Eighty years ago, British political and economic theorist Harold Laski, in his book “Liberty in the Modern State,” noted that successful nations generally make politics work for the economy, not the other way around. He highlighted the state of the American economy after World War II, which was facing the threat of shrinking exports to the world at that time.
In his book, Laski proposed three solutions to address this: first, the state should reorganize the purchasing power of its citizens through a planned economy model to compensate for the decline in its foreign trade. Second, the American government should extend more loans to support the purchasing and consumption capacities of its foreign clients around the world. Third, Washington should forcibly impose its exports on global markets through sanctions and economic wars.
Remarkably, Laski’s predictions from the past converge with the future actions of “Donald Trump” during his first presidential term from 2016 to 2020, and what he intends to continue and implement if he wins the 2024 elections. Trump’s upcoming economic agenda, known electorally as “Agenda 47” (in reference to the next president), aligns in its contemporary details with Laski’s broad solutions.
Through his electoral promises, Trump heralds impressive leaps in the standard of living for Americans, promising significant reductions in electricity and energy consumption costs, wide-ranging tax cuts for local businesses, and absolute support for U.S. independence in the oil and gas sector. This aligns perfectly with the views of his chosen vice president “J.D. Vance,” author of the 2016 book “Hillbilly Elegy,” which discusses these very issues.
Trump’s success in these promises could be the best realization of Laski’s first proposal to boost domestic demand for American products. However, the massive capital expenditures required for Trump’s tax cuts and loans to international importers of American goods may add 450,000 jobs more than his opponent’s plan by 2028, but also significantly increase U.S. debt by about $4.6 trillion by 2034, according to Moody’s credit rating agency.
Regarding economic wars, nothing is more indicative than the recent trade war that Washington waged against Beijing during Trump’s first term, which he plans to resume vigorously in his second term with more protectionist trade measures, imposing tariffs of up to 10% on all U.S. imports, and from 60% to 100% on all imports from China.
We pause briefly to consider the Chinese economy, which is currently experiencing complex and numerous contradictions in its economic policies, as noted in recent discussions of the Communist Party in a key closed meeting held every five years on this issue. Consumer and corporate sentiments are approaching their lowest levels domestically, and stock markets are hovering around five-year lows amid risks of declining demand, growth, and spending, and rising debt levels, all of which threaten deflationary pressures on China similar to those Japan faced in the 1990s.
Returning to Trump’s agenda, we see repeated sharp criticisms whenever he steps onto the stage. During his 2016 campaign, opposition media, supported by reports from major financial institutions, warned of a potential $1 trillion contraction in the U.S. economy and the loss of 4 million jobs if he were elected. Trump’s first term ended with an average GDP growth of 2.6%, excluding the impacts of the COVID-19 pandemic.
Now, in the 2024 elections, Agenda 47 faces widespread criticism, including warnings from a Moody’s study of a potential U.S. recession by mid-2025 if Trump wins, along with 16 Nobel Prize-winning economists predicting a global economic contraction, not just a U.S. one, if Trump’s proposed policies are implemented.
In conclusion, there is no doubt that American politics works for the economy, especially under Trump, even if it is dominated by theatrical and confrontational maneuvers. So far, Trump remains effectively at the center of the spotlight, and the world’s leading economy is recovering and growing, providing its citizens with more freedom, confidence, and adventure – the very three that cannot exist in contractionary economies as Harold Laski discussed in his important book.
