AMERICA UNDER TRUMP 2.0 MAY TURN INTO 19TH CENTURY BUCCANEERING CAPITALISM

As president elect Donald Trump is edging towards taking over powers in America on January 20 next year, the country is lurching towards becoming a typical case of a plutocracy.

Money bags, as opposed to public spirited men and women who have devoted a life time in public affairs, are coming to power in the federal government. Insiders in the Trump camp are describing gleefully the scenes at Donald Trump’s golf club, Mar a Lago, thronged with hopefuls seeking to grab powerful government and policy making positions.

Donald Trump himself is a billionaire businessman having property interests in America and the world. Donald Trump’s company has developed several high end properties in multiple cities in India as well. He is a professedly extrovert billionaire at that and his private jet for personal transportation is in itself an object
of admiration and envy among even the richest of the rich.

Trumping them all is the presence of one man — Elon Mask— owner of among other businesses, Tesla
motor car company, who was a diehard Trump supporter in his election campaigning days. Since then, Elon Musk has become one of the insiders in the Trump set up, often seen seated at dinners with Trump at the highly sought after patio of Trump’s club.

The proximity is now so deep that Trump was seen holding calls with world leaders, with Elon Musk, by his side and sometimes Musk has been handed over the telephone in conversations with world leaders. Musk was for example on the line in course of Trump’s conversations with the president of Ukraine, Volodymyr Zelensky.

The presence of Musk aside, American economic policy is also seen lurching towards a 19th centre type free enterprise and buccaneering capitalism. That means least interference from government in the functioning of the private sector businesses and whittling down of the size of the government. While there are many social implications of this policy —like scrapping aided heath care system— this would be giving
economic right to those who have economic might.

As in the 19th century, the American businessman, famously described as the “Robber Barons” almost
always had their ways in determining government attitude towards control and directions and they got away with transgressions and would barge in with outright force to get their way right.

America already has its share of the super rich of the modern world. But with Trump’s support and policy
push, there will be twenty-first century editions of the Vanderbilt, Rockefeller, Rothschild, and so on.

In course of his election campaign, Trump has put forward his economic policy components which resemble classical capitalist state. Least regulation and withdrawal of government from control of the economy or government presence in economic activities. But there are critical differences between now and the nineteenth century which can create policy conundrums and contradictions. The critical difference being the volume and extent of fiscal deficit of the American government.

Trump is proposing minimal taxes on businesses, which would surely be welcomed by the private businesses. But that would certainly have large implications for government’s financial situation.

A substantial and meaningful tax cuts, coupled with a failure to immediately slash government expenses and public debt, could result in a situation in which the administration would be at loggerheads with the central bank, the US Federal Reserve bank. The point of first friction could be over interest rate policy.

The obvious spark could be a demand from the administration to cut interest rates which the Federal
Reserve could, in its own judgement under a very conservative central banker, Jerome Powell, refuse to comply. Already Trump’s campaigns had indicated a demand for a interest cut.

However, given the inflation trends as well as the continuing demands for funding ,the federal government
could in fact point towards a rising interest regime. It would be a difficult choice for the government as well as the central bank. In an extreme situation, the administration might bay for the central banker’s blood and throw him out.