Trump`s economic policies

Analytics | | 1-08-2018, 01:40

Trump`s economic policiesThe election of Donald Trump was an extraordinary moment in American history. It surprised pundits, analysts and almost everybody who was observing the presidential primaries and campaigns in the 2016 election. At the forefront of Trump’s rhetoric was the slogan: “Make America Great Again”, which mobilized a large group of Americans who felt left out of the positive impact of economic developments. People felt frustrated by globalization, fewer employment opportunities (especially for not highly qualified workers in rural America) and almost no increase in the real wage since the 1970s. During the campaign Trump addressed these concerns and promised to fix them and raise the living standard of those “forgotten” in rural America. International trade and especially the trade deficit of the U.S. were talking points. NAFTA was a focus of his campaign, but also trade with for example Germany and China has been repeatedly questioned. His newly announced steel and aluminum tariffs are endangering existing trade relationships and U.S. exports. Trump also argued in favor of more deregulation for several industries, where he thought existing regulation had been too invasive and hindering economic growth and prosperity. His rhetoric foreshadowed a possible trade war and more deregulation. Trump in his economic policies during the campaign followed the established republican line on most issues, such as international trade and on welfare issues (such as Medicare/aid should be untouched). In the past, the Republicans promoted neoliberal policies, first introduced by the Reagan administration in the early 1980s, which are still regarded as a viable approach to economic policy. Paul Ryan, Speaker of the House of Representatives, has been especially vocal on his stance, which draws heavily from Ayn Rand and established neoliberal policies and thinkers. His desire to restructure (or deconstruct) the welfare system is a representation of his and overall, the Republican Party’s ideology. Many of his Republican colleagues in the House and Senate have similar ideas on how to move forward with economic policies and are strong proponents of deregulation and more laissez-faire policies. Trump’s economic stance and policy proposals were largely influenced and shaped by this approach, but it did not provide any new bold economic strategies or policies. Deregulation, tax cuts, international trade have been talking points of the Republican Party for decades and the same policies of dubious efficiency have been heavily utilized by Trump. Then why did the public elect Donald Trump, if his economic policies didn’t show any remarkable innovation or difference to prior policies? 

One possible answer could be the concept of the winning and losing frame by Tversky and Kahnemann in their prospect model of politics, which tries to model uncertainty. This concept ties in with the thinking of voters in the 2016 election. Trump, even though mostly fitting into the Republican mold of economic ideology, was able to establish himself as an outsider to politics and somebody who is going to change things. His most attracting stance probably was “Drain the Swamp” during the campaign, which was meant to emphasize his negative attitude towards the existing system in Washington and the establishment’s political preferences. This plays into the framing of his campaign and promises by the voters, who were fed up by the status quo and also wanted to benefit from economic prosperity. The voters regarded Hillary Clinton as an agent of the status quo, who won’t bring any meaningful change. This drove them to the conclusion that they have nothing to lose and can only gain from a different outcome from the election. The voting coalition, who elected Trump, had no benefits to expect from the election of Clinton, but more to win if Trump was successful. Either Trump would be elected and improve their situation, or at least they wouldn’t be worse off. This offers an interesting insight into thinking of voters and on how they perceive the political landscape and candidates. 

Another approach to understanding the widespread attraction of Trump. In the text “It wasn’t the economy, Stupid” Alan Abramowitz argues that not the economic issues were behind the success of Donald Trump, but rather racial tensions. Abramowitz argues that it was an “outgrowth of the racial realignment that has transformed the American electorate since the 1970s.” (Abramowitz 2017, 202).  The emphasis lies clearly on the racial tensions and the racial politics, which the Republican Party used since the late 1960s to gain voters and win elections. Especially important to recognize is that “Trump utilized explicit appeals to white fear and resentment of racial and ethnic minorities” (Abramowitz 2017, 209), with his rhetoric around illegal immigrants, his proposed border wall and the travel ban. Apart from the economic motives behind voting for Trump, the racial tensions played a large role in mobilizing rural white Americans. 

In my opinion, Donald Trump during his campaign was able to establish himself as an outsider and through his ability to portray his policy proposals as new and beneficiary for his voters, combined with a great communication campaign and a unique style of talking, so he was able to convince to people that he is different enough from the other candidates that he can bring real change. Even though racial tensions and issues were major topics, the impact of economic developments and perception of the country’s economic standing should not be underestimated. The effectiveness of the implemented economic policies, most notably tax cuts, NAFTA renegotiations and steel and aluminum tariffs, will have to be seen and if the impact of these policies is desirable for his base, which was dissatisfied with the status quo. Nonetheless, the argument posed by Abramowitz combined with the concept of the winning and losing frame offers a compelling approach to the issue. The election of Trump is probably hard to pin down on one deciding factor, such as economic policy or racial matters, rather many different issues and topics together lead people to be dissatisfied with the current status quo and wanted to voice their desire for drastic change.