Among progressives, the immediate response to Donald Trump’s election was conflicted. Some rejected him completely, and others — most notably Sens. Bernie Sanders and Elizabeth Warren — expressed an attitude of selective cooperation: Opposition to Trump's racism, bigotry and xenophobia, but a willingness to work with him on economic proposals purportedly designed to aid the working class.

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The mood of progressives has since shifted sharply away from cooperation in light of how Trump has conducted himself. But things could shift again as attention finally starts being paid to Trump’s budget proposals, with other economic concerns likely to follow. What approach should progressives take toward Trump’s economic policies — and why?

That’s the question taken up by University of Massachusetts economist Gerald Epstein in a new article in Challenge magazine, "Trumponomics: Should We Just Say 'No?'” He argues that economists need to significantly reorient themselves to deal with Trump, as his intentions are markedly different in intent from the neoliberalism of the past several decades. Both Trump's kleptocratic tendencies and his proto-fascist orientation raise problems that defy the standard methods used to critique neoliberal economics.

Although Epstein was largely writing to other progressive economists, his arguments warrant a wider audience for several reasons. First, we need to understand the kinds of arguments that Epstein is urging progressive economists to make. We cannot simply take things on faith, the way that conservatives routinely do. Second, we need a broad public understanding of these arguments. If there had been such a broad understanding in advance, then arguably the differences between Trump and the Sanders-Warren camp would never have become so blurred as to get Trump elected in the first place. Which is why I interviewed Epstein, to help develop that understanding for the battles ahead. (Our conversation has been lightly edited for length and clarity.)

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In your paper, you argue that Trumponomics is something new to America, and that the response it calls for from economists needs to reflect that. In particular, you argue that "Trumpism is a protofascist social formation." What does that mean in terms of economic goals, and how they're married to political goals?

By proto-fascist, what I mean is that in in the social formation, or group, there are a lot of different tendencies, from neoliberal Republicans to nativist xenophobic fascists, probably best represented in his government by Steve Bannon. So “proto-fascist” means it’s on the road to a kind of fascist movement. It's hard to know exactly how it's going to play out, depending on the relative power [of] these various groups that are vying for power.

But the idea about proto-fascism is that those in power use racist, nativist, xenophobic ideologies to try and divide and conquer a political system, for their own goals. That can be for personal enrichment. In the case of Trump it’s self-aggrandizement, in the case of others who are associated with him, it's probably enrichment and the implementation of a destructive ideology. So they use economic policies to mobilize power [and] achieve their own political power, and then they parse out the spoils to various groups in their coalition.

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You write that your analysis of the social formation leads you to advise a "political economy precautionary principle." What do you mean by that?

That's a bit tongue-in-cheek, but the basic idea is I'm trying to argue against economists — and particularly progressive economists, leftist economists, heterodox economists, whatever you want to call them — from doing business as usual. I think the Trump phenomenon is unusual if not unique in the United States, though we’ve seen these phenomena elsewhere in the world at different times. As I said to Joseph Stiglitz when I saw him recently, "You know we economists – and you probably better than most of us – know how to analyze neoliberalism, and we’ve been looking at neoliberalism now for 20, 30 years. We know how to analyze that. But we don't have much experience analyzing fascism, and I think that requires a different approach.

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In neoliberalism and other economic policies, we’re used to looking at it piecemeal. Each policy we analyze: Is it good? Is it bad? What's the impact? On income distribution? On efficiency? On economic growth? We’re not used to looking at these policies not only as an economic package — that is how they support or relate to each other—but also how they support the accumulation of political power.

And since one of the key goals of a proto-fascist or fascist formation is to accumulate and sustain political power for destructive ends, I think we as economists have to look at how these policies will affect the accumulation of power. So a progressive "political economy precautionary principle" takes the idea that you look at the risk associated — like a new drug, at the Food and Drug Administration — and if there's a reasonable chance that this new policy is going to further the destructive goals of fascism, then you should raise red flags about it, even if on its own terms it might seem to be helpful to some constituencies within the economy that you support. So that's the idea.

It’s also different in that it's like a pass/fail grade, isn’t it? You don't halfway raise a red flag.

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Yes. You raise a red flag, but you don't raise the red flag and just badmouth it. You give your reasons. You analyze it. Why are we raising the red flag? What I’m most concerned about is policies that seem like they are the same as progressives have been proposing for years, if not decades: Managed trade, renegotiating trade agreements, infrastructure investment. Trump has talked about those, and recently we’ve seen some labor unions jump on those bandwagons.

But the question is: Are these really the same kinds of policies that progressives have promoted? Who would they help? Who would they hurt? How will this help Trump accumulate more power? We analyze that, and if it seems as though this is going in a bad direction, we raise that red flag. And yes, it's kind of a pass/fail.

