Wednesday, January 18, 2017

Dear Mr. President-Elect Trump

Dear Mr. President-Elect Trump,

We would like to begin by congratulating you on your recent election as the 45th President of the United States of America. You have promised to ‘make America great again’, referring perhaps to a time period after World War II and before the 1970s when the U.S. was an uncontested superpower, incomes were rising and the middle class was growing. To be sure, there were many problems during this time period including the struggle for civil rights domestically and the conduct of a highly questionable military action in Vietnam. Nevertheless, you have highlighted a number of approaches to recovering this perceived ‘greatness’, almost none of which is based in fact and if implemented would most certainly send not only the U.S. but possibly the world in the opposite direction. We wish to offer you some advice regarding several of your proposed policy positions.

Let us begin with your plan to build a wall along the U.S.-Mexican border. We believe that this will not only be ineffective but send the wrong message regarding people of colour. In a survey regarding discrimination of Mexican immigrants, 40% said that they felt discrimination because of their heritage and 30% said that they were physically attacked because of it. A wall would support such actions and attitudes. We do not believe that your country will be made great ‘again’ through the perpetuation of hateful and racist behaviour. In general, immigrants accept jobs that citizens will not, with citizens perhaps fearing being trapped in a cycle of low-paid poverty. If you want Americans to take up these jobs, you might consider instituting a guaranteed income for all citizens. This would then encourage people unwilling to work for sub-subistence wages, to perhaps take on these jobs. 
Evidence from Finland suggests that this would be the case.

Second, let’s talk about your America-first approach to trade and production. You believe that globalization has hurt American industry, and taken jobs and money away from your people. Globalization is not going to disappear. Neither is the trend toward regional trading blocs, such as NAFTA and the proposed TPP, that have arisen in response to globalization. Mexico is your 3rd largest trading partner. In 2015, U.S. imports from Mexico were $295 billion and exports were $236 billion. A lot of this trade is intra-company movement of goods and services, so really benefiting U.S. industry. U.S. foreign direct investment in Mexico amounted to $107.8 billion in 2014 alone, constituting a 5.3% increase over 2013. Canada is America’s 2nd largest trading partner, with two-way trade totalling roughly $575 billion in 2015. These flows are a direct result of NAFTA. The off-loading of many low-skilled manufacturing jobs by U.S.-based multinationals to places like Mexico and China is not to be blamed on your trading partners. It is a function of companies responding to changes in the world economy. As these jobs have been lost, U.S. manufacturing value-added has actually increased quite dramatically over the last 30 years, from $700 billion in 1990 to $1,966 billion in 2012. This is due to a combination of mechanization and the recovery and retention of high-skilled manufacturing jobs across the country. A huge proportion of America’s wealth is dependent upon international trade and investment flows. Sure, the U.S. percentage of global trade has dropped over time, just as East Asia’s has risen. But the rise of Japan, China and so on is due in part to the behaviour of both U.S. corporations investing and producing in Asia (Mexico and elsewhere) and U.S. citizens consuming these products. At the same time, China has invested a great deal of its new wealth in the U.S., so helping America maintain its powerful economic position in the world. We are sorry to have to point out this obvious fact to you, Mr. President-Elect, but we are the world. The answer to perceived unfair practices due to regional and global agreements is to revisit and revise, not to scrap and try to go it alone. Remember how the world lurched into two World Wars? This was partly due to trade wars and hyper-nationalist policies. Do you really want to go in that direction?

Third, let us focus on your desire to get government off of the backs of the people. You have pledged to cut corporate taxes drastically and throw out two regulations for every one regulation that you introduce. Aside from being a rather odd thing to say, let us focus on what ‘deregulation’ entails in your view. You have suggested that you will scrap the Affordable Care Act, commonly known as Obamacare, and privatize the health industry because you think more competition will reduce overall costs and prices. You think Obamacare unevenly helps poor citizens and increases the overall cost of health care. You want to replace it with ‘Trumpcare’, but this is estimated to cost $550 billion, while 20 million people would lose health-care coverage, including a large percentage of those who voted for you. How will you pay for this if you further shrink the tax base, particularly among that group of people most able to pay more tax in order to build a better society? An active state is essential for equitable development, and pulling out of essential services like health care will simply shift the burden onto those least able to help themselves and most in need. Is this the sort of America that you feel is ‘great’, Mr. Trump? You have also suggested deregulating the banking industry. Have you forgotten the housing crisis and the great financial crash of 2008? Canada, despite its proximity and reliance on the U.S., managed to keep its head above water because of tight regulations. We know that you have made much of your wealth by building casinos, Mr. Trump. But in our view, a primary problem with the world today is that current economic approaches toward the free flow of finance capital treat the world as a casino. We need to reign in the bankers, and to bring the financial world back into line with the world of actual economic production. There are tools out there, such as the long-proposed Tobin tax on capital flows. The answer to our current economic malaise, Mr. Trump, is not to turn your back on the world, but to embrace it with all its faults and to make it better through better laws, policies and practices. As you take up the position as ‘leader of the free world’, we hope that you will consider what we have said here and join us as part of the solution, not pull apart from us and become a large part of the problem. What we need is a thoughtful and considerate partner, not a new bully on the block.


Larry Swatuk and the Class of INDEV 200
School of Environment, Enterprise and Development,
Faculty of Environment, University of Waterloo

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