Business-friendly but economy-unfriendly?

It is true that movements like MAGA or the pro-Brexit have received the support of large parts of the working class population. But they have also been financed and led by very wealthy people who thought that their interests would be protected by these movements that happen to distract majorities from their material concerns.

It is not the first time in history that business interests support movements that disrupt democratic institutions in dangerous ways. In fact, there have been worse cases, as it happened in Nazi Germany. As we know, it didn’t end up well for their societies, not even for their businesses I guess.

The Centre for European Policy Research (CEPR) has published a (freely available) book with 40 chapters analyzing the economic consequences of the second one hundred days of Donald Trump in the White House. Although of course there is a lot of uncertainty, and it is early days, the editors summarize the book by saying that the outlook is deeply concerning for social welfare, economic growth or inflation.

Tariffs are one big source of concern, but also are attacks on science or health policy, or erosion of basic provision of public goods. Still, the Republican Party and their business donors keep pushing for the Big Beautiful Bill, which is (pathetically) the true name of a legislative package that drammatically lowers taxes to the rich and most economists expect that will increase public deficit and debt, despite the harm done to many public programs.

These can be considered short-run economic concerns. In the long-run, the erosion of democratic norms and the rule of law can have an ever more costly impact on the economy and social welfare. The historical international study of movements that share similarities with MAGA all over the world in the last century shows that their cost in terms of reduced economic growth and increased inequality is large and significant.

And if something is so bad for the economy, it is difficult to understand how it could be good for business in the long run, because the larger slice of a smaller pie may be smaller than the smaller slice of a bigger pie.

 

Dystopian times and places are not that far away

I have been reading Margaret Atwood’s “The Handmaid's Tale” and watching the TV series based on it (the picture below is from Season 3). For those who have not read or watched it, it is about the democratic US becoming Gilead, a theocratic state that subjects women to slavery, including sexual slavery for a large fraction of them. In militarized Gilead, mobility is restricted, as it is access to knowledge (it is forbidden for women to read). Children born in pre-Gilead times of rebel couples are kidnapped and given to pro-regime olygarchic families. Those that escape, flee to Canada, a free country which however is tempted to appease the totalitarian neighbour. It is one of the best stories of the dystopian genre, together with George Orwell’s 1984, although it is painful to read and watch.

Margaret Atwood has a final message in my edition of her book, in which she says that “the details in The Handmaid’s Tale don’t come from far away and long ago: they are possibilities within every society, including ours.” She mentions women and girls in Afghanistan and Iran and totalitarianism in Comunist countries, but she also says that “the West did not have to look very far back in its own past to find a state of affairs in which most women were barred from higher education, property ownership, and the right to their own children.” We could give examples from the not so distant past in Argentina or Spain. Or current examples of restrictions to mobility in Palestine. The last democratic country were women obtained the right to vote was civilized Switzerland in the 1970s.

While Trump deploys the National Guard and perhaps the Marines in California, and his European allies become stronger, the attack on knowledge and other public goods in the US, the technosurveillance, the massive corruption, the attack on immigrants and international students, the violation of regulatory independence, division of powers, and human rights… All these attacks on the rule of law, the racism, the break on climate change policies, the adoption of incompetent economic policies… These are all ingredients of a dystopian novel, except that this time, it is really happening (in the mot powerful country in the world).

In the picture (from the fictitious TV series), the statue of Lincoln in Washignton DC has been destroyed. The real statue remains in place as far as I know, but the Capitol next to it was assaulted 4 years ago by a mob that wanted to hang the Vicepresident of the country, with the blessing of a President that is today sitting again in the Oval Office.

As Rachel Bitecofer has just written in the social media reacting to violence in the streets of Los Angeles, “for those of us who’ve spend the last 6 months discussing how the Trump would use deportations to create chaos is the Blue states and then use that chaos as an excuse to declare a national emergency and seize total power, things are right on schedule”