Arun Kumar 
Donald Trump’s big victory has surprised many analysts. He has won in spite of all the negatives. He is against the liberal traditions of USA. He is divisive and anti-workers. He is also against women’s rights over their bodies and believes in creationism and does not believe in climate change. Trump is isolationist, anti-free trade, anti-immigration and has been convicted and faced cases of tax evasion, etc.
Trump’s lack of faith in democracy is apparent. Without evidence he has repeated ad-nauseam that the 2020 election was stolen. He encouraged his supporters to attack the Congress on January 6, 2021. He tried to manipulate the vote in Georgia in 2020. During the campaign in 2024, he repeatedly said that the election would be stolen. He had even announced that he would not accept the result of the election if he was defeated — what faith in democracy and its institutions.
Appeal to the voters?
Obviously, there was something else that the voters took into account rather than all the negatives. Namely, he addressed the unspoken and sub conscious fears of many. He played on and heightened the fears that many felt deep down but did not verbalise because of political correctness. His supporters were comforted by his slogans delivered in half sentences. It is easy to widen the divides than to help narrow them. This strategy was used to mobilise votes among the various segments of society — young, old, men, women, urban, rural, coloured, etc..
At the latest count, Trump has got 75.9 million votes, compared to 74.2 million in 2020 — hardly a big wave. His victory is because many opposed to him did not vote. The per cent of ‘eligible to vote’ fell compared to 2020 from 65.9% to 62.2%. The turnout of voters declined by 5.5 million while those ‘eligible to vote’ increased by about five million compared to 2020.
Kamala Harris has 72.9 million votes while Joe Biden in 2020 got 81.3 million votes — a big drop. Perhaps many could not accept the idea of a woman president and that too of colour. Further, Harris was unable to convince many voters on crucial issues like economy and West Asia.
In brief, there was no wave favouring Trump but the Democratic Party failed to get its potential supporters to vote. Harris’s stand on many issues was ambivalent like on continuity with Biden’s policies. Trump’s victory looks big because he won all the swing states and Republicans have got a majority in the Senate and it is likely that they will retain it in the Congress. Thus, Trump will be powerful and will be able to carry through his agenda which neither Barack Obama nor Biden could easily do.
The ideological swing
Democrats not able to get their voters to come out is typical ‘free rider’ behaviour. The non-voters thought others would vote against the extreme Right and they could maintain their ideological purity by not voting for either of the two candidates. They did not take into account that Trump’s agenda poses a grave danger to the USA and the world.
Not that Obama or Biden or Harris are leftists. In the US context, they are left of the average Republican and more so compared to Trump. So, in ideological terms the contest was between the Right and the more Right wing.
In the USA, across the political spectrum, the private sector is celebrated and talk of public sector and provision of more public goods is branded as socialist/communist — almost abusive terms. There is talk of getting the government off the back of the people. Something that Elon Musk is going to accomplish as the new Czar appointed to downsize the government.
Whether the public will benefit from it or not, he would be able to prevent government from breaking the monopolies that his and other IT companies have built. In the USA, consumerism is promoted and celebrated in spite of the talk of climate change. Trump and his supporters do not believe in climate change and will push for greater use of fossil fuels and use of private vehicles which are seen as liberating.
In the USA, there is growing individualisation and atomisation, promoted by the rising tide of marketisation. Capital is favoured over labour. Unions are seen as a problem and concessions to capital are considered necessary incentives to boost economic growth. Talk of equity and redistribution is derided as socialist. So, benefits of policies largely accrue to capital leading to rising inequality since the mid-1970s. This is aggravated by labour displacing technological advancements and shutting down of traditional manufacturing, especially in the ‘rust belt’.
Employment has shifted to services and high technology production leaving many workers in the lurch since they are not able to shift to new jobs. Trump has shifted blame for this to globalisation since low and intermediate technology products are coming from China, India, etc. The intense competition among the developing countries has kept prices of goods of daily use low keeping inflation rates low and benefiting the US economy for decades.
All these trends are a part of the Right wing agenda globally. The rightward drift is visible all over Europe and in large parts of Latin America and Asia. Labour in England which has come to power is not a left of center party. Emmanuel Macron in France is less Right wing than Marine Le Pen. Alternative for Germany (AfD) in Germany and Giorgia Meloni in Italy are Rightwing. Occasionally, some left of center parties have come to power in some countries, like, Luiz Inacio Lula da Silva in Brazil, but the swing to the Right is unmistakable. Trump’s victory will accelerate this trend as he backs the more Right wing parties globally and pushes for his pro-business policies. He is transactional and will push his agenda.
