An economist has warned Donald Trump's "dismantling" of the economy will make a major problem for the Republican Party.
Mariana Mazzucato has said recent policies are a "hodgepodge" of ideas from the GOP that are going to cause trouble in the near future. Speaking to Politico, the top economist urged the president and his administration to rethink their overall policy. Mazzucato likened the current plan to "throwing money around and imposing tariffs". This, along with a proposed 50-year mortgage plan, doesn't appear to be working and will cause trouble in the future for Trump's proposed economic plan, she said.
The Institute for Innovation and Public Purpose at University College London head has warned that the current trajectory of the economy under Trump would see the "competitiveness" of the US wither away. The problem, Mazzucato says, is with the "dismantling" of that competition.
Mazzucato said, "U.S. competitiveness will wither away because he’s dismantling the backbone of U.S. competitiveness which has been, in the past, smart, capable, strategic, outcome-oriented, mission-oriented state agencies."
The economist explained that manufacturing in the US will struggle under Trump, though it may look as though it is working at first.
Mazzucato said, "The problem is, if you reshore manufacturing, is manufacturing in the U.S. going to continue to be on the technological frontier? Or will it simply be in the U.S.? So, for a little bit of time, it will be employing U.S. workers because it will be in the U.S."
"But they are just doomed to ultimately fail because they are not going to be growing, dynamic industries that are benefiting from what I have always argued is required to allow industry to benefit, which is an active, smart industrial strategy."
The proposed reforms to manufacturing were not a "long-run growth strategy," according to Mazzucato, who says the focus should be on "dynamic relationships with small companies."
She added, "I don’t think it’s a long-run growth strategy to simply talk about reshoring. What you want is those companies to arrive and to have dynamic supply chains and to have dynamic relationships with small companies, which also through government, demand-side investments can grow. It is basically what the U.S. has always done through the military, which, over time, is starting to also happen in health and energy."