9 May, 2021

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ABC Of Trumponomics: Can It Make The US A Great Nation?

By W. A Wijewardena

Dr. W.A Wijewardena

Addressing a joint session of the Congress

US President Donald J. Trump outlined his economic philosophy – known as Trumponomics – to a joint session of the Congress last week. He received a standing ovation, sentence after sentence, initiated by his own Vice President and House Speaker and followed soon by fellow Republicans. That would have certainly boosted his morale in delivering the address since it was a living confirmation of what he was saying. The only bemused onlookers were his rivals in the Congress, the Democrats.

Americans endorsing the Trumpian views

A survey conducted by the Cable News Network or CNN immediately after the address revealed that about 78% of the Americans who had watched the address live on TV had had positive hopes about what Trump was planning to do for the US: making it a great nation once again. However, the rating which Trump has received has been a little less than the approval rate of Barack Obama’s maiden speech to the Congress at 88% and George W. Bush’s rating of 84%.

However, given the controversies which Trump had created for Americans as well as for the rest of the world during the first few weeks of his presidency, a rating at 78% is an impressive endorsement of his policies.

Riding on wave of global nationalism

Trumponomics is a new economic philosophy introduced by Trump to rescue the US from the depths to which it had fallen in the last few decades. But it is not totally new; nor is it exclusively Trumpian. It has been there in the past, is in the present and will be in the future rising and falling in cycles of acceptance and rejection.

He is not alone in triumphing it because there is a wave of the fundamentals of his philosophy being practised elsewhere in the world, in both rich and poor countries. This wave has now emerged as ‘global nationalism’, quite distinct from the traditional type of nationalism which had been confined to a nation state.

The new wave of global nationalism is directly in competition with the wave of globalisation which had ruled the world for many decades now. In this global nationalism, the citizens of the country concerned come first for everything and all others have their respective places based on what priority which that nation would give to other nations.

In a nutshell, it rejects the idea of a ‘global citizen’ who has no national identity or distinctive characteristics in terms of ethnicity, religion or language to mention but a few.

Theresa May’s disputation of the concept of ‘global citizen’

This was amply articulated by the new British Prime Minister Theresa May who had declared in a Conservative Party Conference held in October 2016 to an applauding audience that if one believes that he is a citizen of the world, he is a citizen of nowhere.

Replies to Theresa May

It was left to Harvard economist Dani Rodrik, among many others, to counter her in an article first published in Project Syndicate and later picked up by Europe’s leftwing journal, Social Europe.

Rodrik has reminded Theresa May of the existence of citizens of the world by taking him as an example. Says Rodrik: “I know what a “global citizen” looks like: ‘I see a perfect specimen every time I pass a mirror. I grew up in one country, live in another, and carry the passports of both. I write on global economics, and my work takes me to far-flung places. I spend more time travelling in other countries than I do within either country that claims me as a citizen.”

Angered by May’s confinement of human beings to citizens of narrowly defined nation states, the British-Ghanaian-American Philosopher Kwame Anthony Appiah who delivered BBC’s Reith Lecture in 2016 has declared that the “need has never been greater for a sense of a shared human fate” than in the current period. Thus, the bone of contention between Trumponomics and the rest of globalised economics is a choice between a shared existence and a solitary existence. Trump and May favour a solitary existence while the rest of the world argue for a shared existence.

A new US is to be created by Trumponomic policies

In his address to the Congress, Trump has emotionalised the promise of making the US a great nation once again attributing it to a message delivered deeply from his heart. It is filled with so many new beginnings, implying that the US at the moment has a deficit in them: national pride, optimism, renewed spirit, ability to lead, strength and freedom. With that, when the US celebrates its 250th anniversary of independence in 2026, it will be a new America which would be awed by both friend and foe in the rest of the world.

These are certainly sentiments which would not fail to move any American who may be feeling sad at the moment about the perceived loss of its leading role in the global arena in politics, economics, military power, science and technology. So, Trump wants to build a new United States by first condemning everything which the US has today. The beauty of that strategy is that after nine years when the country celebrates its 250th birthday, the full credit for building that new US, if it is really attained by that country, would be apportioned to Trump alone.

Mantra to make US great once again: Buy American and Hire American

Trump reveals the secret door to this new power which the US is planning to acquire over all other nations. That is the mantra, ‘Buy American and Hire American’, which has been chanted by all those leaders who have adopted the path of economic nationalism before him. This mantra is followed by several other policy changes in US economic policy-making.

