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Changes in the United States

Written By: - Date published: 9:00 am, January 8th, 2017 - 79 comments
Categories: International, us politics - Tags:

We are but a few days away from Donald Trump’s Presidency of the United States. His policies from the campaign trail are now clarified by the people he has hired to implement them, and by the broader policy intent of the Republican Party that has strong majorities on both the Senate and Congress. This is the most powerful nation in the world, and what we should expect from this next term of government of the United States remains important to the whole world.

Many view his unexpected rise and triumph as a chance for renewal of tired political institutions that have slowed the efficiency of governing across Washington. Losing candidate Hillary Clinton felt to many like she represented that atrophy. But to renew the decay within United States’ political institutions, there is no case for optimism. Donald Trump has not proposed any institutional solution to the broad state’s capture by powerful interest groups (other than minor proposals about lobbying). The most important signal to the whole political order that he has sent is about his own business interests, which remain deliberately opaque as to paying tax, and shows absolutely no signal that he can separate his own financial interests from his powers as President. Tax is the core instrument of the state to redistribute private gain to public policy good. Trump has signaled that the incoming president primarily works not for the public, or the core idea of the public good, but first and foremost for his own commercial interests.

Similarly, the core of influence in the United States government is the power of money over the legislature and over voters. He has made no commitment to re-challenge Supreme Court decisions like Buckley V Valeo and Citizens United V FEC. These argued that public donations and spending on lobbying are a form of free speech and therefore constitutionally protected. The plug stuck under the swamp will not be pulled by President Donald Trump.

But there will certainly be churn on the surface. President Obama worked pretty hard to get things done with either marginal Democrat majorities or extremely hostile Republican majorities. He got several strong initiatives through, which I’ve commented on before. But the sense of torpor was extremely strong when the Republicans refused to approve budgets. President Trump will get activity going again because all three branches of legislation are now controlled by the one party. The legislation may not be useful, or workable in practise, or popular, but that sense of standstill will be released as all parts of government share strong political alignment.

Where Trump made huge inroads into rustbelt states like Wisconsin, his calls to clamp down on heavy manufacturing going overseas were popular. He has certainly made protectionist moves already. His tweet-influences about manufacturers choosing to stay in-state are doing what the Presidential bully pulpit should do. But if all he can do is tweet rather than enact entire policy, he will effect perhaps thousands of jobs, when the test of policy is to effect tens of millions. Who knows, perhaps he really will renegotiate trade deals and crack down on illegal immigration. But both trade protectionist and immigration control measures will spark comparable trade retaliation by other countries of a scale that will undo much of the trade dynamic that has lifted poorer countries out of poverty in the past three decades: trade and labour mobility. Britain is about to feel the consequences of similar moves as it exists the European Union.

As for the much-vaunted infrastructure plan, presidents have come and gone promising about the same. Infrastructure expenditure remains in the hands of the Republicans in the Senate and Congress. I’m not optimistic that there will be increases in public spending other than on instruments of warfare.

Those instruments of warfare will I think be less likely to be used under President Trump. He will continue President Obama’s rapid withdrawal of U.S. military influence in the world. I can easily foresee money, rather than diplomacy or hard military force, being the primary mode of international exchange – money and the deals to get there are the sole language that Mr Trump understands. The shift to mercantilist governance from one guided primarily in world affairs by military intelligence and military power will be a really important shift for world powers. Again, I’m not optimistic that the rest of the world will concur.

Donald Trump is the first major United States party candidate for whom promotion of a democratic world order – for so long at least notionally the calling of the United States – has absolutely no resonance. He above all will seek to wipe away diplomacy and military force as restraints to capitalism in the world.

I expect Trump to accelerate the trend under Obama to rapidly remove troops from U.N.-mandated conflict lines, downgrade its strong diplomatic presence from the United Nations itself in areas such as climate change, and continue to shrink the full role of the United States in the world.

That may sound attractive to some, until you look at the alternative leaders who fill that inevitable vacuum. Those who have grown used to the way the United States has operated in world affairs may not like such scale of change, because this scale of force withdrawal will be akin to the polar icecap melting: it will shift the way the political world rotates even more than the decline of the Soviet Union, and there will be damage to people along the way.

I do not yet know what the emerging world of populist nationalism will look like, but what is clear is that Trump is a part of making the whole ambit of politics much smaller: smaller states, smaller multilateral horizons, fewer and weaker cross-national binds. There will be no more Paris 21’s, no more GATTS, no more cooperation. It is the world of the strong countries and strong corporations looking after the strong, against the weak. That means us.

