Donald Trump meant everything he said   
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The New Economy involves phasing out all aspects of the old, including personnel    
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by: Christopher Caldwell
 

  
Globalisation is sucking the lifeblood out of the American yeomanry, one decaf mocha extra-skim Frappuccino at a time: anyone surprised that US President Donald Trump feels this way did not pay much attention to last November’s election.

Yet Friday’s inaugural address seems to have thrown Mr Trump’s adversaries into a state of shock. It turns out he actually meant those things. He spoke of “America first” as his principle; “protection” as his policy and “buy American” as his motto. Millions gathered on Saturday in cities across the country and globally for “women’s marches” to protest against his presidency. Mr Trump accepts the radical implications of his world view. In fact, he has a good chance of enacting it.

That Mr Trump’s oratory has the power to shock is a vindication of sorts. His campaign was about things that are invisible to ruling-class America, starting with non-ruling class America. Invisibility, anonymity, voicelessness was the theme of the whole speech: “One by one, the factories shuttered and left our shores,” he said, “with not even a thought about the millions and millions of American workers that were left behind”.

This sentence sounds like it is about deindustrialisation, but it is just as much about rulers’ hubris. The climax of the speech is: “Hear these words: You will never be ignored again.” Mr Trump thus proposes a new identity for the ruling class: not as compassionate champions of the excluded, not as bold captains of industry, not even as thoughtful defenders of common decency — but as pigs at the trough.

Almost every newspaper writer is convinced Mr Trump’s remarks were a vulgar embarrassment. That is a rash judgment. In a country where marketing patter is the lingua franca and most of the 324m residents have a knack for it, Mr Trump has just run the single most effective marketing campaign that any American ever ran for anything.

If you pay attention to the speech, it sounds less like a rant and far more like a serious governing programme. One phrase — “This American carnage stops right here and stops right now”— has struck people as a reference to slum violence, and indeed that is what it would have meant had a president used it a generation ago.

But its position in the speech makes it likely that Mr Trump is alluding to the wave of overdoses, mostly involving heroin and other opioids, in suburbs and small towns. This is the deadliest US drug crisis ever. It is killing 50,000 Americans a year, more than guns or motor vehicles do. In the 1970s, Curtis Mayfield sang about drugs and crime in the ghetto. In the 1980s, two presidents waged a “war on drugs”.

Today’s overdoses are beneath the notice of either the government or the culture. Mr Trump ran a strong campaign in New Hampshire and West Virginia, the two hardest-hit states.
  
Another widely misread phrase is “We have defended other nations’ borders while refusing to defend our own”. This does not, as many listeners assume, contradict Mr Trump’s promise elsewhere in the speech to “reinforce old alliances”. It attempts to re-establish the principle that countries have the right to defend their borders against not just armies but also immigrants.

Neglected, too, was Mr Trump’s resurrection of the 19th-century word “protection” as his preferred term for tariffs. Today it sounds as quaint as old disease names such as “consumption” and “dropsy.”

Usually we speak of protectionism, the presumably extremist ideology that opposes free trade. But Mr Trump is signalling that we are wrong to confuse the two. For him the difference between protection and protectionism is like the difference between Islam and Islamism. He is trying to make tariffs thinkable.

In fact he has already done so. Mr Trump has thrown a few gauntlets at the feet of corporate executives, and won. When General Motors announces a plan to invest $1bn in US jobs, as it did in the days before the inauguration, the sentiment can only rise among swing voters that Mr Trump must be right.

Ditto when the US’s European allies begin reprioritising budgets to bring defence expenditures to 2 per cent of GDP. In the wake of Mr Trump’s election, Lars Løkke Rasmussen, the Danish prime minister, promised to raise budgets. Formerly truculent Lithuania promised to bring its defence expenditures up to the Nato-standard 2 per cent of GDP by 2018, two years earlier than promised.
There is nothing especially radical about Mr Trump’s diagnosis of globalisation, except that he seems sincere about it. Every western politician of the past 20 years, from Hillary Clinton to Helmut Kohl to Jeremy Corbyn, has bemoaned that it leaves people behind. But they did not understand that the New Economy was a new economy. It involved phasing out every aspect of the old economy, including its personnel.