The US will refrain from being the global policeman and benefactor of poor nations and use the savings to develop infrastructure back at home, equip military forces with most modern weapons and strengthen the nation’s security.

He will make it easier for US flagship companies to do business in the country and make it harder for them to leave its shores. Instead of encouraging low skilled immigrants to enter the US, he would adopt a merit-based immigration system as is being practised in Canada and Australia. It will enable the US to expand its pool of high skills, increase the wages of existing workers and help struggling families including immigrant families to join the middle class with ease.

He has scorned the countries that send their goods to the US free of duty while charging high protectionist duties on goods that originate from the US. Though manufacturers have not asked him to rectify this imbalance, he has decided to do so in the interest of US industries. For him, such practices are unfair trade.

‘President of the Wall’

Globally, Trump is known as the ‘President of the Wall’, a name he has earned due to his insistence on erecting a wall along the US’s Southern border to insulate it from the evil influences from Mexico and other Latin American countries. But Trump is not the first world leader to do so, since China had started to construct a wall across its Northern borders to keep Nomads from the Steppes away from that country from around 7th century BCE and maintained that wall for more than 1,000 years till the 15th century CE.

The wall became irrelevant for China when influences began pouring into that country from another side, namely, the sea, from around the 16th century CE. The Chinese wall was built out of its own resources; but the Trumpian wall is to be built, as he has pronounced again and again, out of the resources to be raised from Mexicans.

To raise those funds, he declared after he was installed as President that he would impose a tariff of 20% on all Mexican goods crossing the border to the US.

Who will pay for the wall?

On the face of it, it appears that it is a plan that would work well. This is because Mexico exports merchandise goods worth of about $ 300 billion to the US annually. Hence, a 20% duty should bring some $ 60 billion to US coffers and it is pretty much above the needed funds for erecting a wall across the borders. But on closer examination, it is found that Trump advisors have given him a dead rope. There are two issues involved.

One is the reaction of Mexicans to the proposed tax. The other is the actual payer of the proposed tax.

Mexican reaction will hurt US farmers

In the first case, while the US imports goods worth of $ 300 billion from Mexico, it also exports goods worth about $ 240 billion to Mexico consisting mainly of corn, wheat and other agricultural products.

Mexico has reacted to the threat of a duty of 20% on its exports by announcing that it would buy those agricultural products not from the US but from Brazil and Argentina, two other main suppliers of those agricultural products to the world market. This would deprive the US farmers of access to a safe market just to the south of its borders and, according to reports, they have already begun to panic. The Trump Administration will have to pump money from the US Treasury to keep them afloat until they adjust themselves to the new situation.

It is the US consumers who will pay for the wall

With respect to who would actually pay the newly imposed tariff on imports from Mexico, it is the US consumers who would do so since their consumer prices will eventually move up. This is specifically true for crops like avocado – an American delicacy – over which Mexico holds the monopoly power. According to reports, there is no other source for the US to buy its preferred avocado. Hence, the proposed wall is being financed not by Mexicans but by Americans themselves. And worse, it would be done by US consumers by paying its cost upfront.

Reversing the wave of shared production

An essential feature of Trumponomics is that it wants to make the US a great nation again by reversing the wave of globalisation in which manufacturing industry has become a shared production throughout the globe today.

It was an American journalist, Thomas L. Friedman, who documented this wave worldwide in a book published in 2005 under the title ‘The World is Flat’. This was the natural reaction of manufacturing industry to keep its competitive edge undiluted in a background of a phenomenal rise in the manufacturing wages in developed countries. Thus, individual countries became just assembly plants while components came from a number of countries in the world.

iPhone is a globally shared product

A good example is Apple products. It is now documented that, for example, though iPhone 6 is assembled in a factory called FoxConn in China, the components for producing it has come from production facilities in 31 countries including the US.

If Apple brings back iPhone production to the US, it has been estimated that it would cost Apple an additional sum of $ 4.2 billion making it uncompetitive in the global markets. It would give an advantage to other producers and lead iPhone to a natural death, just like what happened to Nokia in the recent past.

According to Walter Isaacson, Steve Jobs’ biographer, Jobs had told President Barack Obama at a meeting with the latter that Apple could relocate its production unit in the US if Obama could supply him with 30,000 engineers in the US at the salary levels prevailing in China. The US was not producing that many engineers in the country and therefore, relocating the factory in the US was a near impossibility.

