February 27, 2017 | Rome, Italy | Partly cloudy 16°C

America first at what cost?

Trump: Dreams of walls and fast trains that run on time.
By Vittorio Jucker
Published: 2017-01-27

onald Trump's inauguration speech was like no other in American history. It could have been made by a Third World leader full of grudges and intent on thundering against the evil doings of international capitalism, multinationals, and the shortcomings of globalism. To a foreigner it sounded eerie: it was rhetorical, simplistic and didn't seem to reflect a political and economic power of the stature of the United States. It described an outside world bent on exploiting and attacking a defenseless country.

President Trump's first actions were aimed at dismantling some of the long-term policies of his predecessors, such as the Affordable Care Act and the Trans-Pacific Partnership while reinstating the contested pipelines in North Dakota and sparring with Mexico over the infamous Wall designed to stop immigration.

The new Administration also wants to block or at least reduce foreign investments by American manufacturers abroad and may well introduce protectionist import tariffs. "Germans have to import GM cars," Trump has said. Forgetting that Opel (fully owned by GM) and Ford are among the main European car manufacturers. It should be mentioned that German, Italian, and especially Japanese car manufacturers have made heavy U.S. investment.

Trump's America First concept is a rather dizzying about-face since globalization, however it's defined, is something that's been consistently promoted by every U.S. administration over the last three decades. The World Trade Organization was created and international trade expanded rapidly. In fact, the main beneficiaries of the trend were rapidly industrializing developing countries such as China, which has become the world's second largest economic power, as well as India, Brazil, Mexico and others.

Marine Le Pen's French challenge is on solid ground in 2017.

Trump's promise to stop both Mexican Immigration and halt the movement of people from the developing world toward the West is a pledge that united large chunks of populist public opinion both in the America and Europe. It verges on a growing and menacing form of racism that combines a loathing of outsiders with specifically anti- Muslim sentiment. It's a familiar phenomenon in countries beset with economic depression and burdened by growing inequality in the distribution of wealth and income. People seek redress and scapegoats. They're impressionable.

In this respect it's interesting to note that a majority of Asians and Africans living in the UK voted in favor of Brexit because they feared job competition in the semi-mythical form of Polish chimney sweeps allegedly flooding the country.

Heavy infrastructural and industrial investments are also on Trump's agenda, though they've yet to be specified or quantified, Supposedly they refer to a massive upgrading of country's antiquated railroad network, as well as roads, bridges and decaying industries. There's even talk of rebuilding steel works in Pennsylvania. But who will finance all this: the private or the public sector, or a mix of the two? And how much would it cost? A shorthand estimate of what it would cost to build a TGV-style rail system down the West Coast based on the European or Chinese model comes in at around $1 trillion. Enough to keep the new Administration busy for several years.

But the U.S. isn't along in reveling in angry populism. This year, France, Holland, and Germany will all vote in national elections. The political equilibriums that have traditionally governed these countries may not survive. This could potentially, open a new era of political and social instability. The euro could also weaken, or even be abandoned, thus opening the door to a new currency crisis that would also affect the U.S. dollar.

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Vittorio Jucker

Rome-based Vittorio Jucker has reconnected with his first love, economic history, since he retired.

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