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Trump is Hand Grenade Thrown by American Working Class Against the System

Cultural Protectionism has Taken Over from Economic Protectionism
The last year has taught us, with Brexit, the US elections, growing anti-EU sentiment on the continent of Europe, that ignoring national interests, which are more and more often expressed in terms of national culture and identity, is not possible anymore. Will this translate through into the reconstruction of economic protectionism?

Professor Steve Keen, from the University of Kingston, an economist and an author answers this question.

Are identity and culture the new important subjects in politics? Professor Keen gives an explanatory answer. To him, a progressive form of identity and gender politics and socialist politics have been bedfellows for the past 40 years. One of the clearest examples is in France, he says, where you have Hollande; a socialist leader imposing austerity whilst talking about progressive attitudes to identity politics. Progressive identity politics has been tainted with the brush of austerity politics imposed by the European Union. The socialists have been sunk by it, with a resurgent Marie Le Penn benefiting from the support of middle aged white farmers, and white workers in America supporting Trump. It was a massive mistake, Professor Kenn says, for the ‘left’ to align itself with neoliberal economics and failed economic policies which are now falling apart.

The centre left, Professor Keen continues, which has been the mainstream socialist thought for some time are basically saying that we have to get into power, and then make capitalism work better. This is a complete travesty, because success was only brought about by leveraging unsuccessful economies. They ended up deregulating the financial sector, and the next thing they know, economies come crashing down. There is identification of failed social policy with the failed neoliberal policy. The main sufferers have been what is used to be called the industrial workers, they are now saying that if you can't protect us, we are going across to the people who might be able to. They might be ugly but they might allow us to throw a political hand grenade into the system to wake up those Americans who have been neglected ideologically by the left and also because they have actually lost their jobs to benefit people in China, as Trump has been arguing.

Will this lead to the reintroduction of trade tariffs? Professor Keen says that there is an economic term called ‘comparative advantage’ which means that it is good for an economy to specialise in what it is good at. This theory was adopted by most economists, including progressives; because it is so ingrained in our economic thinking from the days of David Ricardo. But, Professor Keen continues: if you take a good empirical look at this theory, something which is being done by a group of people at the economic complexity lab at Harvard university, which is staffed not by economists but by computer scientists, the conclusion you come to is the exact opposite.

The argument that if we reduce tariffs, economies will grow more rapidly is intellectually moribund. If you look at countries like South Korea, Japan, China and so on, they did protect their industries in the early stages, but encouraged industrialization. At a later stage, when these countries were competitive with the rest of the world, they went for free trade.

Keen says that globalization will be affected quite dramatically by the imposition of trade tariffs. Also, technological advances mean that the advantage of low wage economies are being reduced. Foxconn, for example, is spending a large amount of money to replace its own labour with robots right now. Universal Basic Income will be the obvious future.

In conclusion, Professor Keen does think the resurgence of identity politics will lead to the reintroduction of trade tariffs.

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