Thursday, 10 November 2016

Trump - A Gift to The Left

Trump is a gift to the left becasuse he is the first republican in three decades to renounce global neoliberalism as failing the blue and white collar workers of his western homeland.

Bernie Sanders has been quick to pick up on this point. which may come as a total shock to many on the left. However his positive comments are to be welcomed by all.

Neo Liberalism has the common sense appeal that you are worth as hard as you work. The republicans have cut income taxes such that a significant proportion of employees in the US don't pay a jott. This has been the compensation for the removal of those nasty restrictive union negoatiations, which hindered the economy- according to the 'old' - new-right. Only that after 30 years a larger amd larger proportion of the US workforce is finding it harder to even make ends meet, let alone save for the size and location of house they need, or a college education for their kids.

Trumpanomics are set to sweep aside Reaganomics. Where the republicans once fought for NAFTA and Milton Friedman followers  completely burried their heads in the sand when it came to socialist, keynsian China, Trump offers the soltuion which only the so called fringe anti globalist left, like Bernie Sanders and a younger Jeremy Corbyn touted before.

Anti globalism was an underground movement. Mask wearing students with rucksacks and cycle helmets toying with the Police at G8 summits to grab media attention as the bad-boy rebels of our age. Now anti globalisation is at the centre of the neo-neo-conservative government of the USA.

Neo liberalism and the concepts of Milton Friedman and others are a bit like Keynsianism- they maybe work to create well being in closed economies. When you globalise, they both fall to bits. Being only worth what you work for means that your job will inevitably go to a cheaper land, unskilled shop floor or skilled CAD designer. In a world with so many countries having moved vast elements of theirn population outbof subsistance and barter since the 1970s, this is inevitable.

So Keynes and Friedman just don't really work in a global economy, because you actually have endless labour supply and maybe a half century in each developing country before the standards of living and costs of living render the difference negligble. On the Keynsian side, you can't "print" money when half of it is spent or invested abroad- you can't underpin the world economy by US 'qauntitative easing either'.   Unless like China, you cheat.

China has on the one hand access to global markets virtually uninhindered by virtue of both trade deals and global corporations moving production there. On the other hand they restrict access to their market by owning domestic suppky chains and artificially deflating their currency through Keynsian printing, while restricting also the free exchange od that currency. They tackle inflation as RPI only with a huge supply of cheap labour, massive investment in agriculture and some degree of command competition, where in fact there are many more competitors in some markets than typical of the west. Their banks are national and lend money to support all of this. Living cost inflation for actual workers is as bad or worse than in the USA, but real life style inflation is dressed up as desirable capital gains in private property. Whilenthe central banks and finance systems of all the major economies underpin this with public money and inadequare housing policy.

Trump has not only defied the politically correct, to the joy of the "phobes" and "ists" of the country, he is also not economically correct. He defies this system, and offers an alternative. When he stood in front of blue collar workers in a Michigan Ford Corp' plant, he threatenrd Ford management with 35% tariffs if they moved to Mexico. Clinton and Bush era just went along with more and more globalisation and lived with mediocre real, money economy while the super rich expanded their immense wealth in real estate by astronomical figures, pricing many ordinary workers out of ever owning a home in the cities or within an hours' commute of all the main Metropolii in the USA. He knew there was a fundamental disconnect between wealth creation and globalisation which was punishing the working person. No one else dared go against the monetarist orthadoxy, even though it was dead on arrival in september 2008.

That my friends, is why Trump won and will be a remarkable president it has to be said.


Why Then Is Trump a Gift to The Left?

Barack Obama stood 8 full years against a partisan republican congress, who frustrated and slowed much of his policy and continued with economics which secured wealth for the rich and an expanding poverty for a greater percentage of employees. Hope could be sold, but those hopes could not be delivered because the Reaganomic hang over is rising costs of living on wages falling in real terms, or actually cent for cent lower than they were 20 years ago. Affordable healthcare took longer to come into effect, and congress sat back without interfering as the inflationary pressures it exacted, went unchecked by policy and tougher negotiation with suppliers.

We had an impasse. At a time when hope was promised, and so much money was used fixing the broken laissez-faire that the US government may have well shot the bankers and payed everyone directly. There was a bad political situation, which in part reflects the republican 'partitioning' of the geodemographic electoral system, but it just was not tenable. Clinton in charge of a republican congress would be more of the same.

It is then now far better to let the republicans get on with it. Why  is this better than a Blue POTUS, Red Congress?

