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Trump and Europe

Will Trump Ride to Europe’s Rescue?

ByDavid McWilliams

November 15, 2016 "Information Clearing House" - Could Donald Trump be the saviour of Europe? He might be. The papers are full of people telling us how much they hate Trump and lamenting that the US is now a racist swamp where the vilest of sentiments have suddenly been given currency. This is the predictable line, but maybe it’s not accurate.
Let’s drop the hyperbole and analyse what is likely to happen in the US. What if the man who the European elite vilify is the one person who can save the EU from itself? It is possible that Trump could offer Europe a way out.
Forget all the hysterical comment about Trump; while his campaign was full of xenophobia, vulgarity and coarseness, I suspect that language will be toned down and his presidential rule will be, well, more presidential. Trump is an unpleasant character, but that’s not a reason for not analysing why he won or what he’s likely to do.
Before we examine what Trump is likely to do, let’s first try to establish why he won. Throughout the summer, this column has been saying that Trump could win and lots of “serious” people dismissed it as a fantasy. Serious people argued that when the average American got into the polling booth, they would vote for “stability”. We heard the same arguments around Brexit. In fact, the opposite happened.
The reason is very clear: what feels like stability and security to the “serious” people in the media, the think tanks and those around power, actually feels like chaos and insecurity for the “average” guy.
With this disconnect in mind, let’s see what happened and is still happening.
The first major question is why did large swathes of white working class Americans abandon the Democrats for Trump? This was where the swing came from. These people are not racists. Otherwise how do we explain that the same people voted overwhelmingly for Barack Obama in 2008 and 2012? Yet in 2016, they voted for a man who counts the KKK and the Alt-Right movement among his supporters. Why was this? Did large swathes of white working class Americans become racist overnight? That’s not convincing. Committed racists don’t put a black man into the White House, not once but twice.
The root of the political alienation of white working class Americans lies in the direction the Democratic Party has taken under Bill Clinton and then Barack Obama, reaching its zenith under Hillary.
The Democratic Party used to be the party of labour. It agitated for the trade union movement, higher wages and better conditions for the working man; in return working people voted, in their millions, for the Democrats. That was the social contract up to the arrival of Bill Clinton at the top of the party.
Thereafter, we see the emergence of what are called New Democrats. This was also called the Third Way, and its British strain was Blairism. Both Bill Clinton and Tony Blair showed an aversion for the Labour movement, preferring instead to curry favour with business, celebrity and finance. The assumption was that the lumpen proletariat would always be counted on to vote Left, so the concentration would be on power and focus groups, rather than class and social issues.
In the US, this led to Clinton signing Nafta, which hugely benefited American corporations and drove down American wages, because no longer were American workers competing with each other, but were pitted against Mexican and Chinese workers as American companies outsourced. Wages fell and employment became less secure – for white working class Americans.
Clinton, also under huge pressure from his rich friends in Wall Street, repealed swathes of financial regulation, most notably the Glass Steagall Act – allowing investment banks to involve themselves in all sorts of speculation, which up to then was regulated. This caused an avalanche of credit to dump on America, with the result of rising indebtedness but more profit to the institutions that deal in credit, the banks.
Therefore, the only way that poorer white working class Americans could sustain the consumer lifestyle that advertisers told them they should have was not through their wages, which were stagnant, but through debt. So they became more indebted, and therefore more insecure.
To make matters worse, all Democrats wedded themselves – after Bill Clinton – to austerity and more or less balanced budgets. This is political suicide, particularly when your opponents – the Republicans – only care about austerity when they are in opposition.
When Republicans get into power, they spend like drunken sailors. But the New Democrats, to appear ‘responsible’ to their new mates on Wall Street, shackled themselves with fiscal probity. Not surprisingly, when you limit public infrastructure spending, your roads, railways and public services become outdated and overcrowded.
And who depends most on public services? Working people, not the elites.
At the other end of the spectrum, the New Democrats made three key elite alliances and you could see this very forcefully in Hillary’s campaign. The first was Hollywood; the second, Wall Street and the third, Silicon Valley. This tripartite alliance ensured that the Democratic Party shone with the luminous gloss of progressive liberalism, hippy dippy tech evangelism and, of course, lots of Wall Street money. But for the average guy in Flint, Michigan, places like Wall Street, Silicon Valley and Hollywood might as well be on Mars.
When the white working class gets angry and insecure in the US, race always enters the equation.
Then what about Obama? If these things had been going on for years, why did the white working class vote for Obama so overwhelmingly?
First, because Obama was an exceptional candidate, but second, because when race or intolerance surfaces, there is lots of evidence that middle-of-the-road white people will make one big gesture to minorities so as not to appear intolerant, like having one black friend or one gay mate.
It makes us feel better and, more than anything else, it covers us from the label of being in some way intolerant. “How could I be racist? Look, I voted for Obama!”
So the Democratic Party under Clinton and Obama, despite having power, as in the seat of power, were losing their grassroots support as they were becoming more and more removed from their own people without realising it.
Then along comes Trump and pushes all the right buttons, and Hillary can’t connect with the people because she has never spent any time with them and has made a powerful, glitzy alliance with success, when in fact what she should have been doing was listening to failure.
Trump, if he does what he says he will do, will abandon austerity, supercharge public investment and build infrastructure.
This will turn on its head the notion of austerity and balanced budgets, first in America and then in Europe because what happens in America, will be replicated in Europe.
As needless austerity is a root of much of continental Europe’s malaise, Trump may actually give the Eurozone the permission to do the right thing and invest in public infrastructure.
If Europe doesn’t do something to listen to its white working class, they too will jump ship and, vote for patriotic nationalism, or nativists if you prefer, whose ultimate goal is to leave the EU.

David McWilliams is one of Ireland’s leading economic commentators and was the first economist to identify the Irish boom as nothing more than a credit bubble, warning of its collapse and the consequences for the country. His objective is to make economics as widely available and easily understandable on as many platforms as possible.

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