The Rust Belt Messiah: How Trump Can Resuscitate US Manufacturing

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Will Trump make America great again? Here’s what he is capable of, and even though there are several “again” points to it, the looming construct of a neo-modernist living environment is deemed unequivocally new somewhat.

Kristian Rouz – “They will soon be calling me Mr. Brexit,“ Donald J. Trump’s official Twitter account proclaimed in the early hours on 18 August as reports were incoming from across the pond indicating a sudden rebound of the UK’s economy in July, following the referendum on separation from the EU.

Donald Trump gestures during a media event. - Sputnik International
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In the light of that data, Trump’s neo-isolationist rhetoric gains a substantial boost to credibility, particularly given the multiple voices that had predicted Britain’s inevitable economic demise after the “Out” vote, and the ongoing concern lingering around Trump’s presidential bid.

The billionaire investor, who increased his fortune from “just” $200 mln in the early 1980s to his current net worth of an estimated $8.5 bln, has repeatedly pledged to revive and restore the US manufacturing The state of affairs in US industrial production has been steadily deteriorating since the US has become increasingly integrated in international trade deals, particularly with economies featuring lower labor costs, looser tax regimes and a greater degree of policy deregulation and laissez-faire.

The advent of the Japanese car in the 1980s dealt a blow to Michigan’s very own Motor City, and the push for NAFTA in the 1990s squeezed disposable incomes from the American working class. Recent American efforts to implement deals like Trans-Pacific Partnership and Transatlantic

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Trade and Investment Partnership (TTIP) are jeopardizing the feasibility of America’s agriculture, hi-tech industries, and even financial services. The reason is simple, as costs of doing business in the US have been rising steadily since the 1970s amidst all the personnel- and environment-friendly regulations, higher taxes and collaterals, many of America’s current and prospective free-trade partners have become increasingly competitive against the world’s largest economy.

Building a wall – not the widely-publicized border wall, the fragments of which have existed for many years, but a wall of customs tariffs – does not, however, seem to be a viable solution, and, apparently, the “Trumponomics” team are well aware of the hazardous behind-the-wall stagnation in national economy, examples of which the world has seen in the previous century.

Trump will not revive the Rust Belt by putting it into a prohibitive-customs-tariffs incubator. Instead, lowering business expenses in the manufacturing sector could come in handy, given that consumer demand is still solid in America’s domestic market. However, does such an agenda correlate with Trump’s proposed measures on “bringing back jobs and prosperity”?

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The Rust Belt, stretching from Upstate New York through Pennsylvania to West Virginia to Ohio and Indiana, as well as Michigan and parts of Wisconsin and Illinois, has been mired in lost jobs (ranging between 43 and 58pc and above since 2002 in parts of Michigan and Pennsylvania, most prominently). Bringing jobs back is not a matter of immediate presidential action, but the first step is boosting the competitiveness of domestic industries against imports. In economies leaning toward central planning, governmental subsidizing is typically a way, yet, subsequently the New Keynesian approach typically becomes less efficient as corruption gains momentum.

In his economic program last month, Trump offered tax cuts, deregulation and protectionism. A likely blow to the environmentalist cause (and hardly as much to the environment itself), as well as the current fiscal policy narrative (again, hardly as much to tax revenues per se, see Laffer curve), the tax cuts and deregulation could boost investment  in manufacturing, shaping a new landscape in America’s industrial production. However, it is not going to be the same as it used to be a decade, or two or three ago.

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Shifts in technology, industrial property market, equipment and amounts of readily available workforce, as well as many other factors, will all likely warp the course of Trump’s economic reform. Would Trump provide a kick start to the Rust Belt? Yes. Will the Rust Belt be anything like the thriving Motor City of the 1950s? Not at all – the tides of history are not at Trump’s command. What is it going to be like then?

A looser tax and regulative regime would attract industries that are first and foremost struggling with higher costs of production in other parts of the US due to huddling. Silicon Valley is a prime example, with many tech companies seeking to decentralize their business to other parts of the US. Subsequently, Trump’s policies will immediately spur internal movements in capital and industrial production within the US. But what about bringing factories from overseas?

At this point, it is impossible to compete with the developing World in terms of labor costs in the open market due to a variety of factors, determining the face of multiple labor markets across the world’s many regions. It is not only overall lower wages, but also such ugly practices as labor camps, child labor, and various other forms of non-market exploitation.

Customs tariffs are, therefore, a necessity. Historically, the issue of tariffs is a sensitive and volatile one for the US, in particular, as it once triggered a war between states. Yet, Trump is adamant in his Lincolnesque protectionist fervor.

"Every single unit you make that crosses our now very, very strong border, we're going to charge you 35 percent of the cost of that unit," Trump exclaimed before a gathering of Pennsylvanians during one of his rallies last week.

Such measures would contribute to an accelerated re-shoring of some of the traditionally American industries. However, Trump’s fiscal stimulus would more likely trigger an emergence of new trends in the US manufacturing, which cannot be foreseen at this point.

The Rust Belt would indeed benefits economically from the “Trumponomics.” Yet, in this struggle for American hearts and minds, a struggle between the left-wing blurry post-modern and the heavy-stomping onslaught of the Trumpist neo-modern, either outcome is uncertain, but the consequences of each are self-evident. Yet, beware of what you wish for – the technocrat neo-industrialist economy with long workhours at the actual factory might turn out to be a tougher living environment than the social benefits-fueled paradise of lattes, not-so-medical marijuana, and Netflix and chill.

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