Incredibly, it happened; a man who had never even held public office before and has shown scant regard for political convention has been elected President of the United States of America. Who saw this coming? Not the Democratic Party, not the mainstream media and certainly not the polls. The current political elite did not read the mood of their people – Hilary Clinton bringing Jon Bon Jovi to perform at her political rallies seemed like a throwback to earlier climes, an irrelevance for many voters. The political landscape has clearly changed.
Whilst Trump won the election for myriad reasons, chief amongst them was his economic stance. Fiercely anti-globalisation, he spoke to the parts of America that have seen their local industries crumble and die. Trump’s focus on America’s ‘Rust Belt’ – the once-powerful industrial and manufacturing sector that has seen severe economic decline and population loss – arguably won him his place at The White House.
One of Trump’s campaign issues was the promised renegotiation of existing trade deals, such as NAFTA. Repeated promises to bring jobs and industry back to the American heartland struck a chord with people who have seen their employment opportunities dwindle in response to outsourcing and cheaper global workforces. Trump’s pushback against globalization saw him at odds with the current political elite in Washington. His proposal to renegotiate trade deals to create American jobs and increase American wages however, have clearly gone down well with large sections of the population and have helped to propel him to the White House.
Looking at the roots of Trump’s unexpected victory, it is tempting to surmise that globalization has utterly failed. Whilst it may be argued that globalization has helped to create wealth in developing countries, unfortunately it has not resulted in a closing of the gap between the rich and poor; it has singularly failed to address the widening inequality in American society and beyond. The holy grail of any business is to reduce production costs – and thus increase profits – and globalization has enabled this primarily through the reduction of labor costs. Why pay an American worker $15 an hour when someone else, somewhere else, is prepared to do the same job for half that amount? ‘Why indeed?’ the multinational companies have been asking themselves. Whereas once a business might have reduced its running costs through innovative ideas and systemic development, globalization has enabled them to cut costs in other areas: specifically labor. The past few decades have seen a migration of production facilities largely to developing countries offering low cost workforces.
A revolt against globalization?
In theory, globalization was supposed to level the economic playing field and enable developing countries to export cheap goods to other, previously untapped, markets. But there is a human cost – developing countries such as China, Mexico or Bangladesh can only be financially competitive by exploiting their workforces. Developed countries have not managed to avoid the negative aspects of globalization either; employment rates plummet as multinationals transfer jobs to lower cost developing countries. Businesses that could look at increasing their profits through minimizing production costs for example, instead make savings that entail a human cost.
Globalization appears to have served only the few and any system that doesn’t deliver for large swathes of a population must surely be considered a failed one. Trump played on this failure to good effect. His promise of bringing back jobs to the disaffected American people proved to be a winning ticket; his proposed move away from globalization struck a chord with voters. Trump’s challenge now is to replace existing trade deals – such as TTP – with new alternatives that promote innovation and development and put an end to exploitation of foreign worker pools. Global economic growth has been slowing down for some time now – Trump’s challenge is to boost investment and long-term growth through increased nationwide governmental spending in areas such as development and infrastructure.
President-elect Trump’s challenges
Trump needs to rebuild the American economy, making it more responsive to the needs of the population and to safeguard important services from corporate exploitation. Placing an emphasis on research and development can prove to be incredibly profitable – the tech company Apple being a prime example; their spectacular rise was built on innovation and a high return on research costs. R&D can actually work to reduce company costs through more efficient production processes or more efficient products. This focus on R&D will naturally require skilled workers, meaning well-paid jobs for local populations, resulting in diverse economies that benefit humanity as a whole, rather than solely those at the top. Economics has always been a powerful political weapon – with Donald Trump’s victory, we found out just how powerful it really is.
About Sahel Majali
Sahel Majali currently acts as Chairman and CEO of the MID Group, and overseas all of the organisation’s current projects both in the UK and abroad.