Having recovered from the shock of Donald Trump's victory, pundits and politicians are now wondering what it will mean for the future of the United States and world politics. It is imperative that Democrats understand why this unqualified, divisive man - won again. Is it because the Democrats went too far to the left and lost the moderate American voters who make up the majority? Or has the centrist policy of neoliberalism pursued by Democratic presidents since Bill Clinton failed to live up to expectations, creating a need for change?
To me, the answer is obvious: after 40 years of neoliberalism, inequality in the United States has risen to unprecedented levels, average incomes are stagnant (with those below the situation even worse), life expectancy is declining (in part due to an increase in "deaths from despair"). The American dream is dying. Although President Joe Biden and Vice President Kamala Harris have moved away from neoliberalism in favor of industrial policy, they are still members of the traditional establishment and therefore still associated with its legacy.
The current economic situation was important, but the monthly indicators of employment and inflation should be seen in a broader historical context. Ahead of the election, the Biden administration emphasized that the country has a strong economy, especially compared to other G7 countries. That was good, but it wasn't enough. Americans have not forgotten that the Democrats gave the financial sector a free hand (during Clinton's term) and then bailed out the banks, imposing the burden of costs on homeowners and workers who lost their jobs during the Great Recession (Obama's term). Besides, it was Clinton who started globalization, tacitly believing in the economic idea of "inflow of wealth", which would supposedly benefit everyone in the end. The only real difference between Democrats and Republicans on this issue was that Democrats claimed to feel the pain of the losers.
The tragedy is that Americans seem to have simply voted for radical change and not for anything else. Sensing economic instability and the threat of social decline, tens of millions of Americans voted for Trump in order to "punish the establishment" and because they believe he will protect them.
No, it won't protect them. Trump's first term and his 2024 campaign have made it abundantly clear that he has no intention of implementing policies that ordinary Americans need. He favors tax cuts for billionaires and corporations, the repeal of the Affordable Care Act (Obamacare) and sweeping tariffs, which are effectively a tax on American consumers and businesses. The tariffs are most likely laced with corrupt exemptions bought through campaign contributions. They will certainly cause retaliation and job losses in America.
In addition, during Trump's term, the budget deficit will grow sharply, which will lead to higher interest rates and reduced investment in America's future. If he and congressional Republicans follow through on their promise to repeal the Inflation Control Act (which includes lower prescription drug prices) and Obamacare, then Americans' access to health care will deteriorate and costs will rise.
All this is even worse than neoliberalism, which at least advocated competitive markets without distortions. Trumponomy is a surrogate capitalism managed by the powerful of the world through their own interests and in accordance with the principle "money is more important than everything else". Americans seem to have lost confidence in the institutions of the country, as well as faith that the government will take care of them. This is the predictable result of a 45-year propaganda campaign by Republicans (and neoliberal Democrats) that began with Ronald Reagan's famous quip: "The nine scariest words in the English language are: 'I'm from the government and I'm here to help.'"
The culture wars also played a big role in Trump's victory. His campaign successfully promoted the idea that while most Americans are trying to make ends meet, Democrats are obsessed with gender, race and other social issues. Many voters are confident that Trump will reverse or at least slow the pace of these confusing changes that have challenged long-established social hierarchies and roles.
Like nationalists in other countries, Trump blames America's problems on outside forces - from immigration to "unfair" foreign trade. But while it is true that these issues have not been adequately addressed, the solutions he proposes will be a disaster for the American economy and the entire world. To what extent his voters understand this, it is difficult to say. Most, it seems, were bewildered by the political theater. They wanted to express their displeasure and they did.
For Democrats, the message should be crystal clear: You must abandon neoliberalism and return to your progressive roots (Franklin D. Roosevelt, Lyndon B. Johnson). The party should present a new vision of a society that offers education and opportunities to all; a society in which markets compete to produce better products that improve living standards, instead of finding ways to better exploit workers, consumers and the environment; a society in which we recognize that we have moved from the industrial era to an economy oriented towards services, knowledge, innovation and care. The new economy needs new rules and new roles for the state.
There's a big difference between that new concept and the half-measures that Kamala Harris proposed during the campaign (a little more funding for education here, a few more dollars to help first-time homebuyers there). Formulating a strong program will not be easy, its implementation - even more difficult. Yet America's future depends on doing this job.
The author is an American economic expert; he is a Nobel Prize winner in economics and a professor at Columbia University; was the chief economist of the World Bank (1997-2000)
Copyright: Project Syndicate, 2024. (translation: NR)
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