The theorists of the New Economy said it should be possible to compensate the “losers”. But that never happened. Because when the money came in, the people who managed the new economy did not recognise the losers as belonging to the same community.

Perhaps the surprise is that it took as long as it did for a US politician to argue that, if the system’s leaders cannot be trusted to reform it from within, they must be ordered to do so from without.


The writer is a senior editor at the Weekly Standard and is writing a book on the rise and fall of the post-1960s political order.

The Eurozone Faces Tough Questions

Some have started to openly inquire about how states could exit the monetary union.

By Antonia Colibasanu


In our 2017 forecast, we said that the evolution of the Italian banking crisis will force a confrontation between Italy, Germany and the European Union. The groundwork for this confrontation was laid last year, and the face-off has further evolved already this year. In December 2016, two Italian members of the European Parliament (MEPs) from the populist Europe of Nations and Freedom group asked the European Central Bank (ECB) in a letter to explain the “widening balance divergences between individual countries [in the eurozone] since the 2008 crisis.” They also asked the ECB “how the balances would, technically, be settled, especially those in net debtor countries, should a Member State participating in the system decide to quit the single currency.”

This is the first time that MEPs have inquired about what leaving the eurozone would look like. ECB President Mario Draghi responded in a letter to the two politicians on Jan. 19. He first explained the reasons for imbalances and how the eurozone payment system works and concluded by saying, “if a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full.” For the Italians, this issue has more to do with national politics than the European Union. Italy will hold general elections in 2017 or 2018. Its internal debate regarding EU membership will be central to its dialogue with the EU. The power dynamics between the two entities will continue to unfold throughout the year.



The European Central Bank is pictured prior to a press conference following the meeting of the Governing Council in Frankfurt/Main, on Jan. 19, 2017. DANIEL ROLAND/AFP/Getty Images


Power is a key concept in geopolitics. The extent to which a country has, or lacks, power dictates which deals (including treaties) can be made, broken or left in place. To reverse a deal, power is needed. Understanding how you acquire power is key to assessing whether change is possible. Deals, in the form of treaties, are often signed after wars are fought. These deals are difficult, if not impossible, to reverse because the road to reaching such a deal entails extremely high costs, including loss of life and a country’s physical destruction. Other deals seem easier to dismantle, as they appear to be mostly political.

The European Union is essentially a deal between nation-states to form a union with the hope that peace and prosperity would result. Political cooperation, first inspired by fear of renewed war and later by hope for growth, led to the bloc’s formation. The fear of renewed war led to the formation of the European Coal and Steel Community through the Paris Treaty in 1951.

Hope for growth led to the Maastricht Treaty, signed in 1992 by the members of the European Community. This treaty led to the EU’s founding and the creation of the eurozone. Both treaties aimed to create a level of peace and prosperity that member states did not have the power to produce on their own. They feared renewed conflict, as they remembered World War II’s impact on the Continent. They also understood they could not afford massive destruction and rebuilding efforts for a third time.

But in the European Union’s formation, Europe didn’t experience anything comparable to the Battle of Gettysburg during the American Civil War, where the Union Army fought and won against the Confederate Army. The European Union’s founding was more a result of political negotiations than a military battle. The EU was not an ideal solution for the Europeans – but it was seen by European countries and their political leadership at the time as an opportunity for growth.

Today, neither prosperity nor peace is guaranteed through European Union membership. The days of European politicians promising prosperity through integration ended with the 2008 financial crisis. The refugee crisis and terrorist attacks in Europe have threatened to disrupt peace. The EU couldn’t effectively address either crisis and citizens started questioning whether membership was worth the cost. With public discontent growing, populism and nationalism are on the rise. Anti-establishment, populist parties have won seats not only in national parliaments but also in the European Parliament. A significant number of the politicians from these parties represent countries that have experienced severe effects from the economic crisis – such as Italy, Greece and Spain – or countries that have seen a dramatic rise in Euroskepticism in the last few years – such as the United Kingdom.

