THE ECONOMY DROVE TRUMP’S WIN BUT THE LITTLE GUY IS GONNA LOSE
Trump’s victory was powered primarily by two issues: 32 percent of voters told pollsters the economy was key to their choice, and they backed Trump 80 percent to 19 percent. Another 11 percent picked immigration, and these voters were overwhelmingly pro-Trump, 90 percent to 9 percent.
On Harris’s side, the state of democracy was selected by 34 percent of voters, and they backed her 80 percent to 18 percent. On abortion, chosen by 14 percent, voters backed Harris 74 percent to 25 percent. [EJ Dionne]
The big issue that gave the election to Republicans by a narrow margin was the loss of the American Dream for the American worker. Americans are treading water economically and it’s making them mad. In a rapidly changing world, the America Dream is not happening for too many working people. Instead, working Americans are stuck in economic quicksand. The rich keep getting richer. The real problem is massive income inequality.
Trump claimed to address the central issue that working Americans face today by saying he would be a protector and would “fix it”, but he gave Americans two totally fake solutions that will end up making Americans worse off if he carries through with them. Trump’s policies will help super rich empire builders like Elon Musk and Jeff Bezos and hurt the voters who thought he was their populist hero.
TRUMP’S SOLUTIONS WON’T HELP WORKING AMERICANS
Trump claims the answer to the problem of the lost American Dream is: 1) impose tariffs and 2) round up and expel immigrants. Those are fake solutions. The problem is much more complex. Our problems are connected with what is happening globally.
Richard Wolff is a professor emeritus of economics at the University of Massachusetts Amherst and a visiting professor in the graduate program in international affairs of the New School. Wolff has also taught economics at Yale University, City University of New York, University of Utah, University of Paris I (Sorbonne), and The Brecht Forum in New York City. Wolff warns that we are at a major transition point in American history and in the history of the world. Our country dominated the globe for the last 50 years, but China, with its hybrid economy that is part capitalist and part socialist is growing the Chinese economy far more rapidly than we can with our fully capitalist system.
The IMF (International Monetary Fund) reports that the rate of growth of economic output for the US in 2024 was 2.8% while China’s output was double that at 4.8% and India’s was 7%. The US is heading towards being a less dominant player on the world stage. Wolff believes we are living through the end of the American empire. There is a rapidly changing global economic shift going on that he says we need to understand and get real about. In short: America and our G-7 allies (France, Great Britain, Italy, Germany) used to be the leading economies, but the BRIC allies (Brazil, Russia, India, and China) are the emerging world leaders that will dominate the future.
The ride up to world dominance for the US happened in the 20th century. It was a lot of fun. The ride down, Wolff says, is going to be a bitch.
It already is.
Average real wages in the US are going nowhere while the average real wages in China have quadrupled which makes the Chinese government secure, stable and powerful while our government will continue to be divisive and unequal, with people in our country feeling aggrieved and many unable to make ends meet, buy a home or get ahead.
Wolff says that Trump is helping Americans stay in denial about the real reasons they can’t get ahead. Trump is supplying willing Americans with blindfolds and distractions or worse by telling us the solutions to these problems are 1) tariffs, & 2) immigration round ups and expulsions. These solutions will not solve the underlying problem we face, Wolff says. Trump’s policies will create inflation and an even lower standard of living for working Americans. Real wages will be stagnant. The middle class and the poor will “take it on the chin”. The rich and powerful will offload their losses.
Billionaires and millionaires helped Trump get elected because they know he will protect them by: maintaining tax cuts for the wealthy that were about to expire, allowing rich families tax advantages for passing on wealth to the next generation, helping corporations to avoid paying taxes, putting billionaires in charge of key cabinet posts to deregulate and burn down the administrative state, eliminate oversight, ignore rules and laws. This approach should be great for wealthy empire builders but it won’t be good for the average American. The social safety net is at risk. Health care is at risk. Kicking out immigrants will only make things worse for Trump’s base.
UNDOCUMENTED IMMIGRANTS KEEP THE COST OF GOODS AND SERVICES DOWN
There are estimated to be 11 million undocumented immigrants in the US and 335 million Americans in the US. The undocumented immigrants are the most abused workers in America. They cannot get help from the legal system when they are mistreated, underpaid or overworked. They are the equivalent of slave labor. Our industries: construction, restaurants, entertainment, caretaking, health care and others rely heavily on these cheap laborers.
It will cost a huge amount of money to expel these immigrants.
- A one-time operation to deport these immigrants would cost at least $315 billion, broken down as follows:
- The government would have to spend $89.3 billion to conduct sufficient arrests.
- The government would have to spend $167.8 billion to detain immigrants en masse.
- The government would have to spend $34.1 billion on legal processing.
- The government would have to spend $24.1 billion on removals. [American Immigration Counsel]
By rounding these people up and expelling them, Trump paints himself as a hero with his base, but he is actually creating a problem for his base: the loss of valuable cheap labor that keeps the costs of goods and services down and helps working Americans make ends meet. Trump has said that these immigrants are “taking your jobs”, but if an American even wanted to apply to do the dirty work slave labor type jobs these immigrants currently do in our country, they would demand to be paid more money. If business owners have to pay workers more money, that causes the cost of goods and services to rise.
