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  February 20, 2017

Trumponomics: Empowering Proto-Fascists

PERI's Gerald Epstein says that we need to understand Trump's economic policy as aimed at amassing as much power as possible in order to stifle opposition
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Gerald Epstein is codirector of the Political Economy Research Institute (PERI) and Professor of Economics. He received his Ph.D. in economics from Princeton University. He has published widely on a variety of progressive economic policy issues, especially in the areas of central banking and international finance, and is the editor or co-editor of six volumes.


Trumponomics: Empowering Proto-FascistsSHARMINI PERIES: It's The Real News Network. I'm Sharmini Peries, coming to you from Baltimore.

Let's face it. We're all very confused about the Trump administration's policies in general. But its economic policies in particular, have given way to an important debate that is currently underway among Democrats, progressives and the left. It's about the stands on Trump's economic policies, and how to react to it. On one hand, they all agree –- this is progressives –- agree that some of his policies on, say, taxes, finance, industrial regulations, climate change and Obamacare, are extremely problematic.

On the other hand, things are less clear when it comes to Trump's policy proposals on infrastructure spending, and on international trade, that he is quickly trying to undo previous agreements, like NAFTA.

Joining us to help figure out these problems, and how to begin thinking it about it, is Gerald Epstein. He is a professor at UMass Amherst, in Economics, and he's the co-director of the Political Economy Research Institute at UMass Amherst.

Thank you so much for joining us today, Jerry.

JERRY EPSTEIN: Thanks, Sharmini, for having me.

SHARMINI PERIES: So, Jerry, you've recently published an article in the journal, Challenge, titled "Trumponomics: Should We Just Say No?" Let's discuss that, and let's begin with you telling us what is Trumponomics, and how should we begin to think about it?

JERRY EPSTEIN: Yeah. The problem is that progressive economists have many years of experience analyzing, critiquing, and proposing alternatives, to neo-liberal economics. The kind of economics that the Bush administration, that Hillary Clinton, Bill Clinton -- Bill Clinton came up with, Hillary Clinton was going to come with -– this kind of free market economics, and we're pretty good... we've developed a lot of good analyses to criticize those. And the question is whether these same kinds of critiques and analyses work with Trumponomics.

They tend to be kind of, on a case-by-case basis, this policy versus that policy, how could we tweak it, how can we make it better, oh, what's going to be the impact on inequality, et cetera? And what I argue is, that that's not sufficient for understanding, and analyzing Trumponomics.

Because Trumponomics is really part of a whole political movement, a whole system, whose goal is to amass as much power as possible, to reduce the power of alternative groups and opposing groups in society. And what we need to do is, look at each of these policies as part of a whole, a whole movement on the part of Trump –- Trumpism, really –- which I identify as a proto-fascist movement.

I think when we're analyzing the policies coming out of a proto-fascist movement, that is a movement that is on the road to a kind of, right wing populism, or autocratic fascist system. We have to analyze it all as a piece.

So, that’s kind of the main argument I want to make.

SHARMINI PERIES: So, Jerry, before we get into the details of the policies themselves, your article outlines six economic doctrines that you think Trump might be following. But you narrow in on two of those most likely scenarios.

Which are these two economic doctrines, and why do you think Trump is following them?

JERRY EPSTEIN: Well, the first thing we have to do is figure out what Trumponomics is. We have to, as I just suggested, identify what is the political movement that's pushing Trumponomics. But second of all, what kind of economics is it? And I think a lot of us are confused, trying to come to grips with this. A number of people have argued that it's a kind of Keynesian economics, that is based on demand policies, government expenditure, tax cuts, et cetera.

A second type, though, that is more accurate, is a kind of reactionary Keynesianism, because after all, the kinds of tax cuts and fiscal expenditures that Trump is proposing, will benefit the top 1% much more than anybody else, so it's going to lead to a much less equal income distribution.

A third type, that's probably even more accurate, is a kind of military Keynesianism, because a lot of this expenditure, fiscal expansion which Trump is proposing, is on more military expenditure. And so this can have a very negative impact on the economy, can lead to military adventures, imperialism, and so forth.

Some people, Jeff Madrick, for example, has argued this isn't really a Keynesian set of policies at all, it's kind of a Reaganesque supply-side economics. Where the idea is, you cut taxes, that's supposed to generate a lot more effort and productivity, and in the end you have a lower budget deficit than you started with, because output goes up so much. This of course has been totally debunked. We know this can't work. But some of Trump's advisors have proposed this kind of perspective.

All of these are types of economics that we have good experience analyzing, and critiquing. But there are two further types that I think are going to be especially important in analyzing Trump, and we don't have as much experience analyzing.

The fifth is a kind of crony capitalism, or kleptocracy. Clearly, Trump's policies, where he has massive conflicts of interest, with his family and his business holdings around the world, and he has now appointed a lot of his business buddy billionaires to the government, clearly there's a huge agenda in Trumponomics for crony capitalism, kleptocracy.