Draghi’s response to the Italian MEPs’ question marked one of the first instances in which a European authority acknowledged parameters for leaving the bloc. In fact, the European treaty does not have a provision detailing how a member would exit the eurozone, and this is not a mere oversight. There are no norms or procedures that outline how a withdrawal would proceed. The monetary union was considered irrevocable and irreversible. When the Maastricht Treaty was signed, member states thought it was inconceivable that any countries would want to withdraw from the eurozone. Including such a clause in the treaty would have meant acknowledging that membership may have negative effects on states in the future.

Taking such a possibility into account would have implied that prosperity was not a given and undermined the promise and purpose of the treaty. Countries would have been forced to question their transfer of powers to the bloc.

But at the same time, member states didn’t want to give up their authority over fiscal policy – and thus only gave the ECB control over monetary policy. That was their deal: They wanted to hold full political power at home and transfer power over one area, which they thought would limit the costs of financial transactions between member states. They dismissed the fact that these transactions were unbalanced, as the level of trade between countries was unequal and members’ socio-economic environments were very different. But while members maintained hope that the EU would bring growth and prosperity, their deal worked out well.

This is no longer the case, which is glaringly apparent in the letters exchanged between the Italian MEPs and Draghi. Problems appeared as the 2008 crisis hit, and economic differences became visible. While Draghi has rarely mentioned the possibility of a country leaving the eurozone, it was discussed in official spheres during the summer of 2015, when Greece faced its own financial crisis. Italy is far from being in a comparable position at the moment. But Europe has grown accustomed to nationalism and populism since the Greek crisis, and radical positions by politicians are no longer the exception but the norm.

The European Union’s economic crisis is political. The deal that was signed in the early ’90s in Maastricht, and updated in Amsterdam, Nice and Lisbon, seems to be no longer relevant.

There are no ideas on how to improve or reverse it. But political deals can be changed, and the will to make this happen is growing stronger as countries see that it may be in their national interests to reclaim their monetary power, for better or worse.

California steaming

Democrats are learning to invoke states’ rights

America’s most progressive state is set to lead the new fight against federal power
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ON NOVEMBER 9th, as it started to sink in that Donald Trump would be their president too, Californians expressed their anger and disappointment in different and creative ways. Some took to the streets and burnt papier-mâché effigies of Mr Trump’s bronzed face. Others chanted “not my president” and waved signs that read “Immigrants Make America Great” and “Deport Trump”. Kevin de León and Anthony Rendon, the leaders of the California Senate and Assembly, respectively, released a statement.

“Today, we woke up feeling like strangers in a foreign land, because yesterday Americans expressed their views on a pluralistic and democratic society that are clearly inconsistent with the values of the people of California,” it read. “We will lead the resistance to any effort that would shred our social fabric or our constitution.” As Mr Trump takes residence in the White House, California’s lawmakers are putting their words into action. 

They will have plenty of examples to follow. During the Obama administration, Texas and Oklahoma were strident advocates for state sovereignty. Several other states also challenged the federal government in court and by making their own laws. Indeed calls for states’ rights and limited federal power have been a defining feature of American conservatism since the New Deal, says Ilya Somin, a federalism expert at George Mason University. But with the election of Mr Trump, whose party controls both houses of Congress and who plans to appoint conservatives to the Supreme Court, it is Democrats who find themselves turning to the states as bulwarks of resistance. California, America’s most populous and progressive state, will lead the blue-state opposition.

California has plumped for Democrats since the early 1990s—Hillary Clinton won by a margin of 30 percentage points. It is one of six states where Democrats hold the governor’s mansion and both houses of the state legislature. But Californians’ opposition to Mr Trump goes beyond partisanship. If America’s new president honours his promises to deport illegal immigrants, repeal the Affordable Care Act (better known as Obamacare) and relax environmental protections, California—America’s largest economy—stands to lose more than any other state.

More than 3m undocumented immigrants call the Golden State home, reckons the Migration Policy Institute, a think-tank. (Texas, the second most popular state for undocumented foreigners, has less than half as many.) These workers make up nearly 10% of the workforce and contribute $130bn—or about 5%—of the state’s annual output, according to a 2014 study.