Trump reminds all us small states what we have strived to avoid since the whole of postcolonial liberation: we are on our own.

79 comments on “Changes in the United States ”

    • aerobubble 1.1

      A line of tanks on the border of Saudi ready to move north, will we see its like again. US using biofuels in their jets. Russia withdrawing aircraft carrier from Syrian conflict.
      Blowing stuff up is more costly in a globalized world, economy. So militrary power is less likely and so more likely as everyone gets its temporary. Its Afghanistan, men and gold was less of a costnow more nuanced, time limited, excursions will rule. And that surely requires much better, less tied hands, leaders. Notable how Putin and Trump have less affection for truth and facts, working together the west will defeat ISIS arguable created by the west to hone militrary budgets anyways, i.e. put pressure on Russia’s south, etc etc. A kind of hot detante, get the attention of the west and western leaders will contort their arses off on tv to bring the maximimum of bad outcomes your way.

      • aerobubble 1.1.1

        What is Syria? But the US, EU, Russia getting everthing they want. Syrian impunity of its people broken, iSIS located under western bombs, Turkey out of the EU, EU boosted by the Syrian middle classes, who loses? except Assad and any Syrian to keen to take up arms than get gone while the chances were available. They may not redraw the borders but effectively they are there now, Turkey gets a buffer and moves the kurdish problem along, while having greater terrorist powers. Assad, what a loser.

  1. garibaldi 2

    “.We are on our own”. Sounds better than being in the TPPA etc etc etc.
    We can hypothesise as much as we like about how this new situation with the USA will unravel but it would be wiser to watch and learn rather than fall for all the ‘false news’ going down at the moment.

    • lprent 2.1

      The problem with the TPPA and several other similar agreements was the level to which it was trying to suborn local decision making into a supranational and largely unaccountable legal framework with little or no recourse to any appeal.

      That was worth fighting against, and was.

      However, with a few notable exceptions, the multilateral and bilateral treaties that have been signed since the 1950s not operated on that basis. They tended to move more and more towards a basis of mutual advantage and stability (compared with the 19th can early 20th century treaties).

      Which why they got signed and persisted.

      The US for all of its numerous faults has tended to be a big part of pushing that. Largely because its internal institutions like their press and levels of local representation tended to push for it. However those institutions have been falling apart for quite a while now.

    • AmaKiwi 2.2

      “We are on our own?”

      No. We are a mouse that sleeps in bed with an elephant.

  2. lprent 3

    The shift to mercantilist governance from one guided primarily in world affairs by military intelligence and military power will be a really important shift for world powers.

    I suspect, in my words, that you’re envisaging an policy of active corruption including bribes, blustering, military aid and threats under various labels all plastered under a label of patriotism. Trump has already been engaging in some of those internally. I’m sure that when he finally discovers the rest of the world he will engage in them offshore as well.

    This type of policy package isn’t new. It has been done numerous times in the past by various late imperial powers. It stomps on the weakest and cause lots of viscous small wars as revolutions and insurrections arise against their corrupt bribe taking elites.

    Think of what happened during the long fall of the Austro-Hungarian empire, the Soviet empire, the British empire, and so on down to the current slow disintegration of the Russian Federation.

    I guess it is inevitable. Especially the blindness that Trump and his supporters display as part of this process (Putin does appear to be aware of it, but I suspect have quite constrained choices).

    I suspect that it will make the world an uncomfortable place for a generation or two.

    • Ad 3.1

      I hope I wasn’t implying that mercantilism meant active corruption. I hope that isn;t the case.
      I was thinking more along the lines that trade principles would rule all other objectives, like Britain treated its colonies including the United States prior to Independence. Bribes are simply the deals you keep in secret: Trump’s mode will be simply to put the ‘art of the deal’ right out in the open.

      I agree that the growing sense of accelerated decline for the United States is incredibly destabilizing globally. And it will be for us.

      It certainly doesn’t feel like the Cold War of the 1970s, but it’s a far colder, harsher world for the likes of little old New Zealand, with our bulk commodities, our vulnerability to pretty much everything, our poor diplomacy, our weak and rarely-tested alliances.

      • garibaldi 3.1.1

        My memories of the Cold War centre around panic by the West that we were inferior to the Russians. Turns out we were far, far superior. Then there was Vietnam and how patriotic it was to support the noble Americans against the ‘domino affect’. All a load of tosh, and a shameful period of our history.
        Now they are at it again and ,lo and behold, most people are swallowing all the pro American bullshit without hesitation. Ever get the feeling we are repeating our mistakes? Let’s hold off judgement until the truth is out over who did what to who.

