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.