Trump’s Turbulent Debut – Part Two

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nbc-fires-donald-trump-after-he-calls-mexicans-rapists-and-drug-runners_4By: Claudio Katz / Source: Resumen Latinoamericano / February 2, 2017

The furious attacks on Mexico are a warning to bigger competitors. Trump is flexing his muscles with with the struggle to get the victims to pay for the wall that excludes them.

Another thing at stake is the reduction of the commercial deficit with the neighboring country and a renegotiation of the North American Free Trade Agreement (NAFTA) to make it more favorable. But since the imbalance of the NAFTA is not as important as in treaties with other countries, evidently this is a preparation for larger struggles.

Trump assumes that Peña Nieto will accept all humiliations, since 90% of Mexico’s exports go to the U.S., and to increase taxes on them would be nefarious for the country’s economy. He also imagines that the country’s establishment lacks an alternative to the complete subordination of the North. He’s also sure that Canada will back him.

A third of the wall has already been built by previous administrations without the need for an aggressive bravado. But Trump is interested in the message. It’s propaganda for his administration’s plan to manage workforce conservatively. His emphasis on the need for white workers to take all of the jobs deepens the internal fragmentation of the working class. In the old days, the enemy of American workers were European immigrants. Later on, they were encouraged to hate black and latino workers (Gordon, 1985).

Over the last few decades, this fracture was used to consolidate the reduction of wages. The minimum wage is currently 25% lower than in 1968, despite the fact that productivity doubled.

Trump resurrects neoliberalism to reinvent the segmentation of workers in the current neoliberal scenario. He combines chauvinism with privatizations and labor flexibilization. He uses xenophobia to limit the mobility of workers and consolidate the power of capital.

This restriction of workers’ mobility is the main focus of his revision of free trade treaties. He doesn’t intend to question the continuity of accumulation at a worldwide scale. He wants to extend the scheme in the relation between the US and China, which excludes the circulation of workers between both countries. (Pantich, 2016).

 

The risks for the economy

Because Trump began his administration with many open fronts of battle, he’ll need economic successes to keep his administration afloat. His immediate approach is to make public works, which many demanded to Obama without success.

This inversion is necessary in an economy that is affected by the shabby state of public service after three decades of reductions to federal spending.

Trump’s proposal is not as ambitious and involves outlays that are far inferior than those made by China in the last decade. But even at this scale there are few precedents for effectivity in this kind of initiatives. No Western economy has achieved substantial reactivation through this method. The last failure of this kind was registered in Japan.

Trump’s project also entails a big public indebtedness and a significant increase of interest rates. This would make credits more expensive, in a country where the cheapness of credits had alleviated the economy in recent years.

For the time being, the markets are satisfied with their new representative in the White House. They approve the imminent tax reduction on business activity and approve the protagonism that bankers have in the cabinet. But the increase of fiscal deficit can impact investment funds with many US bonds.

The important presence of oil lobby also predicts bad news. They have recovered the power they had during the Bush administration, and their complete denial of climate change means that attempts to stop it will surely be hindered and control on toxic gas emissions won’t be addressed. After the warmest 5 years of recent history, the US will dismantle the Environmental Protection Agency (Chomsky, 2016).

It’s hard to imagine how Trump plans to recompose industrial labor as he promises. None of his proposals reverts the specialization of US economy in services or manufacturing of final goods. They also don’t counteract the automatization processes that are pushing the workforce out. And they also don’t make US worker cheaper than Asian ones.

This model entails a mix of monetarism (high interest rates) and ofertism (tax reductions), with Keynesian ingredients (reactivation of public spending).

 

International reconfiguration

Trump’s war-mongering is reflected in the President’s advisers. He incorporated more militaries in security positions than any other government in the last 60 years. He has already mandated a salary increase for the military and a bigger budget for the Pentagon.

Obama had already recomposed the Pentagon’s worldwide presence with the creation of more international military bases (from 60 in 2009 to 138 in 2016) and the authorization to drop 26,171 bombs (Gandásegui, 2017).

Trump attempts to get closer to Russia to weaken China. He’s doing the opposite move that Nixon did in the 70s when he sought to undermine the USSR by making deals with the Asian giant.

The oil agreements signed between Putin and Tillerson (in representation of Exxon Mobil) have opened this chapter. But the State Department is torn over this course. THat’s why so many secrets about Trump’s relation with Moscow have leaked.

Russia, on its side, has made numerous deals with China and has shown its geostrategic ambitions in Syria.

Trump also risks conflicts with European governments for his approach to Putin. Several European leaders refuse to eliminate the sanctions introduced by Hollande and Obama during the Ukraine crisis. This controversy adds to the uneasiness created by Trump’s demand for Europe to inject more money into NATO.

Even the faithful UK is in tension with the US. Trump backed the Brexit to ease the task of renegotiating free-trade treaties with individual regions. But opposers to the Brexit promote an intermediate bond with Europe, like Norway’s. Others propose a long, 7-year transition. Everything depends on the final resolution by the Parliament.

Latin America trembles

No other country of the world is so torn by Trump’s presidency as Mexico. The government is completely clueless and Peña Nieto only postponed the peregrination to Washington when Trump cancelled it via Twitter. The opposition unanimously criticized this act of submission.

Social struggle is boiling. Marches against the gasolinazo followed the long struggle of teachers and were more multitudinous than the reaction for the 43 murders in Ayotzinapa (Aguilar Mora, 2017).

But not only Mexico’s dominant class is clueless. Every neoliberal President of the continent expected to strengthen the conservative restoration with Hillary, by closing the deal on the Trans-Pacific Alliance. But they find it hard to design a strategy for the new scenario. They only deepen the internal paralysis of the Mercosur, and lack a defensive plan.

The main strategy until now is seeking alternative free-trade treaties, not only with the European union but also with China. Argentina and Brazil are negotiating with the Asian country, without even analyzing the economic consequences of these deals.

If Latin America were to remain in the middle of a commercial battle between the US and China, the effects could be devastating. Given the lack of sovereign policies in the region, both giants would ramp up the dumping and the plundering of natural resources.

The left is solidarious with the US protesters, which converges with their anti-imperialist rejection towards the White House.

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