I’m writing this piece after having just watched the most sinister, darkest, weirdest, inaugural address, I think, ever spoken.
I had to read the transcript for it to fully sink in: President Trump’s factual assertions were wholly disconnected from fact, including the line, “For many decades, we’ve enriched foreign industry at the expense of American industry[.]”
Apparently the president isn’t familiar with how well American industry has been doing for the past two centuries, and despite depressions, recessions and bursting bubbles, Gross Domestic Product (GDP) has been steadily increasing at about 2% per year on average. Stock prices are at record highs.
I think what he meant to say was that “we’ve enriched American industry at the expense of American workers with the full consent and encouragement of my party.” Much closer to the actual truth.
Economic growth as measured by GDP decoupled itself from real wage income growth beginning in the early 1980s. And it been a wild ride to the top for Wall Street and a depressing ride to the bottom for Main Street, ever since. Sorry Reaganites, but if you care anything about intellectual honesty, you kind of have to own that.
Trump also said, even more curiously, “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.” There are so many errors in this single short sentence that it is rendered almost unintelligible.
First, what do borders have to do with other countries making our products? Second, other countries are in point of obvious fact, not making our products. Third, I am wholly unaware of any country in recent memory stealing our companies – the last time Mexico expropriated an American company was 1938.
Fourth, what country has destroyed our jobs? American companies, to increase their profits, have voluntarily moved manufacturing (and many other business operations) overseas to increase profits through labor cost savings.
American companies have destroyed our jobs to increase shareholder value, not foreign countries, and although I get that jingoism sells politically, many of those companies shelter their profits overseas to avoid paying taxes in the U.S.
Perhaps I’m being too picky here. The speech was obviously meant for his base, and maybe they’re not capable of understanding anything that is not couched in the most simplistic, nationalistic, quotidian terms.
Is it not a sad commentary when people can be convinced that American legislators who passed American laws allowing for free trade agreements allowing for duty-free offshoring with foreign countries at the expense of American jobs, can then effectively shift the blame for the loss of those jobs to the foreign countries that accepted the investments?
But of course Trump isn’t a free trade Republican. He’s an apoplectic, isolationist, nativist and humorless populist, all rolled into one, and nothing at all like his party’s demi-god, Ronald Reagan, the happy conservative warrior. This is going to be an enormous problem for Trump within the GOP, especially on economic issues like free trade.
The fact is, despite Mexico’s recent diplomatic blunders that have helped Trump, there’s not much he can do about free trade or NAFTA, without imploding the U.S economy in the process.
NAFTA is the world’s largest trade agreement, and yes the U.S. has a trade deficit with its Mexican and Canadian partners. In fact the trade deficit with Canada is a not insignificant US $15.5 billion. Why has Trump focused on only one side of this trilateral agreement?
Why are we making bad trade deals only with Mexico but not Canada? After all, General Motors and Ford, among many other international corporations, have manufacturing operations in Canada, and export to the U.S., accounting for $302 billion in products sold there. But barely a peep about Canadian trade. Curious.
What would happen if Canada and Mexico simply said “no” to a NAFTA renegotiation? President Trump could, according to Article 2205, withdraw without the need of congressional approval upon six months’ written notice to Mexico and Canada, causing a catastrophic economic calamity for everybody involved, and many not involved.
Professor Robert Lawrence from Harvard’s Kennedy School of Government calls this scenario “[economic] suicide for both sides.” (After all, U.S. companies do export $250.6 billion to Mexico and Canada.)
This economic suicide would apply to Trump’s business empire as well, as it relies heavily on free trade, cheap labor and imports from Mexico, Canada, and yes, China too.
Don’t get me wrong, I’ve never been a fan of neoliberal economic dogma or globalization. But offshoring production is only one part of a problem that increasingly includes outsourcing, crowdsourcing and automation; in fact a 2013 Oxford study, widely reported in the press, concluded that automation and thinking machines will replace 47% of occupations in the United States within the next 20 years.
This is not a bell that can be un-rung. In sum, global supply chain interdependence and exponentially expanding technology are too complex and their tentacles wrap around too many levers that are too dangerous to pull.
If Trump’s gaggle of doting plutocrats, kleptocrats, kakistocrats and the odd neoconservative ideologue supporting and advising him do not know this, then they are dumber than I could ever have imagined, quite possibly mentally retarded.
A more cynical possibility could be that their plan is not to disrupt the world economy by starting trade wars and endless litigation, but rather to do just enough – a tariff here and a tax there – to say they’ve fulfilled their promises, and where their promises were not fulfilled say that they were blocked by Congress or courts.
Will Trump’s loyal ignorati believe him? Of course they will. If Trump convinced them that man-made global climate change is a hoax and Obama is a secret Muslim born in Kenya, he can convince them of anything.
One thing is certain, though, absent a biblical miracle, despite the seductive shibboleth of “make America great again,” manufacturing jobs are not coming back, no matter who’s president.
Glen Olives Thompson is a professor of North American Law at La Salle University in Chihuahua, a specialist in law and public policy and a frequent contributor to Mexico News Daily. Some of his other non-academic work can be viewed at glenolives.com.