Very Bad Things

Pontiac at sea level, 1938

American capital exited the 2nd WW in a dominant position due to its incomparable industrial power. In the postwar years that position was eroded and finally disappeared. American domination continued despite this for a pair of reasons. The first, a preponderance of military power, was eroded by Vietnam and similar struggles and was finally lost with the invasion of Iraq. Although still capable of vast destruction it was shown to be incapable of reaping economic benefits to outweigh the enormous cost. It has left the American economy with the burden of an unstable and expensive stalemate that is the largest factor in its fiscal bind. This leaves us with what is not, strictly speaking, a comparative advantage but is, nevertheless, a bargaining position in world trade, we remain the world's largest consumer.

This final straw, codified in numerous trade deals and expressed in the US$' status as reserve currency, is now, assuming the Trump administration stands with its protectionist trade policy, evaporating. And what will American workers gain by it? Nothing.

Buy American. Hire American. How does this work? It is possible, though by no means easy or even long lasting, to drive up the wages of American labor by imposing tariffs on foreign commodities and by other protectionist legislation. Congressional support for this is not assured. But another measure which uses existing law and is already underway is to remove undocumented workers, and their lower cost, from the workforce.This will be less effective at raising wages than at satisfying the reactionary lusts of Trump supporters and at repressing demands from the undocumented workers that remain.

But an even more basic problem remains. It lies at the foundation of Trump's support. It's the belief that, as a businessman, he will be able to reverse the secular decline of American wages. Leaving aside whether he qualifies as a successful businessman or merely plays that role on TV he faces the same limitations that all presidents of a capitalist America have faced. Even with his party controlling Congress (perhaps especially with that) the president can do very little to compel capital to pay high wages to workers. Trump is trapped in the same economy as his predecessors. Although factions vie for control of economic policy none will bring it to stray far from the needs of capital.

Whatever steps this administration does or doesn't take to "protect" the economy a shrinkage of global trade is underway. Colliding with this are unsustainable levels of public and private credit. If the American market is walled off from global trade to any extent there will be a price to pay. There are financial chickens that must come home to roost. And Trump, to the extent that he knows anything and to the extent that we can discern what that is, knows it. Almost unbidden he expounded at length on this in the debate of 9/26/16:

And believe me the day Obama goes off and he leaves and he goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you are going to see some very bad things happen because the Fed is not doing their job. (And the other leaving that looks good is the stock market)

The hard lesson that awaits those who have placed their faith in the business acumen of Trump is that if America could be managed like a privately held business that would have happened long ago. The "administrative state" which is slated for deconstruction is not a valueless appendage on American capitalism. The state is the very measure of the contradictions of private society. It is possible, marginally, to shift the state away from its regulatory functions in favor of its coercive role. Indeed, that is an enduring plank in Republican publicity. But that doesn't abolish the state. It probably doesn't even shore it up much.

This leaves the Republicans with their usual economic function. They will attempt the further ballooning of global credit via the blind political support for military spending. But how worn away is that? Its decrepit condition can be seen in the proposed budget. Every increase in the war budget must be seen to be offset by cuts in social spending. A very modest increase in waste paid for by undisguised and savage reductions in the standards of living for the working class. For now, tidbits for those who already have everything. But where will the next TARP come from? What will be left in the bag of tricks when the "very bad things happen"? The Boss, the state, the Republican party, and the Democrats to boot, they will all be struck dumb. Well, of course, they won't really shut up. But who will be listening?