So, literally overnight, we entered the stage of the great normalization. We’ve gone from the almost universal belief among the elites, media and a large number of the American public that electing Trump would be a disaster for the country, the economy, our liberty to an apparent shrug of the shoulders and sycophantic search for advantage in the new order.
We’ve gone from a candidate whose last act of his active campaign was to release a two minute ad that pledged resistance against a global financial elite that supposedly holds the white working class in its squid like death grip to a dizzying stock market rally upon his actual election.
What that tells me is that those so-called financial elites whose fortress Trump portrayed himself as storming at the head of an army of the forgotten aren’t all that scared and believe they will do just fine in the new order.
Perhaps that signals that Trump was merely play acting all along. His pulsating crowds shaking their fist at journalists or threatening minorities, and to imprison or even execute a former first lady, senator and secretary of state no more than a sideshow as unreal as Trump as in the ring of a WWE match.
Given his unreality, whatever emerges from the age of Trump is unpredictable and perhaps the man himself doesn’t know with the exception that he hopes to play the type of Moses leading Americans back to the promised land which would make Charlton Heston proud.
Apparently, the US stock market is rallying like Pavlov’ dog at the sound of coming tax cuts which will only exacerbate soaring inequality. On a more positive note they are also anxiously awaiting the kinds of infrastructure spending liberals like Paul Krugman have been arguing in favour of for years.
As the Steve Bannon the head of the alt-right media organization Breitbart, and the true genius behind Trump’s successful campaign strategy has laid out:
It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Shipyards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.
This might mark an end to austerity and over reliance on central banks to keep the economy afloat, and though sorely needed it is not the same as support of social infrastructure which is maintained by many of the government programs Trump and the GOP will aim to gut. Given how tight labor markets have become, it also might cause hyper-inflation or soaring interest rates as bond holder exit from the market and into an atavism like gold.
For now though the markets are far removed from the kind of crash that many thought a Trump victory would bring with the only group to have sunk with the election results being tech stocks. More on that in a bit.
What exactly Trump himself thinks about economics is something of a mystery. Other than seeing it as the ultimate game that creates the world’s winners and losers, where the most disreputable aren’t those obsessed by money or fame but those too stupid or lazy to play along with those who manipulate the rules so they can win.
Aside from that, Trump is like something out of another era- a kind of nationalist who thinks of the economy as almost synonymous with heavy industry. Inspired by his anti-globalism and the suffering of the rust belt men who launched him into office, Trump may be able to improve trade agreements at the margins and may even accelerate already apparent moves towards the “reshoring” of manufacturing. What he will not be able to do is restore manufacturing employment, which like agriculture before it, is seeing humans replaced with machines- and not just in the US.
I suppose even greater investment in manufacturing resulting in even further automation may improve US productivity, but not in the area where the majority of people work- that is services- where productivity gains are needed most- but where they’re needed least because those of us in rich countries are already drowning in stuff.
Perhaps Trump will try to a second great trust buster. That is, he will make an attempt to break up large banks and other multinational companies and especially the big 5 that dominate technology- Apple, Amazon, Alphabet, (Google) Facebook and Microsoft. At a minimum, Amazon appears to be in his sights.
Such a solution might go some way towards solving the fundamental economic problem of the age- namely the ever increasing accumulation of capital by only a handful of global companies and individuals. Yet it’s almost inconceivable that even a congress terrified of further populist revolt would go along with this. And even if they would, unless trust busting was truly global, such breakups would amount to the unilateral surrender of most of the world’s markets to the large multinationals based in other countries. Baidu and Taobao would fill the void left by a shattered Google or Amazon.
Trumponmics as of now is merely a set of assumptions and aspirations that are unlikely to survive their impact with reality because they reject or ignore the last several decades of economic change, namely, the move towards services and the rise of truly global companies. We’ll thus have to look elsewhere if we want to see how Trump will try to shape the current economic order while actually recognizing the economic order as it exists today.
I think one of the best places to look for this shape of Trumponomics would be in the thoughts of one of his smartest and richest advisers Peter Thiel (under any other administration I would say notorious) who lucky for us just wrote a book on the subject right on the eve of the election.
