Promising to “make America great again”, a composed and rather humble Donald Trump held his US presidential victory speech this morning. His stated strategy is to rebuild infrastructure, and to harness the skills and talents of everyone. That includes the many people who voted for him who feel they have been left out up to now. He particularly talked of veterans and made it clear that Americans includes the wide range of ethnic and cultural diversity of all its citizens.
Doubling growth was also something he talked about.
I just want to add my two pennies’ worth to this morning’s onslaught of comments by taking the guy at his word. First of all it’s a tough job as, according to Marxist economist Michael Roberts, the US economy is a poisoned chalice. According to economists at investment bank JP Morgan, US corporate profits declined 7% over year-ago levels. On that basis, they reckon, “the probability of a recession starting within three years at a startling 92%, and the probability within two years at 67%”.
The Marxist analysis goes a bit like this: as corporations compete with each other, their aggregate profits go down. With the priority being put on return on capital – the money invested in the firm – business leaders do all they can to increase profit per employee. Less goes on wages, more goes to appease investors. Michael Roberts means that it has got to a point where business leaders are shying away from investing, they are rather “hanging on” by shedding staff, handing out dividends, doing all kinds of accounting and financial shenanigans and hoping for a better day. Marxists have long predicted this slow and painful end to capitalism and Trump is taking over at a time when corporate profits are so low you have to ask yourself if it is at all worth running a public listed firm at all.
Then you have to add to this the increasing cost of resources as they get scarce.
But let’s get technical here. Donald Trump wants to double growth.
Gross domestic product can be calculated using the following formula:
GDP = C + G + I + NX
C is equal to all private consumption, or consumer spending, in a nation’s economy, G is the sum of government spending, I is the sum of all the country’s investment, including businesses capital expenditures and NX is the nation’s total net exports, calculated as total exports minus total imports (NX = Exports – Imports).
He wants to bring the level of maintenance of roads, bridges etc up. That is good. Maintenance work creates jobs. However, the transport system is fossil-fuel based and fossil fuel availability is not a long-term going thing.
What is really needed is investment by government and industry in the green, circular, inclusive economy. If you really want to make America great then you need to create places to live, food production and energy capture that work without burning fossil fuels and depleting soils and mineral deposits. And provide work for all.
(When people have work they spend more so C goes up. So too does revenue to G so G can rise too.)
A bit of fancy tax footwork that slows the mutually destructive downward dance of listed companies would be nice. Government spending on non-listed companies, cooperatives and the like (ones that do not have the capital return stress syndrome) would create the jobs needed to increase inclusiveness and jobs that enhance the shared, common sector including health care and education.
Spend on infrastructure of the kind “invest once reap the benefits for 100 years”. Renewable energy, regenerative agriculture, affordable eco-housing are all good things to invest in too.
He probably won’t do it, but hefty environmental fees, where the revenue goes back to tax payers, perhaps as part of a universal basic income, would indeed punish pollution-producing products and favour green ones. People should be encouraged to consume instead of being given a bad conscience. As environmental laws and fees toughen up, the cheapest things will be the ones that are best for society and the environment. Your organic locally-produced lettuce will be cheaper over the one trucked up from California. Automation of jobs will only be done when it makes sense, otherwise tax frameworks will ensure that the essence of the firm is people working to produce goods people need in a way that respects the planet and society.