Now, we here in the United States, progressive economists, haven't been quite so familiar with analyzing this, though the financial crisis gave us a lot of practice doing that.

Our colleagues who studied kleptocracies around the world, though, have a lot more experience with analyzing this. And we have to make this kind of analysis central, I think, to our understanding of Trumponomics.

But the final type of perspective to look at this, I think is, the one we have least experience with, and is the most difficult, and this is what I call Schacht therapy -– S-C-H-A-C-H-T –- it's kind of a play on Hitler's economic minister, Hjalmar Schacht, who was central in designing Hitler's policies of managed trade, massive infrastructure investment. He built the autobahn and other kinds of public works, re-militarization, and so forth.

Now, what's so troubling about this kind of set of policies is that it has short-term benefits for workers, it has short-term benefits for business, it promotes economic growth. It even has elements that many progressives on the left in the United States, and elsewhere, have been talking about for decades. So, it has this kind of family resemblance to things that we've been proposing. But obviously, as in the case of Schacht, it led to a disaster.

And it's these kinds of policies, managed trade, infrastructure, where I think the left is going to have a lot of trouble sorting out what it really means. And I'm urging that the left, and the progressives, really need to see this in the context of this entire Trumpism, this movement, which I call the proto-fascist movement.

SHARMINI PERIES: Jerry, there's so much more to discuss here, in terms of how we look at Trumponomics. Let's continue this discussion in Part 2.




SHARMINI PERIES: Welcome back to The Real News Network. I'm Sharmini Peries, coming to you from Baltimore.

I'm speaking with Jerry Epstein. He's a Professor of Economics at UMass Amherst, and the co-director of the Political Economy, a research institute at UMass, as well. Thank you so much for coming back on, Jerry.

JERRY EPSTEIN: Thanks, Sharmini, for having me.

SHARMINI PERIES: Jerry, in the first segment we outlined what we think Trumponomics is, and how to begin to think about some of the proposals on the table. But you picked up a trade and infrastructure proposal of the Trump administration, and the issue of international trade, as particular things that we should use as a prism, to analyze some of his thinking.

Let's talk about those two, and why you think these are the two important things we should try to understand.

JERRY EPSTEIN: Let me just say, that this is an example of a set of policies that won't give us special trouble, in terms of analysis, or agreement among progressives, and so forth, because these are some of the same kinds of things that we've seen before.

Going back to the deregulated financial system that we had prior to the crisis, have banker buddies in the Treasury Department, and as economic advisors, we have Goldman Sachs people all over the place, who want to roll this back. So, yes, this is going to lead to more massive rents, and profits for banking -- is going to lead to more speculation, more instability -- and could lead to more of a crisis.

But we have groups that formed over the financial crisis. And the fight over Dodd-Frank, they're on the case, and we have Elizabeth Warren and others. This isn't, I don't think, going to be a problem for us, in terms of analysis, and in terms of warning the economy, and the people in the economy. What I'm more worried about is the two issues that you raised at the beginning, infrastructure and trade.

Infrastructure development, we've already seen a couple of union leaders meeting with Trump, and saying yes, we want to support this. This is exactly the kind of danger, because while, yes, this kind of infrastructure investment may generate some jobs in the short run, in the long run, what it does is, it's part of a strategy to lock in the working class, the union voters, as a part of the Trump coalition. And I think this is extremely dangerous. So, what we have to do is take something like that, and really analyze it carefully.

So, for example, the infrastructure program of Trump isn't really an infrastructure-spending program, it's really a privatization program. It's designed to make public resources available to private investors, with huge tax subsidies. We know from these, so-called Public/Private Partnerships, that they end up feeding massive profits to the crony companies that get these contracts. And so that's the crony capitalist part of this.

And yes, it may generate some jobs, but it's not going to generate as many jobs as a real infrastructure program, that would be focused on making the green transition to more fossil, fuel-free kinds of energy. In this paper, Heidi Garrett-Peltier, my colleague here at PERI, did some estimates, and showed that investments in green energy will generate a lot more jobs, better-paying jobs, than this kind of privatized infrastructure set of policies, that Trump is promoting.

And Trump is promoting an anti-union, anti-worker campaign. It's not supporting increases in the minimum wage. He tried to appoint somebody who's a total anti-union person, to head the Labor Department. These are all things that we have to look at, when we’re trying to analyze a, policy like, infrastructure.

So, my plea is, don't just look at the policy by itself. Oftentimes, that'll be sufficient to see that it's a dog of a policy. But we also have to look at it; in terms of what power coalitions it's going to develop? What's going to be the long run impact on the autocratic power of Trumpism?