In an interview Theil rightly pointed out how the financial bubbles of the last generation have been catastrophic- that the system doesn’t work- and that what separated Trump from Clinton was his open acknowledgement of that fact. Theil also thought Trump’s move away from regulation would shift the balance back towards small business because large firms were not only able to better absorb the costs of regulation but often actively encouraged regulation to thwart upstart competitors. In his book Zero to One Theil lays out a somewhat different and much deeper view of the current economy, what he sees as its problems, and his proposed solutions to them.
The big problem, as Theil sees it and explains in Zero to One is that the present has failed to live up to its potential. We are living in the future that was imagined in the 1950’s and 60’s that was full of flying cars, space cities, and house robots, and though the technologies we possess are indeed wonders, we’ve certainly fallen short of those original dreams.
Part of the origin of this failure to reach our technological potential Theil lays at the feet of globalization. It’s not only that he thinks technology is a far more important driver for progress than globalization, he seems to think that globalization has slowed the pace of progress down- as cheap humans fill the role that should have been that of advanced machines or augmented, hyper-productive individuals.
That globalization is an unalloyed good is just one of a whole set of false assumptions Thiel believes is holding us back from our potential. Others include our belief that capitalism and competition are the same thing. In fact they are opposites, the whole goal of capitalism is to establish monopolies (zero to one) that then become the engines of progress.
Another would be that the shape of the future should not (or cannot) be defined in advance. The belief that the future will be better than the present but we have no idea what it will look like Theil calls the “curse of indefinite optimism”. The ultimate consequence of this is the move towards the financialization of the economy:
Finance epitomizes indefinite thinking because it is the only way to make money when you have no idea how to create wealth. (70)
In an indefinite world:
money is more valuable than anything you do with it. (71)
Thiel thinks this absence of an definite future we are trying to build means that the government spends its revenue on transfer programs rather than solving complex problem like “atomic weaponry and lunar exploration.” Such lack of a definite future also infects political philosophy both in its dominant egalitarian (Rawls) and libertarian (Nozick) forms where the goal is the adherence to a principle rather than the achievement of any particular form of society.
Darwinian probabilistic theory has also replaced intelligent design in the biological sciences (I’ve heard this before) the consequence of which is that we’ve lost sight of goals such as indefinite life extension. Yet wouldn’t the shift away from globalization and financialization to domestic production and the real economy not only promote accelerated automation (which Theil wants) but also demand even larger government transfer programs (such as a guaranteed income) which he derides as the application of advanced machines results in Marx’s “army of the unemployed”?
Thiel doesn’t think so but rather sees machines as a way to augment rather than replace human labor and thus better for domestic workers than globalization which truly does replace one worker with another (lower paid) one.
And he doesn’t just think the choices we make are mere political ones about what type of society we want to live in over the next century, but existential questions that will decide our very survival. Theil uses Nick Bostrom’s idea of 4 general futures for humanity- cycles of rise and fall, plateau, extinction, and take off, and argues that only road to human survival is to accelerate our pace towards take off because cycles of rise and fall have become unlikely now that knowledge is global, and plateau in a world of resource competition would likely result in extinction level conflicts.
Who knows how much, if any, of Theil’s views will inform the eventual economic policies of the Trump administration. And while there is certainly some truth to Theil’s diagnoses of our current malaise, what his vision of the future deeply lacks is any vision of justice, global responsibility, sustainability, or concept of the good life. His future is all about building an ever more powerful machine. I can see it in neon floating in space now: The Singularity: brought to you by the “God Emperor” Donald J. Trump.
Excellent analysis! A pleasure to read.
[…] via Trumponomics — Utopia or Dystopia […]
“..argues that only road to human survival is to accelerate our pace towards take off because cycles of rise and fall have become unlikely now that knowledge is global, and plateau in a world of resource competition would likely result in extinction level conflicts.”
I’ve heard of Theil but haven’t read anything, probably not going to either.
The idea that we are in a post-cycle world is as naive as Kurzweil’s idea he will be able to upload himself to a computer..
And take off to what?
If there is any take off, it is probably hundreds of years away and we have no idea what it would look like but my guess is it wouldn’t be anything like Theil /Trump world.