Trumponomics will force US industry to go for automation

Thus, Trumponomics can succeed in persuading US businesses to relocate back at home if and only if necessary skills are available at costs prevailing in host countries in Asia and Latin America. This would defeat Trump’s objective of increasing the earnings of US manufacturing workers through a policy of industry relocation. Instead of employing costly workers, US industry will go for automating the processes.

China’s reply to Trump

Trumponomics is known as mercantilism, which was very popular in the 18th century CE in Europe. But thanks to the sane arguments presented by Adam Smith in his Wealth of Nations, a book published ironically in the same year as the birth of the US in 1776, Great Britain threw away mercantilism and embraced free trade. But Trump is planning to move the US back to 18th century Europe through his economic populism.

The answer to Trump was given by Chinese President Xi Jinping when he addressed the World Economic Forum or WEF in Davos in 2016. China had learned a bitter lesson by adopting mercantilist policies for three decades after its Communist revolution in 1949. Drawing lessons from its experience, Jinping announced at WEF, that no one would emerge as a winner in a trade war.

Erecting a trade barrier wall around the US and withdrawing from global leadership

Trump has created a wall all around the US creating trade barriers and endorsing an isolated existence for the country. It has thus voluntarily withdrawn from global economic leadership. Ironically that leadership is now being assumed by China by being the champion of the new wave of globalisation. This was evident when Trump announced that the US will withdraw from the fledgling Trans-Pacific Partnership Agreement or TPPA of which the US was the leader. China moved to fill the vacuum being created by the withdrawal of the US by offering an alternative solution to other bewildered nations.

China to fill the vacuum with a vision

This was reconfirmed by Chinese Premier Li Keqiang when he addressed the Annual Session of the National People’s Congress or NPC in Beijing on Sunday 5 March 2017. He said that deglobalisation and protectionism is rising in the Western World. That is a worrisome development. But China opposes protectionism of different form, said Li. He reiterated China’s commitment to become involved in global governance and steer economic globalisation to see it more inclusive, mutually beneficial and equitable.

China’s message is clear. Trump is promoting selfishly determined private existence. China is promoting shared existence. Trump is concentrating on his $ 18 trillion economy in the US. China is targeting the rest of the global economy amounting to $ 57 trillion. Trump is closing down the US economy. China is opening up its economy. Thus, Trumponomics has voluntarily withdrawn from global leadership, paving way for China to fill the vacuum. Chinese leadership is determined to go for it as pronounced by Premier Li at the recently opened annual sessions of NPC.

*W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 1
    0

    He wish, I suppose. but, how can he put together the humpty dumpty that is broken ?

    That is how every empire, they disappeared slowly.

    Even thing changes. An eternal Truth in buddhism.

    • 3
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      Dr. W.A Wijewardena

      RE: ABC Of Trumponomics: Can It Make The US A Great Nation?

      “Addressing a joint session of the Congress”

      “US President Donald J. Trump outlined his economic philosophy – known as Trumponomics – to a joint session of the Congress last week. He received a standing ovation, sentence after sentence, initiated by his own Vice President and House Speaker and followed soon by fellow Republicans. That would have certainly boosted his morale in delivering the address since it was a living confirmation of what he was saying. The only bemused onlookers were his rivals in the Congress, the Democrats.”

      It he can keep America working, keep educating the Americans to work, and allow only immigrants with IQ over 100 into the country, yes, America will be great nation. American will have a comparative advantage over the others.

      Most of l the religious nuts will be confined to those below IQ of 100. They can believe that the Sin the goes around the Earth, and that man was created from Adam onward.

      National IQ Scores – Country Rankings

      http://www.photius.com/rankings/national_iq_scores_country_ranks.html

      IQs are the major determinant of the wealth and poverty of nations in the … intelligence may be a factor contributing to national differences in wealth.

      http://www.rlynn.co.uk/uploads/pdfs/Intelligence%20and%20the%20Wealth%20and%20Poverty%20of%20Nations.pdf

      • 4
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        Thanks Dr. Wije. Good one keep them coming! Glad you are onto Project Syndicate.

        Sri Lanka is on its own when it comes to economic policy – caught between the Devil and the Deep Blue sea, Scylla and Chariblis, or IMF/ Trump’s Washington’s neo-liberal advisors and policies and China’s debt trap “aid” and dangerous Advisors and so called experts!