According to an American Immigration Council analysis of U.S. Census Bureau data, immigrants generated some $1.6 trillion in economic activity in 2022. Other studies put their contribution at closer to 2 trillion dollars.
Wolff and many other economists anticipate that if Trump carries through with his plans for immigrant expulsions he will plunge our country into an inflationary cycle which will make it harder for Americans to make ends meet.
TARIFFS WILL BE BURDENS ON WORKING FAMILIES NOT THE RICH
Trump on Monday threatened to impose 25% tariffs on goods from Mexico and Canada when he enters office next year—a move that would make good on a central campaign promise but that would likely crush American consumers who already say they’re struggling with the high cost of living.
Trump said he would sign an executive order on the first day of his presidency putting the tariffs in place, claiming that “thousands of people are pouring through Mexico and Canada, bringing crime and drugs at levels never seen before.” Trump posted on TruthSocial, “It is time for them to pay a very big price!” In a separate post, he also said he would charge an additional 10% on China unless the country implemented the death penalty for drug dealers: (Vanity Fair)
The median household [in America] would expect to see its after-tax income fall by about 4.1 percent, more than $2,600, because of tariffs. Still, the top 1 percent would experience net gains in income because their losses from tariffs are more than offset by Trump’s proposed tax cuts. (Peterson Institute for International Economics)
Tariffs are taxes that will be paid by the American consumer and our American importing companies to the extent they want to shoulder the added cost. The Chinese won’t pay at all. Mexico and Canada won’t pay either. Those countries will respond to Trump’s tariffs with retaliatory tariffs of their own. In other words, Trump is starting a trade war with our closest trade partners and the most at risk American families (much of Trump’s base) will foot the bill for it. Wolff and other economists anticipate these tariffs will lead to inflation and possibly a recession adding to the economic woes we will get from expelling immigrants.
WHY IS TRUMP DOING THIS?
By announcing big tariffs on our trading partners, Trump thinks he will be able to make deals with Mexico and China and other deals with many American businesses that will help himself get richer. It’s called crony capitalism. When the guys in construction businesses ask Trump not to take THEIR low wage immigrant workers away, Trump will say “Let’s make a deal. You give me something and I’ll go easy on you.” With Mexico, or Canada he will make a deal that makes it look like he did something to help Americans. For example, he will say HE was the one who forced immigrants to stay in Mexico even though Biden already signed the executive order that drastically cut back on immigrants at our southern border. In other words. Trump will get richer off of this or will use it to convince his voters he gave them what they wanted. Tariffs are one of the few things a president has complete control over. He doesn’t have to ask congress to pass anything. No wonder Trump calls tariffs “beautiful”. They are beautiful for him because they are a great way to enrich himself.
We have seen this show before during Trump’s first term in office. Last time he was president he used tariffs on Mexico to get Mexico to keep more immigrants in their country and away from the American border so that Trump could claim success for the American people. What was the success he claimed? He could say he was trying to keep out immigrants. Because Trump has convinced Americans that immigrants are the reason their lives suck, his voters cheered and tweeted about how smart Trump is. Trump IS smart. He’s smart about enriching himself.
Trump won the election because he is a gifted marketer. He understood how to use powerful images that addressed the underlying feelings that working Americans, his base, are experiencing. Working Americans are feeling attacked and undermined. Trump uses images of walls at the Mexican border and tariffs as walls to protect Americans against the Chinese and other trade partners like Mexico and Canada. When Trump said, “I will fix it” he portrayed himself as the great protector. But Wolff scoffs at Trump’s notion of fixing it by imposing tariffs and rounding up immigrants. He says Trump’s ideas are “Economic total nonsense,” and “economic incoherence.”
Trump’s policies aren’t incoherent at all when you understand that his policies are all about benefitting himself and his rich friends.
FAKE SOLUTIONS AREN’T SOLUTIONS FOR AMERICAN WORKERS
Summary:
Trump will do nothing to address the real problem we face in America today which is massive income inequality. Kicking out immigrants will do nothing to help his base regain the American Dream. His solutions will not return America to greater global dominance in our race against the BRIC countries. It will make inflation worse because we will lose a key source of cheap labor and the cost of rounding people up will be a drain on our economy. Add tariffs and a trade war to this picture, and Americans will be forced to pay more for goods from abroad. It all adds up to inflation, the opposite of what Trump said he would fix. While Trump stands to personally benefit from making deals with the business world, the additional costs from an inflationary spiral will be borne by American consumers. The rich will not feel the pain. Trump’s supporters will.
Biden is handing off a great economy to Trump. If Trump carries out his threatened policies, he will wreck it.
Will Americans figure out that Trump gave them fake solutions? We will see. Trump is a world class con artist. He really understands how a large group thinks and creates effective imagery that engages his followers and builds up his power over them. His followers think he is a genius and a wizard. The truth is he is a brilliant marketer.
Trump is also great at offloading the blame. He will probably find a way to blame Joe Biden and Kamala Harris for the recession he is about to kickstart.
But maybe Americans aren’t as dumb as Trump thinks. If they understand that Trump’s tariffs and immigrant expulsions are the reason things are getting even worse in America after Trump takes office with a trifecta in Congress, they might want to rehire more Democrats in the midterms.
It is up to the Democrats to make this crystal clear to Americans! They should start now by predicting the mess that is coming.