  3. pdm 4

    So far Trump appears to be making all the right moves. His Cabinet appointees are mostly strong people in their own rights and there is no room for sycophants.

    He may be hard to like but at the moment he is a `breath of fresh air’ through the Political scene world wide.

  4. Sanctuary 5

    “…Trump reminds all us small states what we have strived to avoid since the whole of postcolonial liberation: we are on our own…”

    If Trump turns out to be the corrupt crony capitalist wannabe strongman I think he will, then the world will be a safer place for Plutocrats and kleptocrats and autocrats everywhere.

    From a diplomacy point of view, our weasel, colonial cringe Neoliberal governing elite will desperately stick their heads in the and try and pretend the US and the Anglosphere empire is still an ally worth having. However, should Trump prosper in his attempts in turning the United States into a hopeless corrupt 21st century version of Argentina then we will have to face the cost of rearming for neutrality. And it won’t be pretty (conscription would be certain) and it will cost an eye watering amount. But I’d rather we had the means to defend ourselves than have to kowtow to the butchers of Beijing or the new Gauleiters of Washington.

  5. Sanctuary 6

    Question: Can the union hold if the GOP and Trump manage to turn the USA into a vast, corrupt to the eyeballs, one party state? How long will the East the West coast states put up with extremist madmen in the White House?

    I can imagine the USA breaking up within 20 years if Trump and his cronies seize power and make elections meaningless. California, Washington state and Oregon and possibly Idaho and Arizona would be a major Pacific power, New York along with 9-10 of the old union states would be an easily viable nation. A Trumpestan of the rusty bible belt and the old South would remain.

    Alternatively, if Trump continues to be as thin skinned and erratic as he is now, I am almost 100% sure the military will remove him, quietly and “legally” if possible but assassination by the generals is not out of the question.

    • Ad 6.1

      I can’t see the Constitution changing on the issue of Federation, if that’s what you’re thinking. There would be nothing wrong with the Constitutional question of the role of states and the Federal government, and where the balances of power and responsibility lie. Australia nearly got to that question under the previous Labour government, but nowhere near enough.

      We need to see the EU elections and Brexit play out in the next year to understand the proper terms of debate for devolving multinational entities back into a more loosely held federal system.

      • Clump_AKA Sam 6.1.1

        Actually the GOP is just 2 state leigislators away from gaining the nessecary majority to make amendments to the US constitution

        • Ad 6.1.1.1

          I could see McConnell going for further entrenchment of the “right to bear arms” clause. But that would be it.

          • Clump_AKA Sam 6.1.1.1.1

            I see it more as a cry for help. They see there debt and want it payed off

    • joe90 6.2

      I can imagine the USA breaking up within 20 years if Trump and his cronies seize power and make elections meaningless.

      Conceivable, and this bloke reckons the end of empire is nigh.

      But the main book setting out Galtung’s fascinating forecast for the US is his 2009 book, The Fall of the American Empire—and then What?

      The book sets out a whopping 15 “synchronizing and mutually reinforcing contradictions” afflicting the US, which he says will lead to US global power ending by 2020—within just four years. Galtung warned that during this phase of decline, the US was likely to go through a phase of reactionary “fascism”.

      He argued that American fascism would come from a capacity for tremendous global violence; a vision of American exceptionalism as the “fittest nation”; a belief in a coming final war between good and evil; a cult of the strong state leading the fight of good against evil; and a cult of the “strong leader”

      http://motherboard.vice.com/read/us-power-will-decline-under-trump-says-futurist-who-predicted-soviet-collapse

    • Andre 6.3

      Hmm, if the USA broke up, it would be really interesting which states went with the West Coast. CA, OR and WA certainly. Alaska I’ll guess would make the pragmatic geographic choice to join the West Coast. I’d pick Nevada almost certainly with the WC,

      Colorado and New Mexico would certainly want to join the West Coast, but would want a bridge via Utah and/or Arizona. Although Utah is solidly Republican, they might prefer the liberal ideals of tolerance from the West Coasters than the potential persecution from Trumpestaners. The pull of a stronger cultural affinity for the West Coast may well be enough to overcome Arizonans traditional Republicanism.

      Unless there’s been dramatic change since the last time I was there, Idaho, Montana, Wyoming and everything east of the Rockies really are culturally different enough to the West Coast so they’d be solid Trumpestaners. Until you get to the northeast states.