Perception battle
Trump has got the vote of the marginalised sections by promising to bring jobs back from China, Mexico and India. He has promised to raise tariffs on imports and especially those from China. He is also likely to use non-tariff barriers to limit imports. This is going to raise prices of imported goods and services and raise the inflation rate in the US — contrary to his promise. But, will protectionism lead to revival of employment in manufacturing in the USA?
Unemployment in the US is currently at a record low. Post pandemic, economy is facing labour shortages. For instance, restaurants have long waiting lines because of shortage of staff. Hourly wages have risen in the US which added to inflationary pressures fueled by the supply shocks post pandemic and due to the Ukraine war. The rise in wages implies that the problem is not inflation. It is the high prices compared to the pre-pandemic era that has created a psychological perception among people that they are worse off. But, that is true only for those who had quit the labour force for any reason and not for the employed.
The Democrats failed in the perception battle to convince citizens that they are better off than pre-pandemic. This is because the citizens’ were looking at prices and not employment, wages or inflation rate. In fact, when Democrats pointed to the economy doing well, they sounded callous and it became counterproductive.
Globalisation and marginalisation
Globalisation has been blamed for the problems of the blue collar workers. This is because it has benefited capital while undermining the interest of labour. Capital has become highly mobile while labour has not. Trillions of dollars move everyday so that capital can shift quickly from one jurisdiction to another. Thus, to attract it, governments have been offering concessions, like, in taxes and labour laws.
This asymmetry has resulted in the ‘race to the bottom’ and BEPS since December 1991, when the Soviet bloc collapsed. This has reduced governments’ capacity to offer public services with adverse impact on labour — everywhere in the developing and the rich countries. Wages have been squeezed where organised sector workers have been forced to join the unorganised sector at lower wages and reduced the bargaining power of workers to demand higher wages.
Also read: Why America Is Not As Divided as You Think it Is
The asymmetry has resulted in the cornering of gains of development by capital resulting in a boom in the stock markets and the wealth of the rich. Today, finance dominates, as captured by the slogan ‘Wall Street over the Main Street’. The result is an increase in inequality and consequent slowdown in demand, growth and unemployment.
The US has faced less of marginalisation given its unique position in the world due to dollarisation — people and businesses in other countries accept dollars. So, the US is able to have large deficits both in the budget and in global trade and it gets trillions of dollars of interest free loan, enabling the US to live beyond its means. Its businesses can buy out foreign businesses and freely invest in other countries. The benefit from this accrues largely to capital while labour gets displaced in the low and intermediate technology lines of production due to the trade deficit.
In brief, globalisation has benefited capital against labour — more so in the US. Trump has exploited the dissatisfaction of the displaced labour and presented himself as their champion, promising to boost employment through deglobalisation, by protecting the US economy from global competition. Will this help workers in the US and elsewhere? Not really.
Accelerated deglobalisation
Trump ’s slogan Make America Great Again (MAGA) is to be fulfilled by raising tariffs and requiring US capital to return to the US. This is likely to set off competitive tariff increases by other countries to protect their markets. India faced similar pressures during Trump’s first presidency. He has called India ‘tariff king’ and demanded that India lower its duties while it raised duties and stopped preferential treatment.
A global tariff war will disrupt supplies and production while raising prices — it will be stagflationary. The advantage of cheap labour enjoyed by the developing world would be nullified by the increased tariff. The danger is that the world economy could tip into a recession which would not be short run. World Trade Organisation (WTO) and North American Free Trade Agreement (NAFTA) are likely to be impacted.
As tariffs are raised and inflation kicks up, to boost exports, countries will squeeze wages. This will dent demand in the national economy which will run counter to the benefit of lower trade deficit. Nations currently running a trade surplus will be adversely impacted by these two factors. China with its humongous trade surplus would be the worst impacted. Given the size of its economy and its linkages with other economies, this would have a global adverse impact.
So, Trump’s announced policies would accentuate deglobalisation, inflation, unemployment and have adverse impact on workers. The USA which has been a major beneficiary of globalisation even if its workers were losing out, will benefit from deglobalisation but its workers will again lose out.
Trump is not just pro-Capital but, big capital. He has appointed billionaires Elon Musk and Vivek Ramaswamy to downsize government in the name of making it efficient. The idea is to run government like a corporation. This would undermine public accountability and be anti-workers. Trump wants to cut corporate taxes to benefit capital even if that raises the already high budgetary deficit. Even if markets punish USA by downgrading it, the burden would fall on the workers.
