Trump’s economic proposals echo rhetoric that plunged US into the Great Depression: analysts
In the week since Donald Trump became the president-elect of the United States, many people have tried to rationalize what may have led to his victory, and some have pointed to the question of globalization.
According to Business Insider, which cited Deutsche Bank strategists George Saravelos and Robin Winkler, the period of globalization, which has dominated market trends for at least the last century, is coming to an end.
The most tangible way of understanding this very rationale is looking at the United States electing Trump, the United Kingdom voting in favor of Brexit, it’s the movement behind Marine Le Pen in France.
Even the day before the election, former McCain campaign Chief strategist, Steve Schmidt suggested that this election was representational of a shift away from Left v. Right politics, toward one of those benefitting of not from globalization.
Saravelos and Winkler, however, pointed to another time in U.S. history when the government tried to curb the trend of globalization and protect the domestic economy. It led to the Great Depression, they note.
In 1928, on the eve of the Great Depression, Herbert Hoover ran on a platform that promised higher tariffs on agricultural products to America’s suffering farmers. Having won the presidency and a comfortable Republican majority in Congress, Hoover proceeded to pass, with the help of Republican senators, the Smoot-Hawley Act, which was signed into effect in 1930 and raised tariffs on more than 20,000 products to levels not seen before in US trade history.
As a result, US trade halved within years, and global trade weakened even more, even if it continued at low levels within regional trading blocs such as the Commonwealth and the remnants of the Gold Bloc. The rise in protectionism served as an important catalyst to the global recession.
This growing global trend of far right movements pushing back against globalization are not only economic but racial too, as the pushback across various examples has targeted black communities, Muslim communities, and in the U.S., Latino communities.
Saravelos and Winkler also noted that it is unlikely that Trump’s economic policies will set up another economic catastrophe in the U.S. — it’s unclear how he intends to enact his economic policy platform and he previously offered leadership roles in his administration to Wall Street lobbyists.
The strategists suggest, however, that they also “doubt that global growth will be helped” because of his policies, adding there could be “serious problems” with their implementation.