      As far as how long Congressional Republicans tolerate Trump, well right up until the point they decide he’s too much of an electoral liability. Then they’ll swiftly rediscover their constitutional ideals and impeach him under the emoluments clause. But in the interim, they’ll try to use the threat of impeachment to push through their agenda. That’s if Pence and the Cabinet don’t stage a coup using section 4 of the 25th Amendment. However the downside of removing Trump is obvious and even scarier: President Pence and Vice-President Ryan.

      • Macro 6.3.1

        ” However the downside of removing Trump is obvious and even scarier: President Pence and Vice-President Ryan.”
        OMG the thought of it makes me come out in a cold sweat.
        Yes I think your analysis on the time of impeachment is correct. They will use Trump for as long as he is useful to them – then…. Off you go chump!
        They surely have enough on him already, I can see that they have been “happy” to use him as a means to an end. But as soon as he becomes too much of a political embarrassment, they will dispose of him pronto.

        • Andre 6.3.1.1

          On further reflection, my fears about Pence may be a function of being a dual national. The horrible shit Pence would want to inflict on the American people would be pretty much confined to the US.

          From a purely New Zealand perspective, Pence would be pretty much business as usual, leaning towards further expansion of the corporatist neo-liberal model. Unpleasant, but not as scary as the outright chaos and upheaval with a view towards plutocratic authoritarianism that looks likely from Trump.

      • Draco T Bastard 6.3.2

        Alaska I’ll guess would make the pragmatic geographic choice to join the West Coast.

        Out of all the US states I’d say that Alaska has the option of becoming an independent nation as it’s not connected by land to the rest of them while also having a large enough land/resource base to support itself.

        As it seems to be a Republican stronghold it probably won’t do that though.

  6. pdm 7

    Sanctuary – corruption is a word I see mostly associated with the Clintons and Hillary in particular.

    Trump has no need to be corrupt as far as I can see.

    • AmaKiwi 7.1

      Trump is the most corrupt US president in memory. He makes Hillary look like an angel.

      • pdm 7.1.1

        Impossible.

        • Ad 7.1.1.1

          Hillary Clinton finished being an elected representative of any kind in 2009.
          That’s a little while ago.

          Hillary Clinton has no relevance to the incoming President Trump.

          • AmaKiwi 7.1.1.1.1

            @ Ad

            Agreed about Clinton. Trump has concealed everything about his financial affairs. A interestingly uncovered set of facts from the Washington Post:

            Trump owes $3 BILLION dollars to huge foreign lenders in more than a dozen countries. Real or imagined conflicts of interest are inevitable. Eventually the public will find them intolerable. My forecast is that Trump’s business dealings will cause his political death.

          • pdm 7.1.1.1.2

            Hillary stood for President and one of the main factors in her losing, apart from under estimating Trump, was her perceived corruption.

            In politics perception is everything.

          • mosa 7.1.1.1.3

            Hillary’s relevance ended on November 8th.

            She is still in a coma.

    • Andre 7.2

      Have you ever done any kind of side-by-side comparison of Clinton corruption vs Trump corruption?

      Fr’instance, Clinton Foundation, heavily and publicly audited, no problems found. Trump Foundation, very private but known to buy stuff for Trump and pay fines for him, among other illegal self-dealings.

      Tax returns, the Clintons’ returns are available for many years, Trump has managed to trash the transparency norm in place for 40 years and keep his secret.

      The list goes and and on. It could fill a book, and it probably will at some point.

      • Ad 7.2.1

        To get back to the content of the post, what changes to the world order do you see from a Trump administration?

        How will Trump be relevant to New Zealand?

        • Andre 7.2.1.1

          “How will Trump be relevant to New Zealand?”

          I expect an impact on dairy. Wisconsin is very solidly dairy country, and dairy is still important in other Rust Belt swing states. Dairy is also fairly emotive, which is why subsidies and protections have lasted so well in the US.

          With Bannon in particular in the White House, I expect further attacks on objective journalism. With the weakening of Fairfax and NZME, there’s going to be more shit like the Donghua Liu nonsense and less capability to expose and debunk it.

          We’re going to have some really tough questions around our military capability and posture with respect to Southeast Asia, particularly given China’s actions in the South China Sea. Given Trump’s apparent total lack of impulse control, there won’t be any good choices, just a cornucopia of crap ones.

          If we want to continue propping up property values via immigration, I’ll guess there’ll be plenty of Americans wanting to help us out. And it won’t have the backlash that Chinese and Indian immigration does.