        Dani Rodik is a good guy but Harvard’s Center for International Development is intellectually bankrupt and selling out dated neo-liberal advise to Lanka via the Right Wing Millennium Challenge Corporation (MCC), that is “advising” Ranil Wickramasinghe’s team of local Economic Hit Men at the Prime Minister’s Office who are totally Intellectually Bankrupt .
        Ahilan Kadirgamar has written today in an excellent piece in the Daily Mirror editorial page on the dangers of US advisors from Harvard being meekly followed by the Colonized individuals at the PM’s office.
        Bond scam Ranil got Sri Lanka into a massive debt trap with IMF and takes his instructions from Washington DC. This US network (Harvard, MCC, IMF) of neoliberal development “experts” to screw up countries in the global south, (including Greece that has joined the global south and remains trapped in Europe as its being are being savagely impoverished as it lost its Brexit chance), is providing “economic advise” to consolidate the IMF’s and the Washington Deep State’s hold in Sri Lanka and the economy to advance US security interests in Lanka.

        But China is not a solution either – it got Sri Lankan people into a massive debt trap and was fingering and funding the Deep State being built by Mahinda and Gota Jarapassa in order to set up a govt that it can operate via the Gota’s Deep State in the Indian Ocrean.

        Sri Lanka today is on its own when it comes to economic policy – caught between the Devil and the Deep Blue sea, Scylla and Chariblis, IMF/ Trump’s Washington’s neoliberal advisors and China’s debt trap and even more dangerous Advisors and so called experts!

    • 3
      1

      jim softy dimwit

      “Even thing changes. An eternal Truth in buddhism.”

      The Sinhala/Buddhists have been trying hard to prove Buddhism wrong.

      “That is how every empire, they disappeared slowly.”

      Not the Sinhala/Buddhist empire/ghetto. We are strong we have just won Tamil Nadu by beating up the Demelas on this island.

      We have our smart ass patriots to save not only the Ghetto but also Sinhala/Buddhism.

  • 0
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    What Bill clinton told was, just before leaving the white I house I think, The economy would depreciate for about 20 years and then settle.

    Initially they were expecting a hugh deppresion. but, they had the previous experience and because of that they released money into the economy, so that, people could spend.

    But, when the election comes, they need some fodder for the voters.

    Anyway, the Hilary Clinton’s method was to go to war with every country in the world, so they can sell weapons. In the mean time, sign for trade agrements covering the whole globe. that would have ended the supremacy of the USA, just the way British Supremacy ended with the Suzel-canal war.

    The reality is, that there are no empires that stayed for ever. Actually slow growing bizanthian empire which existed by the side of the Fast growing or very active Roman empire lived longer than the roman empire. Roman empire ended not because of others but because of their own faults and they did not want to change. In that sense, Trump may be better.

  • 1
    1

    Trump is a disaster. It has been only about a month, and his people are calling for investigations already.
    Five of his staff members, including the Attorney General, have been found having secretive meetings/calls with enemy no. 1, and this narcissistic man is mad at that AG, for stealing the limelight, just after Trumps speech to Congress, which in Trumps mind was a huge success. He stays up until the early hours of the morning and goes on a twitter tirade, and this time he has accused the former President of wire tapping him. He had no clue that Presidents are unable to order wire taps. Now the rest of the nation including Trumps own party members are asking him to support these wild claims with evidence, which he seems to not have. This is similar to the incident where he accused Obama of not being born in America.

    Trump is mentally deranged, out of control, and totally unfit to be President.

  • 0
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    Guess after what the older regimes did to places refusing to follow the US will, places like Brazil and Argentina will be very wary of selling to Mexico…..and with US building up her military with an even greater furor, countries will walk in trepidation. If US decides to go nationally globalized, they would expect China to follow suit….or else! Let’s hope the nuclear fireworks don’t begin.

  • 0
    0

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  • 0
    0

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  • 2
    1

    Bernie Sanders the Leftist Democrat (? ) who could have rolled Trump if not for that selfish Chandrika equivalent , clapped when the new President said he is going to invest in Infrastructure open up manufacturing and give the Americans job who are specially in the rust belt..

    In contrast Batalanda Ranil’s “Yahpalanomics” sell the assets to Foreigners , even without getting current market prices ,and give the Jobs to Indians..

