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Trumponomics: Neocon neoliberalism camouflaged with anti-globalization circus

from Thomas Palley

A key element of Trump’s political success has been his masquerade of being pro-worker, which includes posturing as anti-globalization. However, his true economic interest is the exact opposite. That creates conflict between Trump’s political and economic interests. Understanding the calculus of that conflict is critical for understanding and predicting Trump’s economic policy, especially his international economic policy.

Trump’s ratcheting-up of the illiberal cultural values agenda enabled him to displace the Republican establishment. His extremism jumped him to the front of the Republican queue, which was critical in the primary process as that process engages the most extreme voters. However, his racist nationalism also has broader political appeal because racism reaches far beyond the Republican base, while nationalism has bi-partisan establishment support.The other side of Trump’s success was his capture of the progressive critique of the neoliberal economy. For four decades, the US economy has short-changed working class voters via wage stagnation and manufacturing job loss. That has created discontent and disappointed expectations. Trump exploited that discontent and disappointment by masquerading as a critic of the neoliberal economy and promising to make the economy work for working class Americans.

In this regard, his capture of the globalization and deindustrialization debate is particularly important. That is because globalization and deindustrialization are the most public face of the neoliberal economy, being where the impact on wages and jobs has been most visible and tangible. By gaining credible ownership of the globalization critique (via his criticisms of off-shoring, China, and trade deals like NAFTA and TPP), Trump gained credibility for his claim to be on the side of working families.

Establishment Democrats handed Trump the opening to capture the globalization debate by pushing the Trans-Pacific Partnership (TPP) despite widespread voter opposition. For this, President Obama deserves special blame.

That capture enabled Trump to create a new twisted narrative about neoliberal globalization which blames “foreigners and immigrants”. The Trump narrative is that the US is a victim. The US has supposedly negotiated weak trade agreements and foreigners have cheated on those agreements. Simultaneously, illegal immigrants have flooded in and taken US jobs and driven down wages. The reality is globalization has been “Made in the USA” by corporations, for the benefit of corporations, working in tandem with Congress and successive administrations.

Trump’s new ‘blame it on “foreigners and immigrants”’ narrative of globalization complements and feeds his racist nationalist cultural values agenda. With foreigners and immigrants supposedly to blame for the economic difficulties of US workers, that provides the rationale for his xenophobic policies.

In sum, Trump succeeded by outflanking the Republican establishment with his racist nationalist values agenda, and outflanking the Democratic establishment with his anti-globalization economic rhetoric. These two political manoeuvres constituted a coherent political strategy that enabled Trump to connect with reactionary voters while masquerading as being on workers’ side.

Bait and switch: anti-globalization bait, neoliberal switch

Trump’s representation as being on the side of workers stands in complete contradiction to his own interests as a billionaire businessman whose metric of success is money and wealth, and who is devoid of charitable inclination or notions of public service. The reality is he is engaged in a skillful “bait and switch” befitting a con artist.

The bait was his critique of the economic establishment and globalization and the harm they have done to working class voters. The switch is rather than reforming the neoliberal economy, Trump substitutes racism, nationalism, and authoritarianism, while simultaneously doubling-down on neoliberal economic policy.

Given his lack of any history of government service, Trump could initially get away with this pro-worker masquerade. However, the realities of Trump’s economic policies have now become clear. All the evidence suggests he intends to worsen the neoliberal economy’s proclivity to deliver wage stagnation and income inequality by increasing the power of business and finance, and by intimidating workers and weakening unions.

Trump’s economic policy team is dominated by ex-Goldman Sachs personnel, who include Treasury Secretary Stephen Mnuchin and National Economic Council Director Gary Cohn. Trump’s Chief Strategist, Stephen Bannon, is also a Goldman Sachs alumnus.

Trump’s tax policy aims to cut the tax rate on corporations and wealthy individuals; his budget expenditure policy aims to slash social welfare spending and provision of public services to lower and middle class families; and all forms of regulation – consumer, labor market, business, financial, and environmental – are under profound attack.