          For the sake of having a conversation, I’ll stop there rather than going on and on like I could.

          • Macro 7.2.1.1.1

            Yeah the South China Sea scenario is quite scary. Trump’s silly tweets have only inflamed the situation, and I suspect that China are only waiting until 20 Jan before stirring the pot even more. The Russian Navy visiting the Philippines is also an “interesting” development. They will be looking to protect their rights of passage through there as well. Maybe that will keep China’s expansionist ideals in check. For China to annex Taiwan would make their claim to the South China Sea more “valid”, which, of course, is their argument all along.

            • Draco T Bastard 7.2.1.1.1.1

              For China to annex Taiwan would make their claim to the South China Sea more “valid”, which, of course, is their argument all along.

              Taiwan is already considered as part of China. That’s actually where the ‘One China’ policy originates – it’s about keeping regions that don’t want to be part of China internationally recognised as being part of China any way.

              Also, it would give no more validity to China’s claim of the SCS at all. The internationally recognised 200 mile EEZ would still apply making the vast majority of the SCS international waters. China’s trying to go against that international law in it’s claims on the SCS.

              • Macro

                Yes Draco – i’m well aware of all of that. Trouble is Trump isn’t – or doesn’t appear to be.
                Actually the building of Island aircraft fighter bases on rocks which they claim as part of China – is an attempt to legitimize their extending claim over the SCS.
                NZ’s EEZ is vastly extended by the inclusion of the Kermadecs for instance.

                • Draco T Bastard

                  Actually the building of Island aircraft fighter bases on rocks which they claim as part of China – is an attempt to legitimize their extending claim over the SCS.

                  And artificial islands, which is what they’re building, can’t be used as territory to base territorial claims upon.

          • Draco T Bastard 7.2.1.1.2

            If we want to continue propping up property values via immigration, I’ll guess there’ll be plenty of Americans wanting to help us out. And it won’t have the backlash that Chinese and Indian immigration does.

            I’m pretty sure that the backlash will be about the same. It’s not race that’s the problem but that we have such high immigration and the fact that it’s not propping up the economy. What it’s doing is increasing GDP which is completely different kettle of fish.

          • Wayne 7.2.1.1.3

            Andre,

            Given Trump is against the TPP, Wisconsin dairy is under no threat from NZ. Trump would have to go into trade negotiations for that to happen. Since Trump wants trade deals to primarily favour the US, there won’t be too much interest from anyone else in doing trade deals with the US (unless it is just bluster). Other nations, like NZ will look for other options which provide benefits for both parties. Maybe much more of a push with India.

            The China issue is the big unknown and the biggest risk for everyone, the US, China, and most of the rest of the Asia Pacific. Will Trump do much about the South China Sea? Perhaps not, given the Chinese bases already exist. But that is not the only dynamic.

            Any vigorous trade action by the US against China could (actually likely) will result in China being more assertive in the East China Sea and the South China Sea, just to make life difficult for the US. Any action the US takes against China will be met with a counter reaction from China.

            So there are real risks ahead.

            NZ won’t automatically line up with the US, if the problems are seen to be caused by imprudent US actions.

            • Andre 7.2.1.1.3.1

              Wisconsin dairy is not under a new threat from NZ and TPP, but the farmers there might think (and persuade Trump) that they would prefer to be the ones supplying the $1.2billion of dairy products NZ sells to the US. Let alone maybe a bit of help selling into markets NZ sells into now. Certainly when I worked in Wisconsin, the locals were pretty quick with a dig about NZ unfairly competing with them.

              https://www.tpp.mfat.govt.nz/assets/docs/TPP_factsheet_Dairy.pdf

              • exkiwiforces

                The problem with those Wisconsin dairy farmers is they can’t get their dumb head around the NZ run dairy faming Co-Op’s. To them a Co-Op is socialist/ commie government run thing that benefits the farmer.

                • Clump_AKA Sam

                  Capitalism is good if it promotes competition but trade deals dissuade competition. TPP is anti free market and pro wealth concentration/cartel/oligopoly/duopoly. What pisses me off is Prebble sold NZ rail and became a major shareholder in mainfreight. That should never have happened.

                  Bond yields are weak (http://www.rbnz.govt.nz/statistics/b2) so we’re going to have to a to have a 5 year manufacturing and jobs programme ready to go to raise the figurative boats if our IOU’s become unserviceable. The 30 year bond which Thatcher funded neoliberalism on is coming to roost.

