To understand Trump, look at Franklin D. Roosevelt
By the usual gauges America’s Depression-era president Franklin Delano Roosevelt was a failure. With few exceptions, nothing he did helped the crippled US economy very much. His policies lurched from one failed experiment to another: price controls, make-work employment, destruction of agricultural crops (to raise prices) in the midst of starvation. His modest increases in federal spending didn’t even compensate for the contraction of state and local spending.
Yet Roosevelt won the presidency four times, uniquely in US history, and almost certainly held the American social fabric together through the dark years of the Depression — not because he succeeded but because he tried.
Americans chose Donald Trump against all the expectations of the pollsters and political professionals, because they want a president who will do something to counter the quiet desperation that has afflicted them for the past eight years. Donald Trump campaigned on tax cuts and a tough stance on trade, a vague and sometimes inconsistent economic program. It doesn’t matter. FDR campaigned on a promise to balance the budget. Trump understands that something great and dramatic must be done. He may not know what it is, but the American voters have given him a mandate to try until he succeeds.
When Roosevelt took office in 1933 at the depths of the Great Depression, the US unemployment rate stood at a record 25%. But that 25% rate was reckoned against the expectation that nine-tenths of the adult male population would work for a living. The labor force participation rate, if the government had calculated it, would have stood at 65%. Today’s labor force participation rate stands below 63%. The unemployment rate stands at 5% rather than 25% because a sixth of American adult men have left the labor force, and because a plethora of ruses disguise joblessness, from student loans to disability payments.
Trump wants to spend US$1 trillion on infrastructure. That means a massive amount of public employment, and a lot of federal debt issuance. He is exactly right. Much more dangerous than the deterioration of bridges and tunnels is the deterioration of the labor force. No country can afford to let a sixth of its adult manpower rot in idleness and still hope to recover. The first thing to do is to get people back to work fast — just as Roosevelt did with his Alphabet soup of public employment agencies.
I have my own ideas about what President Trump should do, but they are beside the point tonight. Americans repudiated the stagnation and social tinkering of the Obama years, just as they repudiated the incrementalism of small-ball conservatives like John McCain, the 2008 Republican candidate, and Mitt Romney, who followed him to failure in 2012.
It is not strictly speaking a Republican victory. The self-appointed guardians of Republican ideology for the most part supported Clinton or sat the race out. George Bush, father and son, reportedly left their presidential ballots blank. It is, however, an American victory, a triumph for America’s risk-friendliness and willingness to adapt, experiment and tinker.
There’s no reason for America’s partners or competitors to panic. America, after all, is just being America. In its heart of hearts it has very little interest in what happens an ocean away from its coasts, and under a Trump presidency will be less inclined to meddle overseas. I expect that Trump will throw more resources into a rebuilt military and (especially) military technology, something that Moscow and Beijing might not like but which does not by itself portend any sort of confrontation.
American bond yields probably will rise, both because Trump will spend heavily to support economic growth, and because higher growth will bring with it higher interest rates. The dollar will weaken, and the chill wind of deflation that has blown from the United States during the past three years will attenuate.
The American public has given Mr Trump a mandate to try something radically different than the disappointed measures of the past eight years. It is likely to be a bumpy way back from economic stagnation and strategic abnegation. But it is a way back, and that ultimately is a good thing for the rest of the world.