This is because by no means is this business as usual. Trump has won on a promise to cut immigration drastically from Mexico, and protect  US manufacturers from Chinese and Mexican (the two main 'outflagging' nations for the US)    This goes against two of the long held Republican Tenets  of ideological free market economics. Free movement of goods and labour. Protectionism - against cheap currency in China, and slave condition labour in Mexico (just one step down the supply chain if you are a 'clean' investor in plant there)

Also it puts a focus back on manufacturing and primary extraction of raw materials domestically. These are two alien concepts to Reaganomics. The republicans and Bill Clinton years did nothing much but allow industry to become less productive, while the rising sun of socialist bank rolling China was too tempting even for those with free market religious fervour. The rush to the east was on again, after Japan had penetrated the US in the 60s and 70s. 

This is the biggest gift to the Left across the world. The left has swallowed so much of monetarism since the 80s that it did not dare suggest protectionism. China was touted as the sunrise land where the west could sell its' higher value products, against inflation busting supply of the cheap, unimportant stuff. This is a completely wrong strategy for China at the wrong time. China is printing money - lending companies huge sums to start up and grow, building enormous infrastructure the likes of which HAVE NEVER BEEN SEEN ON EARTH before. Manufacturing companies in the west, even when they are profitable, are told by their investors to move to the far east. Reasonable ROI from production twenty years ago are no longer good enough when the opportunity for more margin and easier expansion is on the cards in China. In effect the balance of trade will continue to grow worse until all the West have left are local service industries and protected defence and health industries. The US is already perilously close to that with the next round of relocation on the cards.

Despite the promise of China being an ever bigger market for western wares and services, the balance of trade will get worse. Luxury brands which become successful in China, will be bought out by the Chinese and production moved there. The qausi private/state banks and their chinese clients are investing big time in the 'rentier' economy round the pacific rim, and as far away as Sweden where the state banks own the 'privatised' high speed services. Property, leisure and golf, mining. They are like locusts over the world, all with socialist printed money and command capitalism. Yet we in the west have had to swallow this, with stiff monetary policy and wage control in the tide of higher real costs of living.  We are told that we have to compete, we have to be cleverer, we need more capitalism and freedom of movement.

The Left would never dare have gone back to protectionism. Yet Reagonomics had run its course, in a similar way to how post war Keynsianism ran against the buffers of inflation in 1973, so in 2008 the house of cards fell in on itself when so much of the economy and money supply was tied up in the housing market yet there was no real value adding economy underpinning the growth in property wealth and debt. It seems thirty years is about the time economic orthodoxies take to cycle through before they stop working, or people come up with alternative theories which can be put into practice.

In fact Reagonics and Thatcherism did not stop the fundamental idea of growth through the money supply - printing money. Both relaxed access to mortgages and consumer credit. This meant that people for a decade could enjoy a higher standard of material goods, while wage rises were moderate. Many ran up debts they could never expect to pay off, and many home owners took out long term interest only loans. Growth was further fuelled by tax cuts, and of course in fact, expansive public spending on defence and health care (The US government employee contributions are the lions share of medical insurance payments in the USA, and it gets a long term bad deal on drugs and treatments because of bought out congressmen) After the volatility of the late 70s and early 80s,  quietly, manufacturing industry decayed further and when China came on line as a free supplier with trade deals which could only make for a bad balance for the west, the decline accelerated. The internet bubble burst and it was down hill for the west after that, with entire economies living off national credit cards and the circulation of money through debt. Qauntitative Easing is basically keynsianism and it basically secures and benefits the banks and worlds richest investors at the top of the Pyramid. The lie of trickle-down became the diffusioin of socialism for the rich, and that trickle-up in wage/cost of living to the rentier rich had eaten the quality of life of not only the lower working class, but the ediucated middle class.

The UK is only now an inch behind the US in this respect, with further privatisations, brexit related errosion of employment laws,  and a tight supply of housing. There has been a 71% increase in child poverty since 2010. Camerom's response was to redifine our western, 'luxury' level poverty line. The Brexit vote was largely about immigration and that was largely about competition for jobs. Instead of any unionisation or national wage negotiations for tariffs based on skills ( as they still have in several EU and EEA countries incdentally) a market solution could be offered, and many hope for deportation not just 'control' over immigration. Also in respect of China, it just cannot be really economic to fly fresh Salmon from Scotland to be filleted and packaged in China, and then flown back for sale. There is something fishy with that! The chinese are subsidising via bank loans and infrastructure.

