Much has unfolded over the past two weeks. I may not address all events as thoroughly as you might prefer, but I encourage you to acknowledge that each situation was defined by significant differences in perspectives. As discerning adults, you are likely aware of how difficult it is to challenge perspectives, particularly on religion, politics, and money. You may not agree with this viewpoint, which is understandable, as that is your perspective.
First, let’s address the US elections. At the time of writing, President Donald Trump has secured his second term. As the 45th and now 47th President, he was brought in via a nationwide swing towards the Republican Party and its platform. Personally, I am repulsed by their platform, as I—and many others who resemble me and live outside the US—are prime targets of their rhetoric. From an external perspective, regardless of one’s disposition, many positions resonated with anti-immigrant policies and protectionism, particularly favouring the wealthiest. In my opinion, this was confused with protectionism of the working class. Due to word limits, I cannot expound further here.
It was evident that President Trump would win, given President Joe Biden’s faltering domestic policies and physical performance; his near martyrdom, regardless of how genuine one perceives the attempt; and Vice President Kamala Harris’s hesitancy to focus on issues pertinent to the broader electorate.
Politically, I believed that her campaign’s biggest error was pursuing celebrity endorsements, which effectively narrowed concerns to those resonating primarily with liberals. To me, this played into the conservative narrative that the common man must fight against “the elite,” a theme echoed throughout the latter stages of the Trump campaign. This narrative was prominently voiced by certain conservative billionaires who we all know. Politics indeed makes for strange bedfellows, intertwining propaganda and messaging.
The truth is that the USA is fundamentally a relatively conservative nation. More people live outside major cities, and red states account for the largest proportion of the population. The misconception that inflation was solely a Democratic Party-induced phenomenon was therefore hard to dispel, despite the economic data suggesting otherwise. The majority of people felt vulnerable with the rising cost of living during the term and likely believed that the government of the day made them targets by not being in control of prices, among other social issues.
The same economic data suggests that this outcome was influenced by actions taken during President Trump’s first term, specifically as he exited during the Covid-19 pandemic, along with real shortages in products and services. Inflation exacerbated in 2021 and 2022 due to poorly-executed monetary policy by the Federal Reserve and misapplied fiscal policy by the Government. I have previously argued that a monetary policy focused on curbing demand for investment products on “Wall Street” and reducing retail spending on “Main Street” only makes sense when there’s an artificial shortage of goods and services, typically when businesses pull back to charge higher prices. You all know this as price gouging.
However, these shortages were very real, and the Federal Reserve unnecessarily made life harder for many Americans and businesses by raising the cost of credit amidst actual shortages of goods and services. Businesses had little reason to lower prices to counteract falling demand, given the rising costs of inputs. As a result, inflation did not slow as expected, simply because the Fed was focused on the wrong issue.
The Federal Reserve is supposed to be an independent institution, though under President Trump’s first term, it was not quite so. The ideal solution during the pandemic would have been a cohesive fiscal and monetary policy—perhaps what one might call a “Trumpian” approach. Biden’s generous payouts policy, however, may have backfired. The Democrats’ approach was to provide stimulus cheques to out-of-work Americans during the Covid-19 pandemic, a policy I still support. However, they should have pivoted once it became clear that the “Great Resignation” was underway. Fiscal policy should have targeted logistical issues, perhaps through financial support to transportation companies or a temporary tax break, combined with limited price controls. This might have more effectively reduced inflation than monetary policy alone.
Consequently, the public attributed joblessness and the painful cost of living solely to the incumbent government, though this perspective is not entirely accurate. Looking ahead, we can expect some outcomes from Trump’s highly protectionist campaign. Most economists advise against long-term protectionism, but as the USA remains a global economic engine, its anticipated inward turn could open opportunities for other countries to fill the void in global trade. The US is expected to drive growth through a leaner government, lower federal tax rates, and incentives for local hiring as a principal means of production. My view is that this will likely boost growth in the short term, which the stock market appears to support. However, this does not mean the strategy is sustainable. Setting aside the likely disproportionate disadvantages for racial minorities and foreigners, the approach’s long-term success depends heavily on the strength of US foreign policy.
The next administration will likely pursue an aggressive campaign to maintain healthy trade relations. This could involve intimidation tactics, as I expect will be directed at Venezuela to benefit Guyana’s oil industry, or foreign aid. Contrary to popular belief, the Monroe Doctrine remains very much alive, particularly under a Republican-led administration. Interestingly, history shows that Caribbean economies often experience faster growth when Republicans are in power—a phenomenon worth exploring in future articles.