An important part of your paper is looking at Trumponomics in terms of various economic "frameworks of understanding." You lay out six of those. Can you run through them and say a few words about each?

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Economists are trying to figure out, What is Trumponomics? What family does this belong to? Some have said, well, it's kind of Keynesian economics, because it relies on tax cuts, government spending, a demand-side approach to getting the economy going. Others have pointed out that maybe it's Keynesian, but it's a reactionary type of Keynesian, building on the concept John Kenneth Galbraith promoted years ago. That is, it does depend on fiscal expansion to get the economy going, but its impact is likely to be very unequal, it's going to help the rich more than the poor or the middle class, maybe it's going to involve more military spending, etc. So that's reactionary Keynesianism.

It's similar to the third one, a "military Keynesianism," which people started analyzing when they were looking, for example, at the Vietnam War and the economic expansion in the '60 and early '70s. It's an expansionary fiscal policy built around extending the military and the military-industrial complex. Yes, maybe this will create jobs and get the economy going, but you end up producing a lot of destructive stuff that could be used for destructive purposes through imperialist adventures.

The fourth one I call "Reaganomics redux." Jeff Maddrick, who is one of the editors of Challenge magazine says, well no, this really isn’t demand-side at all. This is being justified as a supply-side policy, [as in] Reaganomics, the idea that if you cut taxes on the rich, their incentives for investing and innovating go up, so you can have such a burst of economic growth in output that while the tax rate is going to decline total tax revenues go up, and this will reduce the budget deficit. Supply-side Reaganomics has been shown not to work. Under Reagan, there was a massive increase in budget deficits when they cut taxes for wealthy people, and there wasn’t a big burst of investment. There was a big increase in speculation and moving capital abroad.

The fifth is relatively new for Americans, but not for other countries around the world — what I call crony capitalism or kleptocracy. I think economists and others were slow to realize this, but the big danger in Trump's regime is just that they steal stuff, billions of dollars worth of stuff, through their control of the government. This can go way beyond trying to sell Ivanka’s jewelry. We’re talking about massive looting of billions of dollars through various programs, including, for example, the infrastructure program. I think this has to be a key part of our analysis of Trumponomics.

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Yes, there will be elements of all the previous four, but this new element which we are not that used to analyzing has to be central. I have economics colleagues who think that, well, the real problem is neoliberalism, it’s capitalism, this is kind of a sidelight. But I think when you think about Trumponomics, kleptocracy is a central component.

The final one, number six, is the one I worry most about, though: Right-wing populism. I gave it a kind of cheeky term, “Schacht therapy.” I'm drawing on the example of Hjalmar Schacht, who was Hitler's economic minister and head of the Bundesbank during significant parts of Hitler's reign. Schacht was responsible for developing and implementing a massive public works program, he helped to build the autobahns — the infrastructure, in other words.

That got the economy going in the short run, and it was very popular. Schacht was also responsible for figuring out how to raise funds to rebuild the military, to rearm Hitler’s Germany. This generated a lot of jobs too, and was very popular. In addition he develops a very elaborate kind of managed trade system, not free-trade at all, but [more like] “make Germany great again.”

These policies, on their face, did seem to work in the short term. They did increase jobs and get Germany going again, and help generate a lot of support for Hitler. But we know where the story ends, and it's in a very destructive place. So I'm worried that unless we open our eyes we can have another kind of Schacht therapy in the United States. If we don't look carefully at these trade and infrastructure and other kinds of policies that Trump is proposing, and look at what kind of role they really will play in our politics and our economy.

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In the paper, you suggest a fivefold approach to analyzing Trump's economic proposals, assessing the impact on climate change, human rights and democracy, and on the distribution of power in two forms. First between citizens and corporations, and second between groups that have historically protected the interests of workers and those who typically undermine them.

Let me talk first about climate change. When I think about the problems that we face, and how economists have analyzed them, we have always treated climate change as a secondary issue, if at all. But in terms of Trump's climate denial and in light of all the fossil-fuel advocates placed into important roles in his government, I would say we are in a climate emergency.

So I'm suggesting that as part of our analysis of Trumponomics, we have to put his impact on climate change front and center. So even if an infrastructure program does create some jobs in the short run, if it's not oriented towards dealing with reliance on fossil fuels and worsens our climate problems, then that's a red flag. That's not a net macroeconomic policy we should be pursuing now, and as my colleagues Bob Pollin and Heidi Garrett-Peltier pointed out, there are great ways to generate good paying jobs by investing in green energy, rather than fossil fuels. So I say to my colleagues, please put climate change up there when you're trying to analyze the policy.

