Has America become great again: what Trump has achieved in four years in power
Four years ago, Donald Trump promised Americans an economic boom and prosperity. Did he keep his promise? Was America richer and more influential before the coronavirus plunged the world's largest economy into discouragement at the end of its first presidential term? The answer to this question is short: yes, it did. Is this Trump's merit? Tells about it Air force.
Trump's legacy is not just about employment, income and debt. The policies of the most extravagant president in modern US history will change the future of the American economy, regardless of whether Trump stays for a second term after the November elections.
The intermediate results of his reign can be summed up now. Even if something changes for the better or worse in the economy during the remaining month, this will not affect the outcome of the vote - the overwhelming majority of Americans have already made their choice.
A harmful virus ruined everything
Trump hoped to be re-elected in the wake of the economic boom. But the pandemic has caused the worst crisis since the Great Depression a century ago and record unemployment. Election slogans had to be rewritten.
But until 2020, everything was going well: the economy grew by an average of 2,5% per year and grew to $ 20 trillion - this is almost a quarter of the world.
And even if Trump would promise voters an increase of “4%, maybe 5% and even 6%” per year, but even more modest numbers would not derail the triumph. After all, the rest of the developed world barely recovered from the financial crisis of a decade ago, and the recovery in Europe or Japan was barely glimmering. America went further and further.
However, due to the pandemic, Trump will now go down in history as the president who ended the longest decade of economic recovery in American history.
Trump did not invent the coronavirus, any president would have to face it. He is confident that he did an excellent job. Opponents blame him for the failure and the world anti-record: 200 thousand deaths.
Endless lockdowns have already damaged the economy, and now they risk disrupting the main consumer season - the autumn-winter series of holidays and sales: from Halloween to Christmas.
Even before the pandemic hit the United States, American scientists learned the lessons of the Spanish flu and came to the conclusion that the economy is falling everywhere the same, but it is recovering faster where sanitary restrictions are introduced quickly and on a large scale. And they are removed not at the first sign of relief, but when epidemiologists say. Then the quarantine comes out shorter, and the chances of relapse are much lower - as well as the economic damage.
This theory during the current pandemic was proved by the countries of Asia and some states of Europe.
But Trump went the other way: he demanded that the mayors and governors of the states lift restrictions and back in early May he said that yes, people will suffer from the virus, and “some will suffer badly, but we just have to open the country and we have to do it as quickly as possible. ”.
Whichever voters and history give Trump for the fight against covid, his economic legacy goes far beyond the crisis management of the epidemic.
Trump came to power under the slogan "Return America to its former greatness" and for more than three years pursued a policy under the slogan "America First." Trump supporters have enthusiastically supported his new course and tools: isolationism, trade aggression, sanctions and restrictions.
Opponents see it as a threat to the foundations of America's economic dominance in the world and believe that instead of development and restructuring under a frightening unknown future, Trump has been returning the country to his familiar cozy past all this time.
In the process, he sawed off several of the pillars on which the United States has dominated the rest of the world since the middle of the last century. Friends, enemies, and financial markets began to doubt that what had previously seemed unshakable.
Under him, America became the first developed power to rush against the flow of economic history in recent decades: against globalization and openness, against the slow and painful consent of rich countries to share prosperity with developing countries in order to reduce inequality in the world.
Watching the reality show at the White House, amazed viewers begin to whisper and timidly formulate the first doubts about the future of the United States as a world leader, reliable trading partner, open economy and issuer of the main reserve currency - the dollar.
Trump has quarreled the US with its main ally - Europe, the second economy in the world. He put pressure on neighbors - Canada and Mexico. He unleashed a trade and technological war with China, the world's third largest economy.
He pulled the United States out of the Paris Agreement on combating climate change, paralyzed the work of the World Trade Organization, refused to fund the World Health Organization. He looked like an outsider at the GXNUMX meetings, trampled on etiquette and the traditions of big politics.
He undermined the established norms and structure of government in the United States, hesitated to appoint officials, but rushed to fill the courts with conservative judges. He broke one taboo after another, openly pressured the central bank and prosecutors.
The supporters liked it: they see in him a rebel, dispersing the sleepy kingdom of bureaucrats who have forgotten about the people. They are convinced that Americans will benefit from healthy economic selfishness and show of power.
Critics argue that history cannot be reversed, and the laws of economics cannot be changed with a tweet.
The economists who pass these laws patiently study the mutation of American politics under Trump, are slow to draw conclusions, and certainly do not consider the change irreversible.
Financiers smirk at the headlines about the dollar's imminent decline as the world's reserve currency.
In dollar we trust
The memorial service is premature, they are sure: even though Trump is shaking the foundation of this pyramid, he is far from destroying the institutions on which the dollar's status as the most reliable asset in the world is based.
