Mayism and Trumponomics – A New Economic Order?
Today’s meeting between prime minister Theresa May and president Donald Trump is being billed as the revival of the UK-US ‘special relationship’ – the beginning of a new trade era where the UK looks across the pond rather than across the channel for economic partnership and prosperity, and perhaps even the beginning of a new political order with Trump and May at the world’s helm. Much of this is media hype, of course, but both new leaders have already planted the seeds of a new economic ideology. Could we be returning to the Thatcher-Reagan era in more ways than one?
Many have been quick to draw parallels between the Brexit vote and Trump win. Both were ushered in by a disenfranchised and left behind working class living in areas blighted by deindustrialisation. We’ve heard a lot about the politics that led to both events – anti-immigration stances coupled with promises of real power – but what are the economic policies that go with this new age (or return) of right wing populist politics?
As Trump gets busy with the presidency, it is clear his economic policies speak directly to his election pledges – protectionism through an “America First” approach, cutting back on public services through rescinding Obamacare, pledges to reindustrialise and stoke the fossil fuel industry, nativism through a restriction of immigrant workers, and a huge stimulus for infrastructure projects in rustbelt America oddly coupled with a huge tax cut for corporations and the rich. There are obvious contradictions here – this is certainly not a simple free market approach, and while this package will no doubt increase inequality and mark the return of trickle-down economics, if he can (and this is a big if) pull off decent job creation in rustbelt America, he will make headway in tackling unemployment and job insecurity. It may be dirty jobs that Trump is offering, but they are still jobs for those that lost out from technological change and globalisation.
May’s economic policy is also still forming – and similarly contradictory. She has spoken of making the UK a leader of free trade and negotiating a good deal with the EU, but looking beyond to China, India and the US to secure strong trade deals. She has also spoken of wanting to address directly the needs of those that voted for Brexit – helping those struggling and tackling regional inequalities through an industrial strategy. Her government is still pushing through public spending cuts and privatisation of public services, but the chancellor Phillip Hammond has committed a small amount to infrastructure investment. The Building Our Industrial Strategy Green Paper out this week spoke to some of these aims and to a clear commitment to government intervention, but interestingly did not focus on creating good jobs for those without degrees.
So what does this all add up to? Will Trumponomics and Mayism only converge in a shared desire to beat the EU, or is there a clear common economic ideology here? Will Trump simply use a trade-desperate May to prove he can put “America first” early on in his presidency? Will the two leaders be able to see eye to eye on trade, but ultimately offer different programs of change at a domestic level?
Policy propositions in the UK and US are not the same. But there is certainly something shared – if May and her government end up taking us towards a tax haven Britain post-Brexit, then we may well find the UK’s economic policies increasingly converging with those of the US. Infrastructure investment with less tax income doesn’t add-up, so we’ll have to keep a close eye on the fiscal tools these leaders use to deliver on their commitments. Higher inflation, already spurred on by a weaker pound in the UK, is sure to return. Spending on social services will also be sacrificed.
Many, like me, will feel nauseous when looking at photos of a triumphant Trump and sycophant May, worried that in attempting to make the most of Brexit we are losing sight of our principles. We can only hope these leaders don’t join the dots between their broader agendas during their conversations over the coming days, as the economic ideology that could emerge would almost certainly be something much uglier and more destructive than that of the Thatcher-Reagan era.