The end of the American empire
“Democracy is the theory that the common people know what they want, and deserve to get it good and hard” wrote H L Mencken. That is the thought that springs to mind on the re-election of Donald Trump as US President.
There were excuses for Trump’s victory in 2016. He had the (admittedly dubious) patina of a successful businessman, highlighted in the TV show “The Apprentice”. Hillary Clinton, his opponent, was dogged by scandal. Even so, enough Americans saw through Trump’s bluster that Clinton won the popular vote. This time round, Americans could have no illusions. As Hugo Rifkind wrote in the London Times “Whether or not he will govern like a fascist, he certainly campaigned like one”.
There seem to have been two issues that pushed voters into the Trump camp: inflation and immigration. While he promised to end inflation, he didn’t propose any specific remedies. But two of his most notable policy proposals are the imposition of tariffs and the mass deportation of immigrants.
Trump has a mercantilist view which sees imports as bad, exports as good and a trade deficit as a sign of cheating by other nations. Adam Smith debunked these ideas in 1776 but clearly Trump has yet to catch up on his reading. In any case, a tariff is a tax. Such a tax is not just paid by other nations; its incidence, as economists put it, often falls on consumers. An estimate by the National Retail Federation, which looked at just six product categories, found that tariffs would reduce consumer spending power by between $46bn and $78bn every year. And since other countries would undoubtedly retaliate, tariffs would dent US GDP by around 1.4% in the first year, according to an estimate by Capital Economics.
Then we come to his other proposal: the mass deportation of immigrants. Leave aside for a moment the practical and moral implications: police raids on local neighbourhoods, camps to detain people while their claims are processed and all the rest of it. Immigrants are a vital part of the US labour supply. According to Dhaval Joshi of BCA Research, “Since mid-2023, the growth in US labour supply has come entirely from population growth driven by immigration, both legal and illegal”.
Productivity growth is a lot slower than it was in the late 1990s and early 2000s. So labour force growth is doing most of the work in driving up GDP. If all illegal immigrants were deported (an estimated 4.5m people), this could drive GDP down by more than 9%, according to one estimate. Why can’t the native-born take their jobs? For a start, unemployment is currently very low by historic standards. But Trump will fix that. The adverse impact on GDP caused by mass deportations will probably cost almost 1m Americans their jobs.
In short, the policies Trump sold to American voters will push up prices and cost jobs. But, some commentators say, Trump may not do these things. If there is an upside in electing a man who is a convicted felon, tried to overturn an election, and admitted to sexual assault on tape, it is that he is a notorious liar. (This brings to mind Churchill’s response when his wife told him that his 1945 election defeat was a “blessing in disguise”. “At the moment” he replied “it seems quite effectively disguised”.)
The fundamental problem is that US voters have not felt the kind of rise in living standards they are used to. They were hit by a spike in inflation which, since it was linked to Covid and Russia’s invasion of Ukraine and was replicated elsewhere, was hardly Joe Biden’s fault. But the combination of inflation and slow economic growth has led to an anti-incumbent mood across the democratic world.
For the wider world, the implications of Trump’s election are even grimmer. After the First World War, the US retreated into isolationism and the democracies proved powerless to stop the rise of Hitler and Mussolini. After the Second World war, however, the US took a more benign attitude. It launched the Marshall plan which revived the European economies and thus boosted US exports and growth. It set up NATO, which guaranteed European safety against Soviet aggression.
In a sense, western Europeans have been living in an American empire since then. We have been closely linked together by economic and defence ties. As the Romans spread their culture (language, temples, baths), so Europeans buy American brands, listen to American songs, watch American TV and movies and use American social media apps.
That cultural link will linger, just as did that of the Romans. The political ties are fraying. On the European side, the election of Trump makes it difficult to regard the US as “the shining city on the hill”. When Obama left office over 80% of the Dutch, Germans, French and Swedes had confidence in him to do the right thing in international affairs; by 2019, the proportion of people in those nations who had the same confidence in Trump was 25% and below.
US voters clearly have little interest in maintaining the link, as their decision to elect a candidate with the slogan “America First” makes clear. In the latter stages of the campaign, he said “after years of building up foreign nations, defending foreign borders and protecting foreign lands, we are finally going to build up our country, defend our borders and protect our citizens.” That protecting foreign nations might also benefit US citizens has not occurred to him.
All this is terrible news for the brave people of Ukraine, who have been fending off a Russian invasion with the help of US defence supplies. Trump’s peace plan will almost certainly involve cutting off Ukrainian arms supplies until the country surrenders to Russian demands. This augurs ill, also, for the Baltic nations and Taiwan.
In a sense, this does resemble the fourth century CE when the Roman empire shifted its base and its geographic focus to Constantinople (in present day Turkey). Over the course of the century, Roman territories in western Europe were gradually over-run. In 410CE, the Britons wrote to the Emperor Honorius to ask for help. His reply was to advise Britons to “fight bravely and defend your lives. You are on your own now”. The incoming President’s message might be more along the lines of a famous New York Daily News headline: “Trump to Europe: Drop Dead”.
The effect of US isolationism and nationalism will not be felt overnight. But the post-1945 order that brought free trade, prosperity and democratic freedom under the US empire is ending. Few people, apart from the leaders of Russia and China, will enjoy what happens next.