                  We should have included a swaps deal in our trade pax. Wayne should have done a lot different, but he keeps banging on about yesterday’s problems.

                • One Anonymous Bloke

                  Ahem!

                  Wisconsin Sheep Dairy Cooperative is a farm-to-table cooperative located in Northern Wisconsin. The farmer members raise and milk sheep on sustainable family farms. As the single largest source of high-quality sheep milk for dairy plants in the United States, we are the premier makers of sheep dairy products, such as artisanal and speciality sheep milk cheeses, yogurt, and butter.

                  ..and this:

                  Madison Commies unite!

                  It’s amazing what a Google search for “wisconsin dairy coop” turns up 😉
                  .

                  • Andre

                    “artisanal”

                    Cheese in Wisconsin was really disappointing. Went to a couple of different shops, they all had lovely selection of different cheeses that looked delicious. Both times I got a wide selection home, and they all tasted like cheddar. Every fucking one. Even the runny brie and the one with blue vein mould in it. Fucked if I know how that’s possible, but it was.

                    • One Anonymous Bloke

                      I blame Charter schools.

                    • exkiwiforces

                      I know what you mean with their so called cheese/ dairy products rubbish. You should try eating in a Yank DFAC on a Yank military base it’s the shits in more ways than one.

            • Draco T Bastard 7.2.1.1.3.2

              Given Trump is against the TPP, Wisconsin dairy is under no threat from NZ.

              It never was. NZ dairy is under threat from Wisconsin though.

      • Psycho Milt 7.2.2

        It could fill a book, and it probably will at some point.

        Oh, yes, Many, I expect.

  7. Morrissey 8

    Yes, there’s a real concern that the United States will start supporting ISIS in the Middle East, supporting the blockading, incarceration and mass murder of Palestinians, and crushing democracy in Central and South America.

    Oh, wait….

  8. Draco T Bastard 9

    But both trade protectionist and immigration control measures will spark comparable trade retaliation by other countries of a scale that will undo much of the trade dynamic that has lifted poorer countries out of poverty in the past three decades: trade and labour mobility. Britain is about to feel the consequences of similar moves as it exists the European Union.

    Still swallowing the Koolaid I see:
    ‘Michael Fish moment’ as UK economy thrives after Brexit vote

    Economic forecasters had a “Michael Fish moment” over their mistaken Brexit predictions, the chief economist at the Bank of England has said.

    Andrew Haldane said it was “fair cop” to say the profession was “to some degree in crisis”.

    Of Course Brexit Didn’t Cripple The Economy – British GDP Growth Revised Up To 0.6%

    Back in the spring, before the referendum vote on whether Britain should leave the EU, we were warned that economic doom would follow swiftly upon any decision to do so. The Treasury told us all that the economy would crumble under the uncertainty, the Chancellor that there would be immediate tax rises and spending cuts. 6 months after we did so vote to leave it is obvious that this hasn’t happened. Indeed, we’ve just had the news from the ONS that the economy is doing rather well, with GDP growth just revised up to 0.6% for the quarter.

    BRITAIN’S BREXIT RICHES: IMF expert BLOWS APART gloom of discredited Remoaner economists

    European economics guru Ashoka Mody said the UK is destined for a richer and fairer future after unshackling itself from the “depressing decay” of the failing Brussels project.

    And he emphatically swatted aside europhile claims the economy has not felt the impact of Brexit because it has not happened yet, pointing out that companies have already factored in that the country is leaving the EU.

    Professor Mody, an academic at the world-renowned Princeton University and the former deputy director of the IMF’s European arm, said that even as an optimist he has been surprised by how Britain has boomed since June 23.

    Trade has never really made people better off. It’s development of the economy that does that but trade actually prevents that.

    The shift to mercantilist governance from one guided primarily in world affairs by military intelligence and military power will be a really important shift for world powers.

    The US has always used it’s military to advance it’s oligarchies interests. That’s not about to change.

    I do not yet know what the emerging world of populist nationalism will look like, but what is clear is that Trump is a part of making the whole ambit of politics much smaller: smaller states, smaller multilateral horizons, fewer and weaker cross-national binds. There will be no more Paris 21’s, no more GATTS, no more cooperation. It is the world of the strong countries and strong corporations looking after the strong, against the weak. That means us.

    Probably and another reason to develop our economy and strengthen our defence forces.

    • Ad 9.1

      Britain hasn’t left he EU yet so there’s no useful points to be made about its current GDP and any causation to leaving the EU. As I noted, we will have to wait for at least the whole of 2017 to see what those effects will be.

