So, Donald Trump will soon be sitting in the Oval Office. The BBC’s period of official mourning still has a week to run but from Silicon Valley to Islington (via Hollywood), the liberal left remains in a state of shock; if only the ‘deplorables’ couldn’t vote, Hillary would be President with Beyoncé and Jay Z as joint Secretaries of Defence. In the most bizarre presidential contest in history, a man with no political experience whatsoever and more baggage than Samsonite, managed to beat a candidate whose credentials were impeccable; a former First Lady, Senator and Secretary of State. On paper (if not e-mail), it strains credulity but as Mark Twain noted, “truth is stronger than fiction because the latter is obliged to stick to possibilities while the former is not”.
Trump’s ideas are certainly short on detail, which is perhaps a good thing because U.S. government debt currently amounts to almost $20 trillion (not counting plenty of ‘off balance’ sheet liabilities), its budget deficit is $500bn per annum and the President elect is wanting to cut both personal and corporate taxes. However, when he goes on to say “we are going to fix our inner cities and rebuild our bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work”, you somehow get the feeling his hairstyle has more credibility than his economics.
The Donald’s policy outlines have led to the coining of the term ‘Trumpflation’. This is not something that can be cured by Pepto Bismol but refers to the rising price level likely resulting from his combination of deficit spending, protectionism and tax cuts. He is going to attempt the stimulation of domestic manufacturing capability but it remains to be seen whether his accession can reverse the previous direction of travel where the trends of globalisation and free trade were clearly in the ascendency. His plan to build a wall along the Rio Grande (and send Mexico the bill) is perhaps a metaphor for his presidency. What started as a wall may ultimately become a picket fence.
Of course, using public works to stimulate the economy is not a new idea. Roosevelt’s New Deal helped pull the U.S. out of the Great Depression while Nazi Germany pursued something similar via rearmament and autobahn construction. Not that I’m comparing Donald Trump with Adolf Hitler; for all his faults, this would be grossly unfair. One offered quack cures for regaining lost prestige to a desperate electorate while heaping blame on a particular minority; the other started WWII.
John Newsome can be contacted on: 01423 705123 or email:john.newsome@williams-im.com
