As the most tumultuous U.S. presidency in over a century winds down to its final days, political commentators of various stripes are hard at work compiling lists of lessons learned from the past four years. These lists tend to focus on the debilitating effects of polarization, the impact of a fragmented media landscape on public opinion, and the weakening of longtime codes of conduct in the political arena, among others.
Cleary, Donald Trump’s presidency has been unusual in a number of respects, and it will take time for journalists, historians, and political officeholders – not to mention the typical American voter, if such still exits – to make sense of recent events.
Before the dust settles, I would like to suggest my own Lesson #1 from the Trump Years for policy makers closely attuned to the underlying tectonic plates of American democracy: the absence of a bi-partisan industrial policy to protect U.S. manufacturing jobs and the nation’s industrial and technological base was a giant breach in the defensive wall of U.S. constitutional government through which Mr. Trump launched a successful assault on what he termed “a corrupt and rigged system”. This absence is still the central reality underpinning Mr. Trump’s political success – his electoral defeat in the 2020 Presidential Election notwithstanding.
Donald Trump’s political philosophy can be distilled to a single core message, repeated in one form or another over five years – “America’s political and economic elites have betrayed their constituents by crafting policies that led to the off-shoring of hundreds of thousands of U.S. jobs to foreign countries and allowed nations designated as ‘developing’ as recently as the 1990s to catch up with the United States. I, Donald Trump, pledge to reverse these policies and restore broadly-shared U.S. prosperity.”
Far more than explicit appeals to nativism and coded appeals to “white nationalism”, Mr. Trump’s “America First” approach to foreign trade and U.S. intellectual property have won Mr. Trump the allegiance of millions of working class Americans who saw their fortunes decline and their communities dwindle since the 1980s.
How else to explain Mr. Trump’s 2020 electoral win in the State of Ohio, where he captured 53% of the vote? Trump’s victory in The Buckeye State made Ohio, in the words of one New York Times commentator, “Trumpier than Texas”, where Mr. Trump captured the allegiance of 52% of voters in 2020 compared to 59% in 2016. Mr. Trump increased the total number of votes he received in Ohio by nearly 300,000, growing his share of the vote to 53.2% in 2020 from 51.3% in 2016. How did he do this?
Withdrawing from the Trans-Pacific Partnership trade agreement in 2017 probably played a role. So did his steadfast refusal to enter into new international trade agreements even as he aggressively renegotiated NAFTA, a trade deal from the 1990s that proved bitterly unpopular with automotive and manufacturing workers in Ohio and other Midwestern states.
While the consensus among most economists concerning the steel, lumber, and automotive tariffs levied by the Trump Administration is that they have not led to a rebound in U.S. manufacturing employment, academics who study trade policy in university office complexes are several steps removed from the factory floors where workers have to earn a living.
The symbolic value of Mr. Trump’s tariffs and his willingness to unapologetically defend U.S. manufacturing have endeared him to America’s industrial workers. Whether or not these measures substantially improved workers’ job stability and income is a secondary question. The key fact is that Mr. Trump was willing to break decisively with policies that guided Washington’s thinking for a generation in a determined attempt to arrest the seemingly inexorable slide of U.S. manufacturing into irrelevance.
American workers across large swathes of the country have taken notice. So have workers in industries tied to manufacturing, or who previously were classed as industrial workers before being forced into other sectors, often for lower wages and with less job security, when the pace of offshoring accelerated in the early 2000’s. Their loyalty will likely have considerable staying power, accruing to Mr. Trump if he stays in politics, and transferring itself to his political heirs if they defend, promote and advance industrial policies similar to or inspired by Mr. Trump’s.
What does this mean for Democratic political leaders such as President-elect Joe Biden who have shown an eagerness to court Mr. Trump’s base? And what does it mean for policy makers in both parties?
The main answer, I believe, is that the time has come for professional economists and Conservative think tanks to dispense with the idea that “government can’t pick winners”. That may be objectively true, but it is also true that governments can decide which industries are essential to their national security — defined in the broadest way possible.
National security-essential industries might be defined to include industry sectors that employ large numbers of workers in key states, groups of major commercial and financial firms that sustain major cities, and individual companies the survival of which are critical to America’s ability to remain a global economic and military superpower.
The Financial Crisis of 2008-09 taught us that there exist financial players that are “too big to fail” without endangering the entire U.S. economy, be they bulge bracket investment banks with names such as Bear Stearns, or government-sponsored enterprises like Fannie Mae and Freddie Mac.
The Great Recession taught us that bailouts of key industrial players (i.e. Chrysler and General Motors) were feasible policy-wise as well as politically popular. President Obama’s decision to save tens of thousands of auto-sector jobs in 2009 resulted in his re-election in 2012 when he ran against a Republican candidate who had penned an op-ed three years earlier advising the U.S. government to allow the ‘Big Three’ automakers to enter Chapter 11 bankruptcy proceedings.
Though he did not realize it at the time, Mitt Romney’s 2009 editorial in the New York Times urging a work-out for the Big Three sounded the death knell of the economic orthodoxy that had dominated Conservative think tanks such as The Heritage Foundation since the 1970s, though most staffers at these institutions would be slow to catch on. The Conservative think tanks and K-street would keep repeating the “governments don’t pick winners” mantra until shortly after Donald Trump took office in January 2017. But the winds of change has already begun blowing.
In the view of this writer, the election of Donald Trump in 2016 taught us that economic nationalism was alive and well in the minds of the American electorate, regardless of where elite opinion lay and what most widely-read publications argued.
Trump’s near re-election in 2020 with 72 million votes — 10 million more than he received in 2016 – can teach us another lesson if we are willing to listen: Trump’s consistent opposition to new trade agreements and willingness to offend long-term allies and neighbors, not to mention adversaries, was popular with vast segments of the public. Particularly among the politically disengaged, those Americans who seldom vote and may not have registered to vote for decades, the Trumpian message of “America First” resonated viscerally and deeply.
It appears the President-elect Biden may have been among the first to absorb this lesson. Biden is, if nothing else, a politically-canny survivor. His interview with Thomas Friedman of the New York Times published on Nov. 30, 2020, included the statement, “We are going to work ourselves to the bone to put America first when it comes to jobs and security.” It seems that Mr. Biden has come to the conclusion that he will have to “out-Trump Trump” in the next four years to have a clear shot at re-election.
The snarling of established global supply chains caused by the coronavirus pandemic may give Mr. Biden the opportunity he needs to proceed with an ambitious “re-shoring” policy. The pandemic has re-emphasized yet again, in case Mr. Trump did not emphasize it enough, the U.S.’s uncomfortable and growing dependence on China to supply many essential products, including pharmaceuticals. Political pressure to “bring back” the production of key consumer products to U.S. shores is likely to accelerate rapidly in the next two years. Mr. Biden will want to make the most of this, by riding the mercantilist wave and loudly trumpeting any policies his administration can muster to facilitate re-shoring activities.
At the same time, the “Bidenites” of the incoming administration would be advised to deploy a range of idiosyncratic policies aimed at improving the economic security of the average American. Only a convincing mix of trade, industrial and social security policies will persuade skeptical and jaded voters that Washington understands their worries and is responding.
Perhaps a mix of re-shoring, continued tariffs on Chinese and Vietnamese goods, pro-union legislation, industrial subsidies and a strengthening of the social safety net through the inclusion of ideas such as Andrew Yang’s “basic income” proposal will be what is needed to satisfy the public.
Do you agree? What do you believe the chances are for the incoming administration and a divided Congress to enacted the outlines of a coherent industrial policy in the next four years?
Please let me know what you think.