Health Access California, a consumer advocacy group, estimates that the state government could lose $22bn in federal funding annually if Obamacare is gutted; some 5m Californians could find themselves without health coverage. And even though Mr Trump has vowed to axe Barack Obama’s Clean Power Plan, which would have regulated carbon emissions from power plants, California is likely to continue complying with—or even exceed—the requirements laid out in the framework. But its companies might find themselves at a competitive disadvantage if other states do not.

Politicians from California and other blue states plan to resist Mr Trump using three main tools: legislation, litigation and circumvention.

Start with legislation. On December 5th California’s lawmakers introduced a package of laws to impede mass deportation. One bill would create a programme to fund legal representation for immigrants in deportation hearings. Andrew Cuomo, the governor of New York, announced earlier this month that he would launch a similar fund. A recent national study found that immigrants with legal counsel were five-and-a-half times more likely to avoid deportation than if they represented themselves. Yet only 14% of detained immigrants in deportation proceedings had lawyers. Gun control, health care and environmental policy are other areas where Democrat-dominated states might focus in the coming years, says John Hudak, a fellow at the Brookings Institution.

The leaves are Brown

 

Several states are also getting ready to challenge the Trump administration in court. Maura Healey, the attorney-general of Massachusetts, which has a Republican governor, and Eric Schneiderman, the attorney-general of New York, have both expressed their willingness to square off against the federal government. Earlier this month the California State Legislature announced that it had retained Eric Holder, who served as Mr Obama’s attorney-general, as outside counsel. He will work with the state’s next attorney-general to bring suits against the federal government. California’s decision to hire outside counsel is distinctive, but litigation as a means of stalling the federal government is hardly new. In 2010 a group of mostly Republican attorneys-general filed a lawsuit to block Obamacare. According to analysis by the Texas Tribune, the Lone Star State sued the Obama administration at least 48 times during Mr Obama’s term. Hiring Mr Holder “sends a message to the administration about the state’s resolve to defend our people, our diversity, and economic output,” says Mr de León.

Some potential suits are starting to take shape. Gavin Newsom, California’s lieutenant-governor who will run for governor in 2018, has said that the state could sue under the California Environmental Quality Act or its federal equivalent to quash Mr Trump’s plans for a wall along the border with Mexico. The argument would rest on the claim that construction of the wall could upset water flows and quality as well as wildlife. Richard Revesz, an environmental-policy expert at New York University’s School of Law, says Democratic states could also sue to slow the repeal of the Clean Power Plan.

The final way in which blue states can resist Mr Trump’s policy agenda is by trying to get around federal policy. California already has cap-and-trade agreements with foreign jurisdictions such as Québec. Mr de León says that, under the Trump administration the state will work to expand such programmes. Since 2009 nine states in the north-east have participated in the Regional Greenhouse Gas Initiative, a cap-and-trade programme. Even if climate protections are relaxed under Mr Trump, such an alliance could continue.

On immigration, California has legislation preventing local jails from holding people for extra time just so that federal immigration enforcement officers can deport them. So-called “sanctuary cities” in other states, including Chicago, New York, Seattle and others, have pledged to protect their undocumented residents in similar ways. Such policies are likely to be effective at obstructing a massive dragnet; there are 5,800 federal deportation agents compared with more than 750,000 state and local police officers. Deporting undocumented immigrants without local co-operation is much more difficult.

Mr Trump has threatened to cut federal funding for jurisdictions that insist on adhering to “sanctuary” policies, but Mr Somin suggests that courts may not look kindly on such an action.

In 2012 the Supreme Court ruled that the federal government cannot force states to bend to its wishes with a financial “gun to the head”. Although much about the next four years is unpredictable, one thing seems clear: the courts will be busy.

Tanks for calling

As America and Russia talk, Ukraine fights

New clashes in Donbas may show Vladimir Putin testing Donald Trump
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China’s Debt-Trap Diplomacy

Brahma Chellaney

Trump, Iran, and Stability in the Middle East

Javier Solana
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