The one area where the masquerade continues is international economic policy. That is because Trump is compelled to balance political needs and economic interests. As for politics, Trump needs to present himself as remedying globalization’s negative effects. Among working families, globalization is the most visible and economically understood issue, and Trump’s critique of globalization is front and center of his pro-worker masquerade. That makes it politically essential he preserve his image as critic of globalization.

As for economics, Trump’s own economic interests have him identifying with corporations and capital. Globalization has been “made in the USA” for the benefit of large American multi-national corporations which have been big winners from the process. Consequently, Trump is inclined to preserve the system, though he is willing to make changes if that increases corporate profitability.

The implication is one can expect lots of anti-globalization circus to address Trump’s political needs, but he will not rock the globalization boat unless something more profitable is possible.

Trump’s international relations unilateralism: the neocon factor

Trump’s international economic policies also signal the transition to a new era of US unilateralism in international relations. Part of this new unilateralism is Trump’s political posturing aimed at convincing his base that he is nationalist and anti-globalization. However, part of it may reflect the triumph of neocon thinking within the US.

The neocon project derives from the belief that never again should there be a power, like the former Soviet Union, capable of rivalling the US. Originally, the neocon project represented extreme Republican thinking, but it has become mainstream thinking. Both Republicans and Democrats now believe the US has the right to intervene anywhere in the world, any time it chooses, and it has the right to pepper the globe with military bases and military personnel deployments – including ringing Russia with these.

The bi-partisanship is evident in Democrats’ support for the Iraq war and acceptance of the war on terror as justification for intervention anywhere. It is also evident in President Obama’s continued investment in global military base expansion, expansion of NATO deployments into central Europe and the Baltics, and encouragement of the 2014 Maidan revolution in Ukraine.

Additionally, Democrats supplement the neocon rationale for intervention with the claim that the US has a right to intervene in the name of protecting democracy. That right derives from “US exceptionalism” whereby the US has a special mission to transform the world by promoting democracy, and it reinforces bi-partisan belief in unilateralism.

The neocon project was originally concerned with military supremacy and targeted Russia. However, it is about US power in general, which means it potentially implicates every country and every dimension of international policy.

Neocon unilateralism may now be now spreading into international economic relations. As the sole global super-power, the US inevitably feels increasingly unrestrained in all areas. Economic unilateralism is also politically consistent with popular hyper-nationalist sentiment that has been encouraged on a bi-partisan basis. Lastly, it also fits with the narrative constructed by Trump that “foreigners and immigrants” are responsible for US economic malaise.

The importance of the neocon factor is it dramatically changes the interpretation of Trump’s unilateralist international economic policy chatter. Instead of just being Trump bluster, such chatter is consistent with the neocon construction of international relations. That construction provides the over-arching frame for US foreign policy, and international economic policy must therefore conform with it. That explains why Trump’s NATO strictures have raised so few ripples within Washington, and why the Washington establishment has been so quick to engage the border adjusted tax (BAT) proposal despite its unilateralist character and inconsistency with the WTO. Trump has surfaced such thinking because it plays well with his nationalist domestic political strategy, but proclivity for such thinking was already in place within the establishment.

The implication is Trump’s neocon unilateralism is not a one-off temporary political aberration. Instead, it reflects enduring features of the current US polity which has entered a neocon era where tacit US global supremacy is the goal and unilateralism is a new norm. That has bigger ramifications for the international relations order that foreign governments, including Western European governments, will need to digest.

  1. April 22, 2017 at 8:49 am

    Well considered thoughts. These are historical events. So, some historical details that help us understand them. First, US imperialism (neocon as you call it) began “officially” in 1898 when the US fought a war for no other purpose than to enhance its reputation as a world and colonial power. The Spanish in Cuba were the US’ first victim. The general direction of the policy, nor the taxes and military hardware build-up to support it has not changed since that time. However, there were times when that direction was challenged. The first was after World War I when the costs and casualties of the war angered and harmed many in the US. That passed only when the Great Depression erupted. The second was during and after World War II. By comparison the harm the US suffered from the war was small. But even so it was enough to force politicians and imperialists to be careful about budgets and speeches that glorified war. The greater harm suffered by the other participants in WW II essentially ended their desire for war. Germany, Japan, Italy, the UK, etc. sought out a permanent peace. Some returned to a belligerent path later as the memories of the war faded. Even the USSR wanted no more war. Unfortunately, invention and use of the atomic bomb by the other allies without involving the USSR frightened the Russians (an historically paranoid nation) who began to build the armies and weapons to “catch up.” Thus, the cold war and the arms race.

