Donald Trump, for the simple fact of being a large business owner and a billionaire, should have been a darling of capital and global plutocrats, in theory. By now we all know he is not; on the contrary, he may have been the single most slandered presidential candidate in the most impartial of US elections. He has been called a populist, a nationalist, a fascist, a racist, a sexist, a rapist, a danger to world peace, a Putin puppet and many more terrible things. Certainly the media did not treat him fairly, and Wall Street seems to be very worried about the possibility of a Trump presidency. But why is big international capital so afraid of Donald Trump?
Trump’s economic program, to his detriment, mainly for the lack of originality and details, does remember a lot of Reaganomics: less taxes, less wasteful spending (but more military spending at the same time), less regulation, while promising to cut the budget deficit and more economic growth, a lot of economic growth. Last time I checked, big business had always liked Reaganomics and the revolution it ushered in. Things have changed significantly since the 1980s, however. In the 1980s, the US had an industrial sector. One could of course say that it was exactly Reagan’s economic policies that brought about the deindustrialization and the subsequent loss of relatively low skilled but safe working class jobs that has made many blue collar workers the losers in the process of globalization. Maybe. It does not really matter here, however. This is 2016, not 1981. Much of the former US industrial production has been relocated to low cost labour countries. This is no mystery to anybody. Trump, at least in his campaign speeches, has promised to reverse that. Electoral promises are one thing, however, and the reality of presiding over a democratic government can be very different. But Trump’s promise to the American working classes to bring factory jobs back to America seem to have been enough to throw big business into a panic.
It is actually true that limiting free trade and controlling jobs off-shoring could result into an economic recession. Our living standards have increasingly come to depend on having the possibility to buy cheap goods produced in far away countries at a fraction of the cost. Bringing production back home would mean that labour costs would have to increase (unless American workers would agree to take very large pay cuts and work for a Chinese salary), thus goods prices would in all likelihood increase too, with profit margins for business reduced, and with this a decline in share prices. Some people would get their blue collar jobs back and they would certainly be better off, although many of the things they produce would be more expensive and thus fewer people would be able to afford them. Less profits would translate into less investment … well, you get it: it is an endless circle. Economists try to quantify these things using fanciful models all the time and nobody seems to ever be able to come to a clear conclusion, in a fog of unnecessary data and infinitesimal percentages: will it be a a good idea or a bad idea to bring these damn working class jobs back to America? Not everybody can be a software engineer – or an economist, for that matter.
One thing is sure: the last 35 years, the years of the neoliberal consensus have certainly seen a lot of economic growth, in the West too, although at a slower pace than the booming years between the end of World War II and the first oil crisis in 1973. But unlike the post war boom, the years of the Great Expansion, roughly between 1982 and 2007, saw most of the profits going to corporations, with wages effectively stagnating in real terms. Trump clearly wins among households with an annual income of less than $ 100,000 a year, as a poll published in The Economist shows. Of course one could always argue that people with an income of less than $ 100,000 are all a bunch of uneducated, racist deplorables. Considering that the real median household income in the United State is at moment around $ 56,500, it makes for a lot of deplorables. Trump could indeed be a catastrophe for big business, if he really intended to bring working class jobs back to America, regardless of how big his tax cuts would be, because corporations would have to spend so much more on workers wages. Free trade and the abolition of tariffs look just perfect in the economic models, with countries and economies specializing in what they do best and earning the most out of it, but competitive advantage is a lot less fair in a complex world, especially when you lose your job.