Trump’s support for cryptos which earlier he had called speculative will also help big capital. Bitcoin has breached the record level of $80,000. Cryptos will benefit the rich due to the digital divide. They enable hiding the trail of transactions, etc., enabling illegality to be committed more easily. Once the use of cryptos becomes more generalised in the US, it will proliferate and no country would be able to stop its spread — the genie will be out of the bottle. This is a bit like AI being let loose as certain countries and companies continue to develop it to gain advantage. Unless all agree simultaneously, its development cannot be stopped, even if the consensus is that its development should be stopped till we better understand the risks.
Cryptos will impact the macroeconomic policies of countries. The central banks fear that their role in regulating financial markets would be dented resulting in massive increase in economic instabilities. That can only benefit speculators and not the workers.
Trump threatens to throw out 10 million immigrants. That is going to be logistically difficult and may not happen at this scale. But, it will create huge uncertainty in the US economy and slow down investment. Immigrants perform work that others are not willing to do. So, if any significant displacement of immigrants occurs, it will further throw the US economy into turmoil. It will also lead to additional problems in the countries from where the labour had migrated and where it will return.
So, the deglobalisation that is likely to follow from the policies that Trump is talking about, would further marginalise the marginalised; they would further lose out due to inflation, inadequacy of employment and uncertainty.
New cold war
Deglobalisation started even before the pandemic but it has gathered pace after the pandemic and more so with the start of the Ukraine war. Two distinct blocs have emerged — the advanced nations and that led by China and Russia. While the cold war of the 1950s was ideological now it is not so since both the blocs are capitalist. It is a fight for leadership and over resources for long term domination. Even if Trump gets the war stopped these factors will persist.
Restrictions on trade, technology and finance are being imposed by the rich countries on the members of the other bloc. So, two circles of trade and finance are beginning to emerge. Some developing world nations are joining the alternative bloc under BRICS and SCO since they worry about any future sanctions by the rich nations. Many central banks are moving from holding dollar reserves to holding other currencies and gold. Trade not denominated in dollars has also grown. This would slowly impact the pre-eminent position of the dollar.
Trump’s isolationist stand based on ‘America first’, transactional approach and reduced commitment to NATO has aggravated uncertainty among its allies. EU consists of 27 very diverse countries. They find it difficult to take a joint stand and, therefore, are unable to confront the US. This weakens the bloc of the rich nations.
The other bloc has been coming into existence slowly. China is not able to take a firm stand since it has a huge trade surplus with the rich countries. So, in the Ukraine war it has not been able to fully help Russia, fearing sanctions, etc.. But as its trade gets squeezed through the proposed tariffs (like, against electric vehicles) and non-tariff barriers (like, against Huawei 5G) and gets encircled by the military alliances headed by the USA, it will have no option but to more resolutely be a part of the other bloc.
There will be global environmental implications as the two blocs chart their own paths and conflict grows at various points. The ongoing wars in Palestine and Ukraine and civil wars in various parts of the world are already having an impact. There are likely to be greater sanctions against Iran, North Korea, etc. Further, to lower costs, fossil fuel use and its production using fracking are likely to increase. Environmental clearances are likely to be given more readily. As trade, finance and technology get disrupted, supply bottlenecks will grow thereby disrupting production and causing inflation.
Finally, as USA turns more insular, like in Trump’s previous presidency, spaces will open up for China to advance. Its Belt and Road Initiative (BRI) initiative and massive foreign exchange reserves have already enabled it to increase its presence in Africa, Latin America, etc.
In brief, there are various strands in the new cold war that are aggravating conflict in the world, making deglobalisation messy and increasing uncertainty. The result will be reduction in growth and acceleration of inflation, both of which will hit workers and the marginalised sections. Only the armament industry will benefit.
Conclusion
There is no pro-Trump wave. He has received roughly the same number of votes as in 2020. It is the Democrats who could not get their support base to come to vote due to disenchantment. The economy is doing well with record low unemployment, a low inflation rate and higher wages. But people’s focus was on prices which are higher than pre-pandemic. The Democrats lost the perception battle and faced a free rider problem.
Trump promises to use his trifecta to push for more Right wing policies which will disrupt globalisation and accentuate the trend towards deglobalisation. Globalisation was pro capital and so will be deglobalisation following Trump ’s announcements even though the rhetoric sounds pro workers. A new cold war is building up and adding greater uncertainty and accelerating deglobalisation. The world faces grave uncertainty. Trump’s appointees like Musk are committed to carry forward their boss’s agenda but let us hope they quickly see the contradictions inherent in the agenda and dissuade their boss.
Arun Kumar is retired professor of economics, JNU. He is the author of ‘Indian Economy’s Greatest Crisis: Impact of the Coronavirus and the Road Ahead’.