/index.html

http://www.salon.com/2016/08/19/the-half-life-of-deind_partner/

US Presidential Debate illustrates the Policy Divide between Trump and Clinton

(nb: apologies for having to repost this ; I accidentally deleted it while posting the most recent article on Tony Blair and a Critique of the Third Way)


Dr Tristan Ewins

This week’s US Presidential Debate was interesting in a number of ways.  The economic debate in particular was of concern to this observer.  In summary, it was framed with the opposition of Trump’s traditional neo-liberal emphasis on ‘trickle down’ Reaganomics, deregulation, and sweeping corporate tax cuts.  By contrast Hillary Clinton’s rhetoric was suggestive of mild social democracy or social liberalism – which has ‘learned certain lessons’ from the GFC.   Important talking points for Clinton included winding back regressive prohibitive user pays in higher education , improving the minimum wage , and promoting US interests via international trade deals. This was mildly encouraging – and perhaps a sign that a small but symbolic portion of the Sanders policy agenda had been ‘taken on-board’ in order to mobilise the disillusioned ‘progressive masses’ that had been so inspired by Sanders’ break from the ‘Democratic establishment’: which for many was actually seen to be part of  the problem.

Unfortunately what was left unsaid, here, was that the interests of US-based transnational corporations have seen US policy makers (influenced by the dominant corporate lobby) pursue trade agreements which disadvantage even traditional US allies such as Australia.  As with the Trans Pacific Partnership, the right of social democratic governments to maintain natural public monopolies in the interests of the people they represent practically stands to be ‘criminalised’ in the name of ‘free and open markets’. Here there is neither a market nook nor cranny that is spared exposure to the transnational corporations.  And the relationship between the corporate lobby and the US political class is almost a ‘symbiotic’ one.  Of course the eagerness of Australian policy makers to expose our economy to TPP must also be questioned.  Perhaps this is seen as ‘the price we must pay’ for coming under the US security umbrella.

Clinton also argued the case that ‘trickle down economics’ and radically small government had failed Americans as per the 2007-2008 Global Financial Crisis – and that Trump’s desire to ‘go into economic policy reverse’ was an unacceptable risk for the country, and indeed the world.  As per usual, Clinton also emphasised the struggles of the US  middle class when compared with ‘robber baron capitalists’ (where it was implied Trump himself fell into that category) Although Clinton did not use the expression specifically.

But the refusal of mainstream Democrats to speak to – and speak of – the working class-in their ‘mainstream’ electoral discourse provides Trump with an opening.  Here his arguments against deindustrialisation may resonate with desperate workers who are willing to try anything to secure their futures.  Though his ‘solution’ of stemming the flow of manufacturing and other jobs by deeply slashing the taxes of corporations would necessitate a decay of infrastructure, welfare and social services – where the connections between these just don’t seem to be grasped by much of Trump’s support base.  

Trump takes advantage of desperation and the sense of abandonment by many US workers with a shameless opportunism that may yet win him the ‘top job’ in the White House.  He argues as if government should be run like his own personal business.  Though it is interesting to observe that the very impetus for infrastructure projects to come in very significantly over-budget (a phenomenon he pursued relentlessly) is linked with privatisation. Parasitic corporations trying to maximise their returns ; where the sense of ‘the public good’ is lost all but entirely.  Private prisons which abandon rehabilitation and support unnecessarily-severe sentencing in favour of ‘growing their businesses’ are perhaps the most appalling example.

Clinton also argued a strong case in favour of a big investment in renewable energy: and whereas Trump is a ‘climate sceptic’, Clinton’s strong position, here, was perhaps indicative of her imperative of winning over Greens voters whose votes might be ‘wasted’ on the Greens Presidential candidate, Jill Stein.  For progressives this comprises a testing dilemma: protest against the Democratic National Committee’s appalling attempts to undermine the campaign of Bernie Sanders ; or to ‘swallow the bitter pill’ ; and admit that if Clinton is in any way ‘the lesser evil’ , then she is the ‘lesser evil’ by a very significant margin.  A big vote for Stein would make a Trump victory certain.  Though it would build a case for electoral reform – making a genuinely ‘multi-party democracy’ really-viable.

But as Clinton argued: can we trust Trump with the US nuclear codes?    Can we trust him as ‘commander in Chief’ of the world’s pre-eminent super-power?.  (though progressively under challenge from a rising China ; and from an emboldened bloc or  ‘strategic partnership’ centred on Russia and Iran)   And can we really trust him to enforce nuclear non—proliferation?

In conclusion, though, Trump actually made some telling points on foreign policy – despite the fact more broadly that he is ‘not to be trusted’.  For example the disaster of the Iraq War ; and of the regional destabilisation and escalated conflict that ensued. In Australia the lesson for us is that we must never allow such a war to ensue – with our participation and support – without even allowing a parliamentary debate.  And maybe a parliamentary vote. That is one area where the Greens actually make good policy sense.

In the debate Trump seemed ‘energised’. He spoke with apparent enthusiasm – compared with which Clinton’s demeanour was ‘steady and deliberate’ but also ‘buoyant’.  However: there was no ‘knockout blow’. The campaign is only just beginning – and has more than two months yet to run.  

Clinton’s choice of Tim Kaine as Vice-Presidential running mate was also suggestive that Clinton was intending to appeal to the ‘policy Centre’ more so than the ‘unambiguous Left’.   Again: with two months to go, though, there is still the potential prospect of more progressive policy announcements.  The Sanders campaign mobilised millions: especially amongst the young. Clinton would be well advised to go further in remobilising those people. 

And as for the Sanders campaign: socialism is increasingly ‘coming in from the cold’ in US politics.  As Sanders argued – his ‘defeat’ was not the end of the story.  Unlike with the earlier Obama campaign, the intention is that the movement itself will persist ; and continue to build and campaign openly.  While 2016 is not the year for Sanders, perhaps 2020 – or maybe 2024 – will see the resurgence of the US social democratic and democratic socialist Left.   Sanders will perhaps be seen as ‘too venerable’ by then ; but surely for him it was very much about the movement ; the policy agenda ; and a ‘political sea change’ in the US with the resurgence of a distinct and mainstream Left.  And the Democratic National Committee must surely realise that it needs to change its ways – lest the broader Party divide openly against itself.  With the consequence of a clear run for the Republicans – unless they too experience a similar debilitating split.  (not impossible given what we have seen this year)

Here’s hoping for a Clinton victory: and that we may be pleasantly surprised with more favourable policy announcements from a Clinton campaign which realises the imperative of mobilising the movement mobilised itself before-hand by Bernie Sanders.