Is the “America First” approach really going to put America first? Economically Speaking…
Trump’s first few days in office have been quite eventful. Let’s talk about a few of his executive orders and their significance. However, before I dive in the discussion I want to reflect on an incredible article I came about from the Financial Times by Dani Rodrik, who is a writer and professor of international political economy at Harvard University.
In this article, Rodnik uses the metaphor of riding a bicycle to draw an image of global trade negotiations, if one stops moving forward then one falls off. His intent here is to point to the way countries should deal with globalisation. It has become very clear that constituents are increasingly losing faith in their governments and their abilities to sustain healthy economies. This has opened up the field for populists like Trump who promise to “drain the swamps” and “reverse the order of things” to become appealing to the worker who has seen his salary stagnate and even drop over the years along with his standard of living. This also led immigration, trade and the free flow of capital to become issues that have drawn a lot of discussion and opposition.
What I personally love about Rodnik’s approach in this article, is thathe sort of predicts the rise of Trump by continuously pointing to the “frustration of the middle and lower classes” who grew to be strong believers in the idea that political elites have put globalisation and global economics ahead of domestic needs and concerns. This has actually pinned down a large group of Trump voters and people who support the current Administration.
An important take away from Rodnik’s article to me personally was the idea that this growth in fear of globalisation is an important alarm signal that needs to get the politician’s attention in addressing the gap as well as the imbalance that has continued to grow between the global markets and national responsibilities. With this I leave you to think about how leader’s of our countries can address this issue with something other than signing executive orders that ban trade negotiations and feed the need for further nationalism that in my opinion will definitely not bridge the gap that exists between global markets and national responsibilities.
First things first, Trump was quick to sign a memorandum that ordered the formal “trashing” of all of Obama’s work on the Trans-Pacific Partnership (TPP). If you don’t know the specifics of the TPP, all you probably need to know is that about twelve countries extending from Latin America to North America created a number of trade rules in order to create a strong tie between the US and East Asia and be an obstacle to the continuous economic booming and the overall rise of China.
Some say that the withdrawal from the TPP was very much symbolic because the Congress was going to “trash” it anyway. In Trump’s words, “We’ve been talking about it for a long time…great thing for the American worker.” Okay Mr. Trump but how about China? I can imagine Trump saying, “well the American worker will be protected from low-wage countries.” Okay but Mr. Trump do you really do your homework? How are you putting America first when you are letting China lead the party by expanding its power in the region and beyond. Unless you mean America first to last. Looking inwardly might not be the best way to go about it because losing its spot in the globalisation party could mean losing it to China. Sen John McCain echoed the fear of such action by saying that will put China at a pedestal.
I mean Mexico’s President Enrique Peña Nieto is already shifting away its countries’ trade ties with the US, directing them towards other countries. China’s President Xi is not intending to leave behind globalisation and he confirmed that just last week in Switzerland. In a few years this mishap could lead China to dictate whatever it wants to the rest of the world against the US. So how much are you putting America First, Mr. Trump? Eswar Prasad, a professor of trade policy at Cornell University said, “this could have an adverse long-run impact on the ability of the U.S. to maintain its influence and leadership in world economic and political affairs.” A White House economist predicts through close analysis that this decision could cost the US $5 billion in exports and millions of American jobs if the China and Japan establish a deal.
But the US is not the king of the world, certainly not under Trump’s rule. If the US decides to fold inwardly, the world might decide to not go with its terms and in fact this is already starting with multinational corporations establishing a backup plan, since the TPP is “trashed.”
The world is about the welcome the R.C.E.P or the Regional Competitive Economics Partnership. This partnership includes 16 countries from Asia and the it excludes all environmental and labor standards. China is obviously a member and it will undoubtedly be the country that dominates what is the largest trade zone.
So week number 1 almost done, but America does not seem to be first.