Editor’s Note: What is President-elect Donald Trump’s plan for the economy? Economics correspondent Paul Solman sat down with Columbia University’s Adam Tooze to discuss. An economic historian, Tooze gives much needed historical perspective to Trump’s economic plan as put forward by his economic adviser Peter Navarro on Real Clear Policy.
PAUL SOLMAN: You’ve read Donald Trump’s so-called Gettysburg address, his economic program. [In late October, Trump spoke to supporters in Gettysburg, Pennsylvania, where Lincoln gave his famous Gettysburg Address over 150 years ago.] Historically, what does it remind you of?
ADAM TOOZE: I think as a historian, what strikes one the most about this program is simply its nationalism. Thinking about the record of American economic programs, it strikes me as perhaps the most nationalist in tone and in spirit that we’ve seen in the U.S. since the so-called isolationism of the Republicans in the 1920s.
PAUL SOLMAN: The Roaring Twenties was a period of enormous economic growth in the United States.
ADAM TOOZE: Absolutely, it was also a period of a rebound from an enormous war, so the growth is not altogether surprising, but it was growth that was also unstable and that came crashing down in 1929 in the Great Depression. And it was a period in which America’s economic policy was, from the point of view of the wider world, unhelpful, some would even say irresponsible, in failing to figure out the implications of America’s policy on trade, its policy on migration and its policy on foreign investment as well as the implications of those policies for Europe and Asia in the 1920s. And so in that respect, too, one is worried, perhaps, about the historical parallels.
PAUL SOLMAN: And the historical parallels specifically with regards to, say, immigration and trade?
ADAM TOOZE: Two of the key elements in the program that Trump outlined at Gettysburg are an aggressive assertion of American national interests with regards to trade policy. The renegotiation of NAFTA and the renegotiation of a recent deal with South Korea, for instance, are mentioned as hot button topics that the new administration will address. And the other nationalist plank of the program is obviously the policy toward immigration and the promise to dramatically change the regime of migration to the U.S.
PAUL SOLMAN: But the program also has a huge investment in infrastructure?
ADAM TOOZE: So the investment program is there for infrastructure. Clearly, the United States economy is in desperate need of investment in its infrastructure to repair deterioration, to provide America with a 21st century backbone for economic growth. What’s striking about the Trump program in its current form is that it’s unspecific about how it will be funded. It has about it the feel of financial engineering almost. There’s an element of hand-waving about how government money will be multiplied by means of public-private partnership, which is a common feature in thinking about government spending in an age of high debt, when any incoming administration is looking to provide stimulus without ramping up enormous deficits and adding to America’s existing debt burden.
PAUL SOLMAN: But President-elect Trump seems to be committed to a major infrastructure program. If he doesn’t get the private investment, I would think, or at least people think, he will use government money to do it and provide the jobs and re-build America.
ADAM TOOZE: Yes, I mean the need for investment is evident, and it was also a major part of his stump speeches while he was touring America. It’s also part of the piece with his commitment to the redevelopment of American manufacturing and industrial jobs, providing jobs for the constituency which was so important in electing him last night.
There’s no question at all that over the last 20 years blue-collar America, middle America, has been in the firing line of the pressures of globalization, which is also being felt everywhere else in the world — in Europe, even in the rust-belt in China. In the 1980s and 1990s, major industrial concentrations that were built up in the heyday of heavy industry in the middle of the 20th century — 1930s, 1940s, 1950s — came under massive competitive pressure from new suppliers in the Asian tigers, in Japan and South Korea, and all of them saw huge job losses. And these have continued if one thinks, for instance, of the troubles of the American auto sector all the way through to 2008, 2009. There is a constituency there which is clearly facing existential questions about its employment prospects in the 21st century.
PAUL SOLMAN: But he’s addressing that constituency.
ADAM TOOZE: That is certainly the promise of his campaign, and the promise of his economic program. This economic program is really the pick-up truck of economic programs, it’s the Ford F-150 of economic programs, it’s macho, it’s heavy industrial, it’s about blue-collar jobs, it’s about the jobs of the 20th century, it’s about manufacturing, it’s about oil and fossil fuels. It’s a deliberate, forceful reassertion of an image of American industrialism that we have inherited from the 20th century.
PAUL SOLMAN: As a historian do you find that anachronistic?
ADAM TOOZE: In some senses I think it’s almost deliberately anachronistic. There’s a retro feel to the Trump program, and one can understand the politics of that at this moment: It speaks to a constituency that’s underserved. I think if one wanted to make sense of this program, it’s a kind of holding action, it’s an effort to bide time for a constituency of workers who have really been suffering in the last 20 years and who need to be prepared and be given time to prepare for a transition to a very different type of employment that we may be moving into in the coming decades.
PAUL SOLMAN: So it’s buying time for the children of these people while they continue to have jobs that are essentially going to disappear anyway?
ADAM TOOZE: For the last 20 years, all the way back to the Clinton administration of the 1990s, the question of how we reskill the American workforce for future employment is one of the key issues of economic policy. What will be interesting to see is whether or not we see from the administration initiatives on higher education for this workforce. Because if those kinds of training opportunities are not provided, then I do think this program begins to look like a defensive, holding acting, a rearguard action, buying time for workers who might not otherwise find positions in the 21st century.
As you say, perhaps with their children, this is a launching pad. Without a stable, domestic platform, without a stable home, it’s difficult for kids to make their way into college education. We know that social mobility in the United States over the last generation has slowed down. A lot of that has to do with the fact that the bottom has fallen out of working-class families, which previously might have provided a springboard to higher education in the glory days of American public universities in the ’50s and ’60s. Those kinds of routes out of blue-collar family backgrounds –by way of college education into white collar work — were quite common. And they’ve become increasingly less so in part because of the crisis in manufacturing and in industrial work.
PAUL SOLMAN: But this was the rationale for saving the auto industry, wasn’t it? The Democratic Party’s rationale was, we’ll preserve jobs at least for a while to keep the people who have had them employed.
ADAM TOOZE: I think there’s a real common ground here, in fact. That was an exception within the Obama administration’s economic policy, a crisis that he inherited from the previous administration, and felt it was essential to carry through on. It went hand in hand with really deep restructuring with both GM and Chrysler, but in a sense I think one can see the Trump program as if it were that element of the bailout of 2009, writ very large, and now extended out towards fossil fuels.