Trump then can achieve much for the Left against the old neo liberal establishment if he really is serious about flagging-in US jobs and investment. This protectionism will be inflationary, but China may be brought to a less skewed place by harder negotiations which render US and western products more competitive domestically, and protect the key auto and aero industries from unfair competition.

Of course Trump may fail on this policy, because his own Republican Congress may block him. But that will be hard, the message is out there, and it is based on the truth. China and Mexico are stealing jobs unfairly. If he does fail to secure a better trade deal because of congress, then who knows, he may jump ship and become a democrat? Also this will leave a new, more left Democratic leadership to rush in and claim this ground and get control of congress and POTUS.

Raging Against the Trump Machine

There are a few other areas of policy which he will find resistance to over time. Firstly he is the great blue collar hope, so worsened pay and conditions which are likely under the republicans, may lead to a back lash of disappointment over percieved broken promises. He has to deliver to a lot of discontented people in blue and white collars who are struggling to make ends meet, and can in no way expect the material standard of livbing and free time their parents generation enjoyed.

Climate is there also. Finally the sceptics and their paid for, minority report, pseudo science and doubt calling gets centre stage. However Global warming is happening, and at a rate which is quite possibly purely antho-acclerated. Nearly the entire population of Florida will be adversly affected if the antarctic and greenland ice caps melt by a third. It will destroy land, infrastucture and  in so doing demand vast public spending or a decimation of the economy there. Rivers and harbours in the US will also be threatened. Four years more warming under Trump and a reversal of climate policy may then lead to real fear scenarios with more extreme weather and more rapid melting measured on the ice caps. Soon we will have  over 50 years of weather satellite data to analyse and 150 years of sea level measurements.  Fear of the unknown for the public and fear of economic catastophe for the state will drive post Trump politics back to the green.

In terms of minorities, where as Trump could cynically exploit the racist and islamophobe vote, the Democrats can secure more of the Latino vote and retain their black vote. With Pence as VPotus, there will be a clear anti LGBT bible-belt agenda. These may seem like small minorities, but they can have a large impact on the overall result as we see with the Bush/Dukakis and other runs which have been closer than Clinton/Trump.

Most of all we come back to the economy, stupid, and Trump has broken the wheel of Reaganomics, of globalisation, of putting up with your lot and not expecting politicians to actually change anything but for lower taxes. Even if Trump is frustrated by congress, or the economy falters for other reasons, the net result is that new economics are on the cards, and Keynsian new deals for the people and protectionism, could once again form a new epoch of growth in well being for western citizens. Shorter working hours, better pay, better holidays, more free stuff from the state. All these terribly bad things that Thatcher and Reagan tried to sweep away and sold the public on 'nanny capitalism' - your own best efforts from cradle to grave will secure you a good future alone, in a free meritocracy. Breifly we saw this hope flicker, but it has soon been taken away by on the one hand investors moving plant to China, while on the other the same investment over class tightening supply of housing and forcing more money to flow from your pockets to theirs via capital investment and the banks they own.

Coming out from all this then, there are four years with positive economic ground-shift changes from the broken epoch to a new, and very much else to rally against. Race, climate, nature and environment,  worker's rights, women's rights, healthcare for lower paid workers, access to higher education. All these are issues which like the in the civil rights' period will come to be movement issues once again and new campaigners will emerge organically, without the backing of billionaires, but via word of mouth and social media. The trad' media will continue to go on line, and new battle lines will be drawn now that the centre of politic is drifting to the far right such that some media will find themselves on the left.

There may even be a new moderate 'anti tea party' republican movement who try to drag politics back into the centre, with common sense if Trump goes wild with Pence in arms with him. No longer have we the 8 year dichotomy of hard right congress and a progressive President, we have a way out there right wing candidate with a conservative mid right trailing behind him in where they stand and how to react. We have four years of  Republican against republican with a POTUS & vPOTUS agenda which is more radical and less tolerant than all the Reagan and Bush 1&2 put together. The public can no longer blame one side, there is only one side, and republicans blaming republicans in congress or against Trump,  looks a lot like civil war and hitting the self destruct button.

Trump is a gift then. Like Thatcher and Reagan, Roosevelt, IKE, Kennedy and Clement Atlee, he is symptom of a demand for change after difficult times and an impasse in the ways things have been done in the outgoing, failed epoch. The Left need to ride this four year wave and in the UK, tackle Brexit outside the EU or by going in again, but in either way, the hipocrisy of command capitalism in China needs to be tackled in order for the west to do any value adding activities in production, and not keep on living off the house of card property and consumer services' industies. That is the recipe to grind the western worker into poverty, and Trump is breaking that mould.

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