SHARMINI PERIES: And you mentioned climate change, the greatest crisis we are actually facing, perhaps the world over. Trump's policies towards, of course, economy and climate change, is perhaps the most problematic one that we are going to be dealing with in the future.

What is some of the... advice you have in terms of the way in which we look at this problem, and how to analyze it?

JERRY EPSTEIN: Yes, I think it is... it's clearly going to be a climate emergency, largely because we have failed to address it, and now Trump is not going to address it. He puts these fossil fuelers in key positions in his department, Rex Tillerson, Pruitt, et cetera.

We macroeconomists, progressive macroeconomists, with important exceptions -– primarily my colleague Bob Pollin and some others, Jim Boyce and Julie Shore and others –- we have kind of, fallen down on the job. Because when we have analyzed macro policies in the past, we might look at its impact on jobs, or look at its impact on income distribution, or economic growth.

But we really haven't put front and center, in analysis of the impact of macroeconomic policies on climate, on fossil fuels. I think moving forward, if these policies aren't part of the solution, that is, if they don't help move us to a greener energy system, a greener environment, then they're really part of the problem.

And so, I think all of these policies, the infrastructure policy, the tax cuts, all of these policies, need to be analyzed, among other things, through the climate change lens. And when you do that, I think we're also going to find that these policies are wanting.

SHARMINI PERIES: Speaking of tax policy, Jerry, tell us what are some of the proposals out there that should be concerning for us.

JERRY EPSTEIN: Well, a lot of people have talked about the tax cuts that, lower the rates... the general rates, which are going to help the richest Americans. But I'm also particularly concerned about all this push, on the part of Trump, to try to lower corporate taxes. You hear all over the place, even on outlets like National Public Radio -- which is supposed to be a public media outlet -- talk about how American corporations pay the highest tax rates of any corporations in the OECD. It's simply not true. With all the tax breaks, and all the ways that they're able to shift income abroad and so forth, American corporations pay among the lowest tax rates.

Also, it's talked about, well, we have to lower tax rates, and give corporations a moratorium, so they'll bring all this money that they have parked abroad, back into the United States, so that they'll invest it here. Well, the fact of the matter is, they don't have this money mostly parked abroad, it's all sitting in banks in New York, but just with a different label. It's says, "foreign money", not, "American money", and they get the tax breaks.

So, I'm really worried about Trump's attempt to hide huge tax breaks for corporations, and the wealthy, in the guise of making the tax system more efficient. He's talking about a border tax. That's just a way of giving massive tax breaks to corporations, and so we... again, we have to look very carefully at that.

But I think, the other issue which you raised, which is really problematic, is trade. Trade is another one of these things where, for years, we've said let's not sign trade agreements, let's renegotiate NAFTA, let's not sign the TPP, et cetera. And Trump has been making similar noises, and it sounds similar to the kinds of things we've been saying. But I think this is another case, where if you don't look very carefully at what Trump is doing, we can get locked into a vicious kind of program.

Look what Trump is doing with migrants, and immigration. This is all part of his international economic program. And the idea of putting up more protectionist walls against Mexico, while throwing out Mexican immigrants, some of whom have been here for decades, I think has very serious, negative human rights implications. And we have to look at all of his policies, including his trade policies, in this light.

SHARMINI PERIES: Right. And, Jerry, of course, one other looming thing that we often read about, is his attack on Obamacare, and Medicare, and Medicaid, that's coming down the line. What should we expect, and how do we begin to analyze it?

JERRY EPSTEIN: Well, in terms of Obamacare, as many people pointed out, they have a problem, because the Republicans, including Trump, are probably realizing that a lot of people benefit from this. And so, they're now kinda stuck, exactly what to do about it. But clearly, whatever they do, it seems very unlikely they're going to propose what's really needed... is a single payer health insurance kind of approach, which the nurses union, and others, have been proposing for a long time.

But, in terms of social security and Medicare, this is going to take the lead of the Republicans, who have been trying to implement this for ages, and they may privatize it, cut it, et cetera. This is coming from Paul Ryan and others. So, we clearly have to worry about that.

So, as I tell my colleagues, in the olden days we just had to worry about neo-liberalism. Now we've got a big problem, because we have to worry about neo-liberalism and proto-fascism. So, there are many of these neo-liberal policies, that are still coming at us, and that we still have to fight against. But the main point of this article is that we also have to beware of these proto-fascist policies. And those we have to look at in a broader context, if we're really going to attack.

SHARMINI PERIES: All right. I thank you so much for joining us, and just laying out some of the things that we should be looking out for, and how to begin to talk about it and analyze, from what we already know. But also going forward, in terms of what we need to fine-tune our tools with, in order to analyze what Trump is proposing.

I thank you so much for joining us.

JERRY EPSTEIN: Thank you, Sharmini.

SHARMINI PERIES: And thank you for joining us on The Real News Network.




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