    Trump, as you suggest has taken full advantage of the fears that now populate America. These fears are the direct result of policies and philosophies that began with Ronald Reagan. Reagan literally abandoned America and Americans to a philosophy that denied anything like the US could even exist, much less guide the future of the nation. His only replacement was this from a 1981 speech,

    “Our goals complement each other. We’re not cutting the budget simply for the sake of sounder financial management. This is only a first step toward returning power to the States and communities, only a first step toward reordering the relationship between citizen and government. We can make government again responsive to people not only by cutting its size and scope and thereby ensuring that its legitimate functions are performed efficiently and justly.

    Because ours is a consistent philosophy of government, we can be very clear: We do not have a social agenda, separate, separate economic agenda, and a separate foreign agenda. We have one agenda. Just as surely as we seek to put our financial house in order and rebuild our nation’s defenses, so too we seek to protect the unborn, to end the manipulation of schoolchildren by utopian planners, and permit the acknowledgement of a Supreme Being in our classrooms just as we allow such acknowledgements in other public institutions.

    But beyond this, beyond this we have to offer America and the world a larger vision. We must remove government’s smothering hand from where it does harm; we must seek to revitalize the proper functions of government. But we do these things to set loose again the energy and the ingenuity of the American people. We do these things to reinvigorate those social and economic institutions which serve as a buffer and a bridge between the individual and the state — and which remain the real source of our progress as a people.

    And we must hold out this exciting prospect of an orderly, compassionate, pluralistic society — an archipelago of prospering communities and divergent institutions — a place where a free and energetic people can work out their own destiny under God.”

    Now, which of these things did Reagan actually carry out? None of them. He increased the size of cost of government. Increased racial and class tensions. Incarcerated Americans at a record rate. Placed government out of the reach and unable to respond to needs of all Americans, except through the military. Church attendance continued to decline. Rather than ending government’s smothering hand he and the “conservatives” who followed his attempted to extend it to other nations. The 1980s were popularly called the “me” times. In other words, selfishness, hatred, cruelty, and disrespect of people became ever more common place. Reagan never encouraged much less reinvigorated “those social and economic institutions which serve as a buffer and a bridge between the individual and the state — and which remain the real source of our progress as a people.” He helped create a nation of thieves, sociopaths, and corporate raiders. He virtually alone destroyed many of the civic virtues and institutions he swore to protect. That held the US together. He began the collapse of the US. Which we see continuing today. Do conservatives have something to offer to America? Yes, they do. But not the kinds of conservatives that call Fredrick Hayek, Milton Friedman, and Ayn Rand heroes. These are destroyers of societies, of civic society, and ultimately of civilizations.

  2. patrick newman
    April 22, 2017 at 1:38 pm

    The cognitive dissonance of his natural corporate ideology and the anti neo – liberal narrative must surely catch up with him. It should not be forgotten that he was well defeated in the popular vote. He made extremely efficient use of the antiquated Electoral College system of modulating votes. Was this just a very clever use of resources or was he just ‘lucky’? How will all this resolve – Trump has been absolutely consistent in his unpredictability!

    • April 23, 2017 at 8:35 am

      Based on personal experiences with Trump and his “people” I don’t believe he ever believed he could or would win. I believe he thought he could rake in a lot of money by campaigning after his loss about rigged elections and the double cross of white working guys. For Trump it’s always about the money. Take for example his campaign for a second term, which began the second day of the first term. 100 days in and he’s already collected $13 million and that’s with no paid ads. At this pace he’ll have $50 million in the bank by the end of the first year in office. $200 million after four years. Trump’s always lived off other’s money. Who would expect him to change now?

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