The courts, Congress and the central bank, not subject to the will of the president, coupled with economic power, promise the US currency dominance for decades. This has been proven by the current crisis, in which the Federal Reserve System has actually assumed the role of a world creditor, and American government securities have proven their status as the main instrument of savings. The share of dollar settlements in trade remains the same.
“A shrinking US weight in the global economy, aggressive unilateral financial sanctions, and increased doubts about US leadership in the global arena could accelerate the decline of the dollar in the future,” admits US Treasury veteran and former US representative to the IMF Mark Sobel.
“However, so far all the prerequisites for maintaining the status of a reserve currency are in place: the largest, most liquid and open capital market in the world, solid protection of property rights, a giant economy, a strong financial system with an international network. Plus the inertial effect, ”he writes, brushing aside the possibility of an imminent decline of the dollar.
The largest foreign holder of American debt is China, against which Trump unleashed a vendetta as soon as he took power. However, neither diversification of China's reserves nor Trump's claims that a weak dollar is beneficial to American producers did not lead to a depreciation.
At the beginning of this year, it became finally clear that Trump is not an obstacle to the dollar: in January he made peace with China, and by May he changed his rhetoric and supported a strong dollar.
Trump's success in undermining the foundations of US economic power is reassuringly modest. And what about his creative activity? What achievements has Trump boasted over the past three plus years?
What Trump has achieved
Before the current crisis, the economy under Trump grew at about the same rate as under Barack Obama, who entered the White House in the midst of the 2008-2009 financial crisis.
Private sector wages have risen steadily and the number of jobs has grown. By February, unemployment had dropped to its lowest level in half a century, 3,5%.
However, this upsurge began under Obama, and its pace has not changed in any way under Trump. For example, America has created jobs with enviable persistence for over 100 months in a row.
And the conditions were about the same: even though Trump initially complained that Obama was lucky to rule with a massive post-crisis stimulus to the economy, he eventually tired the central bank with his tweets, and he stopped raising rates. In addition, in addition to credit stimulation, Trump achieved a direct budgetary: he passed a tax reform through Congress.
The coronavirus has canceled all achievements. But this is an out of the ordinary event, its influence is temporary, and someday the economy will recover. However, this is already the story of Trump's second term or Joe Biden's first term.
But before the virus emerged, Trump's economic agenda was driven by two of his flagship strategies: aggressive protectionism and the rejection of the green agenda in favor of energy development. What fruit have they brought to America?
First, about protectionism.
Trump has unleashed trade wars with the entire world. He raised duties on Chinese and European goods.
The goal: to get American companies to relocate manufacturing to the United States, to convince foreigners to buy more American products, to reduce the trade deficit, and to clip the wings of a China striving for technological superiority.
Result: the deficit did not decrease, but increased. The increased duties are paid by American consumers, the money goes into the budget, and from them the authorities compensate for the losses to those who suffer losses due to retaliation.
Democrats reproach Trump for the fact that his trade wars have deprived America of 300 jobs. Companies are moving production from China, as Trump wanted, but not to America, but to Vietnam and the Philippines.
China is not giving up, and the conflict not only did not end with Trump's complete victory for re-election, but only escalates and promises decades of viscous butting.
In addition to the external front in the war for America First, Trump opened an internal one: against immigrants. After coming to power, he signed the Buy American and Hire Americans decree, and as a result, the number of H-1B visa denials for highly skilled workers has tripled.
But it turned out that the demand for labor does not arise by presidential decree, but due to the needs of the labor market and the capabilities of companies.
The Internet giants of Silicon Valley and other American businesses, faced with restrictions on inviting workers from abroad, preferred hiring Americans to employment abroad: mainly in Canada, India and China, Britta Glennon, a professor at the Wharton School of Business at the University of Pennsylvania, found out.
Elon Musk, an immigrant from South Africa, once studied there.
If Glennon's observations are correct, then Trump, by limiting highly skilled migration, risks depriving America not only of jobs and taxpayers, but also of attractiveness to talented and ambitious people from around the world, which has so far been the main component of its success.
It's too early to judge the triumph or failure of Trump-era protectionism, but his environmental and energy policies are yielding tangible results. Already this year, America - until recently the largest importer of energy resources on the planet - was supposed to turn into a net exporter.
We will find out what adjustments the coronavirus crisis will make to these plans at the beginning of next year. True, Trump announced victory two years ago.
“We have become the world's premier energy producer. Who would have thought! - he praised himself in July 2018. - In the energy sector, we are now the largest in the world. The largest! And for the first time in history, we have become an exporter of energy resources. This has never happened. And now we will export ”.
Trump was quick. Before the pandemic, exports and imports converged at one point.
Perhaps he was referring to gas - here America is really reaping the fruits of the technological revolution in oil and gas production and has long supplanted the once largest producer in the world - Russia.
Now it is actively fighting its main competitor for sales markets: the Baltic Sea in Europe and the Nord Stream 2 gas pipeline have become the arena for the last battle.
But the situation is similar with gas: Trump only consolidated the achievements of his predecessor.
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