      • Draco T Bastard 9.1.1

        Yeah, one of the articles I posted addressed that point as well.

        Simple fact of the matter is that once development of the economy starts trade has very little effect upon the welfare of a nations populace.

    • ian 9.2

      I would disagree that ‘companies have already factored in that the UK is leaving’ because I don’t think any multinationals know what form the separation will take.
      When you think about it, the substantial considerations for what might impact business are not what the UK draws up, but the Eurozone’s reaction to it. For instance, what if the UK left, and the Eurozone required that all testing of medicines be conducted in domestic laboratories and by staff that were ensconced in an EU state? Boom, there goes their pharmaceutical industry. What if the Eurozone’s reaction wrt information privacy was that (like New Zealand) a person’s private information cannot be transmitted outside the Eurozone? Boom, there goes the financial services industry. There are so many things at this point that are outside of the control or possible forecasting of business that it would be foolish to read anything into their behaviour.

      I would agree, though, that this is probably a going to be a ‘Michael Fish moment’ except that it will play out in the true sense of the expression. A pronouncement of fair weather based on a slightly more buoyant quarter, followed by a devastating storm.

      • Draco T Bastard 9.2.1

        For instance, what if the UK left, and the Eurozone required that all testing of medicines be conducted in domestic laboratories and by staff that were ensconced in an EU state? Boom, there goes their pharmaceutical industry.

        More independent studies of the effects and efficacy of pharmaceuticals – great idea.

        What if the Eurozone’s reaction wrt information privacy was that (like New Zealand) a person’s private information cannot be transmitted outside the Eurozone? Boom, there goes the financial services industry.

        That would probably be good for them and the rest of the world.

        Really, the financial ‘industry’ is what’s sucking the life out of economies everywhere.

        When you think about it, the substantial considerations for what might impact business are not what the UK draws up, but the Eurozone’s reaction to it.

        A business should be able to survive solely upon the local population. If it can’t then it’s actually grown too big.

        • ian 9.2.1.1

          I agree completely with all of your points, particularly that business should be able to survive solely on the local population. Unfortunately, that is not what has happened in the UK and, as their hinterland shrinks following Brexit, it is very likely that their economy will contract substantially. One quarter of good news (likely off the bat of a stronger than expected Eurozone performance) does not, a summer, make.

    • Wayne 9.3

      Draco

      Your anti trade bias is against the views of just about every economist in the world. Trade is clearly a benefit for most nations. Virtually none of them can make everything.

      For modern sophisticated goods, it looks like a minimum economic size is 500 million people at first world levels. Take civil aircraft. There are two suppliers in the world for the most advanced large aircraft, Boeing and Airbus. Sure there are other civil aircraft manufacturers, but for 787 of 350 sized aircraft there are only two.

      Without trade New Zealand would have a nineteenth/early twentieth century lifestyle. No international telecoms, no internet, no international air travel, cars that are like the unlamented Trekka, etc, etc.

      Now I know nothing I say will convince you, but at least you should acknowledge some basic facts.

      • Andre 9.3.1

        “Your anti trade bias is against the views of just about every economist in the world.”

        And at least one R&D engineer, whose career has been spent working on products that are majority exports and wouldn’t have been viable projects without access to export markets.

      • Sacha 9.3.2

        As with Hamilton’s Pacific Aerospace, our high-tech manufacturing has to be well-matched at global niches where we have better understanding or design. Sometimes we might be the world leader in one like Buckley Systems.

        The Trekka was only possible because of trade from Czechoslovakia, in any case. Heard Todd Niall’s RNZ story on it recently.

      • Draco T Bastard 9.3.3

        Your anti trade bias is against the views of just about every economist in the world.

        Reality isn’t a popularity contest.

        Trade is clearly a benefit for most nations. Virtually none of them can make everything.

        Actually, they can make everything. Anything that can be made by one country can be made another. They just need the knowledge and the infrastructure.

        For modern sophisticated goods, it looks like a minimum economic size is 500 million people at first world levels. Take civil aircraft. There are two suppliers in the world for the most advanced large aircraft, Boeing and Airbus. Sure there are other civil aircraft manufacturers, but for 787 of 350 sized aircraft there are only two.

        And neither of them would be commercially viable without massive government subsidies.

        In fact, that is actually the problem. You’re basing your assumptions upon commercial viability rather than economics. Consider this: How commercially viable would manufacturing of cars be if oil was US$200 per barrel and CO2 emissions was US$200 per tonne?

