Watching American news coverage of Donald Trump’s inauguration speech last week declaring his “America First” approach to the economy, I was struck by how little commentary there was about why globalization developed in the way it did. As someone living outside the United States, it was clear that Trump's speech was a profound change in direction, not just for America, but for all of the world.
When the U.S. emerged from the Second World War, it was determined to put in place an international order that eliminated "beggar thy neighbour" policies such as high tariff barriers and currency devaluations that contributed to the breakdown of economic growth. This strategy was a direct result of the lessons of the post-Great-War period which showed that the absence of economic collaboration among nations inevitably resulted in economic competition among them, which in turn led to war.
The strategy was the foundation of U.S. visionaries and the precursor to the freedom of mobility of capital and labour that characterizes our current global system. Out of this strategy emerged great stabilizing institutions like the International Monetary Fund and the World Bank, as well as the Marshall Plan, which provided large-scale economic aid to rebuilding Europe. These visionary Americans understood that helping Europe get back on its feet created new markets for international trade and American goods. But last week, President Trump repudiated that strategy. In the words of former Canadian Prime Minister Stephen Harper, seven decades of economic leadership were thrown under the bus as the U.S. opted for the very beggar-thy-neighbour policies that U.S. leaders tried to discourage after the Second World War.
Why did Trump do this? The U.S. economy is clearly the most dominant in the world. Its unemployment rate, at just 5 per cent, is very low and its economic growth is still the best among G7 nations. Perhaps a victim of its own success, too many of the benefits of globalization fell to the “one per cent,” creating a backlash in politically important regions in America. Yet the answer is not to throw the international system overboard but to correct the inequities at home. You don't need to destroy the entire international system to fix what is largely a regional problem.
Unfortunately, people don’t always act in a rational fashion, especially when human emotions are triggered by one of those politicians who know all the right buttons to push. The significance of his speech to the world economic order cannot be underscored. Flag-waving jingoism – “Make America Great Again” – has a superficial appeal to a public with little appreciation of the historic reasons for why free trade and globalization were developed.
There's a reason why you can buy a pair of jeans at Costco today for the same price we used to pay 50 years ago. There's a reason why poverty around the world has never been lower. There’s a reason that the world has enjoyed 70 years without a world war. Don't be fooled by what you see on the nightly news. As horrific as the war on terror can be, it is nothing when compared to the barbarity of truly global war. While we may see lots of violence daily because of the media's desire to show us compelling and graphic visuals, the world has been a better, safer place precisely because of visionary leadership, including economic leadership, by the United States.
So what happens now? Can America's great constitutional of system of checks and balances mitigate President Trump’s disruptive agenda? Optimistic commentators take comfort in the fact that Congress legislates and can thwart the executive branch. But things have changed.
First, the bully pulpit has never been stronger. Trump has figured out he can play on human emotions directly through his Twitter account. And the media are no longer performing the role as filter but are now the amplifier of his views which appeal to Americans who are generally unaware of the visionary policies of past U.S. administrations.
Second, Trump owes no one – not the Republican establishment nor any particular interest group. He paid for his own campaign along with the donations of average Americans. He comes to office with no strings attached. That gives him remarkable freedom in a system where money talks.
Third, he can mobilize his supporters and turn on Congress if it becomes too cantankerous. He has an army on simmer and can turn out 30,000 supporters over the weekend to demonstrate his strength to any senator or representative, very few of whom will be able to resist that type of electoral strength.
Lastly, he has constructed a Cabinet unconstrained by factors like region or diversity but who share Trump’s command-and-control management style of business, his values and his criteria for performance. It's all about winning now.
Taken together, these factors lead me to believe that not only will Donald Trump try to destroy what decades of visionary Americans created, but that he may well succeed. For Trump, it's about me, myself and I, not humanity. That's a worry for all of us. And if the rest of the world worries, don't think America can remain isolated. Ultimately, it will reap what it has sown.