    Dr Wijewardana did a good job exposing the CB Bond Rort. which forced Dr Batalanda Ranil’s close buddies to forge the ex President’s signature to save Diaspora Mahendran.

    Now Minister Ranawaka ( UNP or Sira Party ?) has tried to pull off a another big one to rip off the nation with a valuable block of land in Rajagiriya, which is worth LKR 15 Billion.

    It was all planned by the Hybrid Fat Boy Minister, using his old cricket mates as the bait.

    It is a Muiti Billion dollar project for Shopping and Apartments with the promise that each aging World Cup player gets an Apartment worth USD 800,000 and cash Santhosams up to USD 250,000 to live happily ever after.

    UNP Harsha with a PhD , whom I thought is a waste has finally score here.

    He is the dude who dobbed in the Fat Boy minister to the President..

    Coming on top of the Bond Deal, Horana and Kegalle land deals , looks like Dr Batalnda Ranil will beat Trumpy to it by driving the suckers to a great Yahapalana Nation .

    Wonder whether Minister Ranawaka at least carried Drinks at the World Cup.

    BTW, Fat Boy Minister.s Mentor the W Madam ,apparently has give them all 25 Perch Block each in Nugegoda. And they still keep them too..

  • 0
    1

    Black and Hot money is having a field day. Many maybe making investments and savings through the swiis banks. The media is controled by the multi national companies. A effort is being made to neutralise Trump. We need a new World order not one that gives credit, creates panic and then gradualy get control of the Worlds asset. We must be careful in geting to much credit what ever the source.
    We also need to predict changes in gold and an emerging crisis that is being engineered.

  • 2
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    America remains as great as it has ever been.

    Its democracy will produce a lemon every now and then, and we have one now.

    The fact that he was able to read off a teleprompter does not make him ‘presidential’.

    But America will get through the pestilential times of the next few years, and then it will surely elect a leader that speaks for all.

    Till then her friends must remain strong and steadfast.

  • 1
    0

    What about totally green RW loyalist building a 200 million rupee mansion in kotte by buying up through intimidation all the neighbouring plots of land? He already had a massive house. Now he’s building a palatial house. How come Harsha is quiet and RW too ?how did those thugs operate? Put pressure and everyone knows it’s the wife who is the money collector. That guy is 100% UNP in charge of money

  • 0
    1

    Trumponomics? Tongue in cheek insult to the suffix “…nomics”?

    Trump-chinthanaya is more like it. It will go down the drain where all chinthanaya go.

    Trump making US great again? He must learn from the experience of an Utopia. “Patriots” created the language/religion divide and have nothing to show after seventy years except bigots the Dayan ilks.

  • 0
    0

    Tump doesn’t act or even sound like the President of USA.

  • 0
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    Dr Donald Trump is going back to their own laid down policies wrote by even after second world war ORDER was founded by USA Imperialism of new hegemony.

    Well is understood fact US $ 18 trillion world largest economy is fast track decaling. It has come to point of survival of USA nation economy that turning only way to be policies of closed door set of policies and nation Protectors are vital interest for USA nation survival The very policies of Free Trade and Liberalization by USA politically advocated principle are no longer valid after Wall Street Financial and stock market collapse during in 2008 August.

    In fact USA lost key Capital Market and Trade and Investment after 2008,it has not recovered or review by hers elves. There is no way to regain or reborn USA economy at all what ever cost of USA dollars appreciated or revalued US $ dollars by any means. That US days has gone for ever .

    Needless to say USA bail-out packaged from US Treasury bonds and sovereign bonds are totally over US $ 18 Trillion Dollars.. Its exceed US national economy . No a single Sri Lankan elites who utter word of this truth this economy.
    I am lowest educational man who has learn few of this economic reading by study by my self. I have just passed grade seven some years back !

    USA is the Centre of Capitalist hegemony and Hegemony of Economy as well as political “Monopoly of bourgeoisie Democracy” of who rule world by Few Riches vested interest .

    In case of its collapse world bourgeois’ capital control will be out of order by USA centered oriented that fake of democracy of moribund system of Imperialisms will be ruin .

    The collapsing USA is imminent, but issues is matter of time ,but suitable alternative has to be Replace by Rational political classes of elites of working class of inelegancies.

    That task undertaken by Marxist -Leninist an ideologist. And their political parties……………….? People may agreed or not that depend of their world outlook of democracy of Globally, what we want and what we do not want by depend on their classes of origin …… .

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