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Paul J.J. Welfens: Explaining Trumpism as a Structural US Problem: New Insights and Transatlantic Plus Global Economic Perspectives

Paul J.J. Welfens: Explaining Trumpism as a Structural US Problem: New Insights and Transatlantic Plus Global Economic Perspectives

 

 

JEL Classification: D7, F00, F02, P16
Key Words: Political Economy, Collective Decision Making, Populism, Inequality, International Economics

 

Summary

The 2016 US presidential election resulted in the populist Donald Trump becoming the 45th President of the United States. While many observers assume that this reflects a transitory phase of populism in the US, a closer analysis suggests that there will be a structural populist threat for the US, the West and the world economy. There is survey evidence that US voters consider the inequality which has emerged in the US over many years as unacceptable. At the same time the Lindh-McCall survey results show that the relative majority of US voters expect that big companies rather than government will correct this inequality. This is illusory and wishful thinking and will serve to create continued voter frustration for the lower half of households – this refers to the poorer half of US households – and populism could indeed expand on the basis of such frustration for many years to come. The main drivers of rising inequality in the US, namely ICT expansion, financial globalization and the rise of China’s exports will continue in the medium term so that US voters’ frustration is a structural problem that cannot easily be remedied and that has consequences for transatlantic and global economic relations as well as security policy implications. While the decline of the income share for the lower half of income earners in Western Europe has been rather modest in 1981-2015, the decline of that share in the US has been dramatic, namely from 20% to 13%. The EU is nevertheless threatened by US populism since its political representatives are trying to export their ideology and approach to Italy and other Western continental EU countries. In the UK, a subtle populism is already becoming more apparent under the heading of BREXIT. If the EU27 could defend the model of the Social Market Economy and export this system to Asia and Africa while joining political forces with ASEAN – and possibly China – to defend the multilateral economic order, European impulses could help to contain US populism.

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