The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
One of the unfortunate aspects of Trumpian populism is the effect it is having on our discussion of economic policy, and thereby on our understanding of the underlying goals that policies are meant to advance.
This is perhaps most stark in discussions of international trade. The right used to discuss trade as a way to enrich the nation and raise living standards. To grow the economic pie, for everyone. To bring down prices, which in turn increases the purchasing power of wages. Embedded in this understanding is the assumption that economic policy should advance the common good.
Beyond economics, free trade was understood as a manifestation of the proposition that two parties should be left on their own to determine whether a voluntary exchange of goods or services is mutually advantageous. Embracing protectionism meant retreating from economic liberty.
In their rhetoric about free trade, Trumpian populists argue against advancing the common good by growing the economic pie and in favor of protecting their slice. That doing so is a retreat from liberty? No worries. That taken to its logical conclusion, protectionism would find me growing all my food, sewing all my clothes, treating my own illnesses, and building my own house — all while immiserating the nation? Supporting economic silliness is fine if it helps the populists keep what they’ve got.
Of course, the administration of President Donald Trump has not aggressively embraced protectionism. But in a democracy, today’s rhetoric affects tomorrow’s understanding, which affects policy the day after that.
Conservatives have long championed changes in old-age entitlement programs. The plain arithmetic of projected spending on Social Security and Medicare is obvious: Those programs consume a larger and larger share of US economic output, cause larger and larger projected budget deficits (increasing from 1.9 percent of gross domestic product today to an even more concerning 3.6 percent 10 years from now), and crowd out spending on other important priorities.
Arguments about reducing entitlement spending often sound like exercises in bookkeeping, but there’s more to it than that. Underlying the need to restrain entitlements is the goal of maintaining them for future generations. It’s important to act soon, to provide retirees and people in late middle age as much continuity with current policy as possible, and to disrupt their retirement plans as little as possible. It is properly thought of as an act of shared sacrifice, of caring about the whole.
Trumpian populism rejects entitlement constraints, and you can see the same impulse at play as in international trade: a disregard for the common good in order to keep what’s mine. As long as Social Security and Medicare are generous enough for the populists, they want those programs to stay just as they are.
Stephen Bannon, the still-influential former Trump strategist, reportedly supported a significant increase in the top marginal income tax rate, designed to increase popular support for an overhaul of the tax code. Here, too, we see the traditional conservative understanding of economic policy thrown aside to appeal to the right’s populist base. The rich aren’t in the base’s tribe.
We see this also in rhetoric and understanding surrounding immigration. Reasonable people of good will can disagree over the appropriate number of lesser-skilled immigrants the US should admit.
—Bloomberg
Michael R. Strain is a Bloomberg View columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy†and the co-editor of “Economic Freedom and Human Flourishing: Perspectives from Political Philosophy