Trump’s tariffs: is there a better way?

Donald Trump has said that “trade wars are good, and easy to win”. I posted on the issue of protectionism in the wake of his election victory here, and on ‘beggar-thy-neighbour’ policies here, and stand by my arguments.

Contrary to the claims of mainstream economics, free trade is not always mutually beneficial for the nations involved. In particular, the historical record suggests that particular ‘infant’ industries in developing countries can benefit from temporary and selective protection, until they are competitive enough to succeed on world markets.

There are plenty of examples of infant industry protection which have failed, so it is by no means a universal panacea. Success requires the management of a particular balance of power in a developing country between particular groups such as the state and social classes, which might include emerging industrial leaders or the middle class. It will also be context-specific: it depends on the historical evolution of the groups and society involved.

Trump’s tariffs on steel and aluminium imports are not an example of protecting an infant industry. They may protect some jobs in those sectors, but most economists argue that by increasing the costs of these products as inputs for other industries, many more jobs will be lost in the latter, so that the net employment impact will be negative. Continue reading


Trump and the deregulation agenda – a boon for prosperity?

Donald Trump came into office promising to ‘roll back’ the regulatory ‘burden’ on business as part of his economic strategy. The claim is that this will reduce business costs and create jobs by boosting economic growth. But will it work?

The right often complains of the ‘burden’ on business and, particularly in the US, equates the absence of regulation with freedom.

This is emotive stuff. Burden? It sounds bad. Freedom? What’s not to like? But this kind of rhetoric avoids a more nuanced discussion of the issue. Continue reading

Trump’s robber baron presidency – via Lars P. Syll


In Trump’s world, ​the rich in the US obviously are not rich enough. So he has set out to lower the corporate tax rate to 20 percent and abolish the estate tax. The working and middle classes are, of course, überjoyed …

via Trump’s robber baron presidency — LARS P. SYLL


Trumponomics Part 3: Alternatives

TrumponomicsHere is Part 3 of my series on the book Trumponomics – Causes and Consequences. As it is an early assessment of the economics of the Trump presidency, concrete left policy alternatives do not take up much of the content, but there are some ideas to draw on.

Central to the aim of making the left ‘great again’, to quote one of the authors, is a political programme which pivots away from the dominant liberal, politically correct agenda, and which serves the interests of the masses.

This would be a social democratic platform, offering a radical alternative to the neoliberal ideology which has captured both major parties in the US. Bernie Sanders, despite failing to win the Democratic nomination, gave many a taste of what could be achieved.

Sanders styled himself a ‘socialist’, but by the standards of Europe, his policy proposals were far more social democratic. He certainly was not calling for the revolutionary overthrow of capitalism, but merely a larger role for government in the economy. Continue reading


Trumponomics Part 2: Consequences

TrumponomicsSince taking office Trump has proved unpredictable, but what are the likely outcomes of his policies? His executive orders aside, he has not had it all his own way, despite Republican majorities in both houses of Congress.

Yesterday I outlined the economic causes of the rise to power of this ostensibly populist president. This post reviews some of the potential consequences of Trump’s economic policies, as discussed in the book Trumponomics.

Jobs and growth

The centrepiece of Trump’s economic strategy, if in fact it has any coherence at all, is a pledge to put ‘America first’ and raise the growth rate of the US economy from its currently sluggish 2% per annum, to something like 4%. In doing so, he has promised that this will create 25 million jobs over ten years.

The pledge on jobs, if it is achieved, would in fact be nothing special when looking at the US record since the last recession. Continue reading


Trumponomics Part 1: Causes of the phenomenon

TrumponomicsAs promised, here is a review of some of the ideas covered in the fairly weighty tome Trumponomics – Causes and Consequences, recently published by the World Economics Association.

The book consists of 30 chapters, each one written by a different author. They are wide-ranging, but all come from a left perspective on economics and politics.

I am not going to review it chapter by chapter, but thought I would discuss some of the main ideas. As there is plenty to get through, I have divided it into three posts to be published this week: part 1 – causes, part 2 – consequences, and part 3 – alternatives.

Part 1 – Causes

A number of the chapters discuss the reasons for the electoral success of Donald Trump. The book is written by economists, so inevitably many of them have an economic basis. However, since their sympathies are with left wing heterodox thinking, much of it could be classed as political economy, which often incorporates political, historical and sociological ideas to an interdisciplinary analysis.

Broadly speaking, the rise of Trump can be explained by patterns of socio-economic change in recent decades which have left many behind; by the perception that particular elites, including the Democrats, have become disconnected from the concerns of ordinary people and have been captured by Wall Street and the ideology of neoliberalism; and by a campaign whose rhetoric successfully appealed to raw emotion rather than to rationality alone. Continue reading


What I am reading now: Trumponomics – Causes and Consequences

TrumponomicsThis tome (at about 500 pages), recently published by the World Economics Association, is my current summer reading! The WEA champions economic pluralism and aims to ‘increase the relevance, breadth and depth of economic thought’.

Most of the thinking covered by the book lies on the political left and centre left. Trumponomics, to quote reviewer Bob Jessop, demonstrates ‘the explanatory power of a pluralistic heterodox political economy and its contribution to the critique of power and domination in an increasingly authoritarian and financialized age.’

It covers everything from post-Keynesian and Marxist to feminist and development perspectives, so there is plenty of variety to keep the interested reader going.

I hope to review some of the book in a week or two. For those who want to explore some of the individual papers, they are available for free download in two parts here.