        Economies of scale would no longer match – and neither would those aircraft manufacturers.

        Without trade New Zealand would have a nineteenth/early twentieth century lifestyle.

        No we wouldn’t be.

        And, at end of all that. I’m not against trade – just against being dependent upon it as we are now.

        Do some research – exchange it for other research from other nations and then develop and produce what we need for ourselves from our own resources.

      • ian 9.3.4

        Whoops! There are only 320-odd million people in the United States, home of manufacturer Boeing. And here is the actual list of manufacturers that produce aircraft in the Dreamliner/A350 weight range: Boeing, Airbus, Ilyushin, Tupolev, Comac, Antonov.

        • Clump_AKA Sam 9.3.4.1

          If you take each of trumps policies and test what effect each one will have on real GDP you’ll obviously get different results but you could establish a base line which is like throwing darts. You’ll learn more about the economy studying earthquakes than that.

          First you have to prove if running a budget deficit is negative. If it’s negative then doomsday predictions set off and soldiers go to places where trade stops flowing.

          If running a budget deficit (my money is on this) is positive then the US government pumps money into the economy by spending more than they receive in taxes until you’ve raised all boats then start paying it down. Seeing how there are two unoccupied seats on the US federal reserve board, my prediction is trumpet will put two republicans in meaning the board will be a large majority GOP and trump will park all his new debt on the fed res.

          • Colonial Viper 9.3.4.1.1

            If running a budget deficit (my money is on this) is positive then the US government pumps money into the economy by spending more than they receive in taxes until you’ve raised all boats then start paying it down

            It helps if you happen to have the privilege of issuing, out of thin air, the world’s always-in-demand reserve currency.

            • Clump_AKA Sam 9.3.4.1.1.1

              We have one to we just choose to borrow from there’s for political reasons. And political reasons can be changed. Welcome to trumpism

              • Colonial Viper

                We have one to we just choose to borrow from there’s for political reasons. And political reasons can be changed.

                Touché

                (And another reason why pretend lefties like Labour talking about why the UBI or NZ Super are “unaffordable” is so galling)

                • Clump_AKA Sam

                  Reganonmics/Thatcherism/Rogernomics experiment was all funded on the 30 year bond. That’s gone now. This is our chance to make a new. We’re smarter now, motivated, we know what we want to build. Let’s not fuck it up

                  • Colonial Viper

                    You and I might have some “radical” ideas about what we urgently need to build for the future; however others still support building “affordable” $600,000 first homes in Auckland.

                    • Clump_AKA Sam

                      I can’t tell the market I’m right.

                      The markets tell me if I’m right.

                      This isn’t a dig.

                      There are so many designs/consent ready and waiting for cash. Just how much cash will fill those buckets is yet to be seen.

          • Nic the NZer 9.3.4.1.2

            Gerald Friedman analysed Bernie Sanders proposals in a similar way, and concluded that Sanders economic policy would set off a boom in the US economy.

            You can imagine what the establishment thought of that!
            http://krugman.blogs.nytimes.com/2016/02/26/romer-and-romer-on-friedman/?_r=0

            And more pertinently, Krugman calls the end of the recovery period just in time to say that the deficit is important again.
            http://www.nytimes.com/2017/01/09/opinion/deficits-matter-again.html?rref=opinion&module=Ribbon&version=context&region=Header&action=click&contentCollection=Opinion&pgtype=Blogs

  9. adam 10

    Thanks Ad, good read.

    I was thinking whilst reading your piece, of a quib a mate of mine uses, and which is in the latest Pillager documentary.

    China is a one party state, but with enough pressure you can change policy. The USA have two parties, and elections, but you can never change policy.

  10. Cinny 11

    Turns out Vice President and President are exempt from disclosing any conflicts of interest. USA legislation is out dated in this regard, so many rules and Trump will always find the loop holes. Sadly USA citizens only have Trumps word that he won’t use his position of power to enrich himself and his companies.

    How many times has he gone back on his word?

    Counting the Cost is rather insightful this week

    • Colonial Viper 11.1

      Trump enrich himself? You mean from $3 billion wealth to $4 billion wealth?

      That’s the beautiful thing about Trump – he’s not like the Clintons who needed to sell their public office and their political career to keep the money train going.

      BTW a massive amount of Trump’s business value is in the perception of his main brand = TRUMP.

      And when he was elected as President of the United States, the value and prominence of his brand skyrocketed.

      So he’s already massively profited from being President.

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