On human rights, I think it's an important signal for understanding the path of fascism. I wrote this article in anticipation, though no knowledge, that Trump would start implementing his war on immigrants and Muslims and foreign citizens. I was raising that as a red flag to say, look, this is a sign that the fascist forces are gaining some ascendancy in his coalition, and when we think about analyzing economics and economic policies, we have to think about whether these policies going to generate support for those gross violations of human rights. That should be a red flag.

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The same thing for democracy. Lots of people are worried about autocracy, and how Trump's goal is to aggrandize himself and achieve more power. As he rails against the press, judges, the CIA and others, any possible opposition to his power, that's a red flag. This right-wing populist -- fascist, if you will -- aspect of this movement is gaining ascendancy. Any economic policy that generates support for that kind of movement raises a red flag. So these are all things that we need to worry about with this kind of Schacht therapy, this proto-fascist movement.

You present an overview of some expected Trump policies and divide them into three categories: Ugly, uglier and ugliest. Could you explain how that division can clarify our thinking?

Well, again, I was being a little tongue-in-cheek. As I define it, the ugly ones are the ones that, first of all, we can analyze pretty easily using the toolkit that we’re used to — in terms of being inefficient, in terms of generating more inequality of income and wealth, and even in the sense of generating crony-capitalist outcomes where you bestow a lot of benefits to a few corporate leaders, and not many benefits to anybody else. And ones that might lead to financial instabilities.

The one that I’m most familiar with is getting rid of Dodd-Frank, and deregulating finance. We know that this is likely to generate, at least in the short run, a lot of profits to the Goldman Sachs friends of Trump by letting them do whatever they want to do with borrowed money. We’ve seen this picture before, and we know that it's not going to end well. We know that it could lead to more financial instability and maybe even another economic crisis, and then the government will be placed in the same kind of bind it was before. Do we bail out the too-big-to-fail banks, or do we let them drag down the entire economy? So nothing will have been learned, and more destruction is likely.

So we know how to use our tools to analyze these ugly policies. Take the tax cuts. We analyzed the Reagan and Bush tax cuts, so we know that they're going to not lead to a burst of supply-side magic. We know that they're going to lead to some economic growth, because that's what tax cuts do, but we also know that they're going to be very un-equalizing, so these are ugly policies.

Uglier policies are ones that start have kind of a shade of respectability, or some interest to progressive forces and the middle class, but we know that they are very destructive. Some of these for example are privatizing Social Security or block-granting Medicare. These we’ve analyzed before, and we know that these will be very destructive of long-standing social policies that the right wing, the Paul Ryans of the world and the Koch brothers, have wanted to get rid of for decades.

The ugliest are the ones that I've been talking about mostly so far, the ones that seem to be really progressive. For a long time, progressive economists have talked about, you know managing trade, renegotiating trade agreements and making infrastructure investments. These you can partly analyze just by looking at them.

Let's look at infrastructure. What Trump is proposing is not really a massive public works program. To the extent it’s clear what he is proposing, he's proposing a privatization plan: Huge tax subsidies for wealthy investors and hedge funds and private equity funds and bankers, to privatize public bridges, roads and things like that. [He wants to] start charging tolls to pay for them, and again it's a huge subsidy, it's a crony kind of policy, and are most likely they are going to use labor that's not unionized. They'll probably use these kinds of policies as leverage to get other kinds of reactionary policies they want.

That's a very specific example, in a case where Trump's plan has already been put out there. What's the broader lessons we can draw from that example?

The broader lesson is that we have to look under the rhetoric. These people are masters at using the words we think we understand, like "infrastructure program." First of all, look under the rhetoric to see what it really is, and give it its proper name, and use that proper name. So in this case it's a privatization plan. No. 2, analyze it for its crony-capitalism aspects, my fifth category of Trumponomics. Then analyze it for its environmental implications, and finally look at how it's going to be used to mobilize power for Trump and his allies, his corporate allies, his base, and so forth. And then analyze what impact it will have on the middle class and working class in the long run, if he is successful.

I think if you do that, the political economy analysis, the climate analysis, the crony-capitalism analysis and then just the standard income distribution efficiency analysis, you will find that very few of these policies are going to come out smelling good.

It’s very important not to get caught up in the appearances of what Trumponomics is proposing. One needs to look underneath the words to the real policies, and be very skeptical and analytical. Skeptical at first to understand what is being proposed. Analytical in the sense of who's going to benefit, not just in terms of income and wealth but in terms of who's going to gain power and who's going to lose power. Don't be afraid to stand up and say, no, this is a package that if you look at its power effects is going to lead us down a very destructive path, and we’re not going to go there.

There's a positive side to all this that we haven't talked about yet. There are a lot of positive alternatives being developed at the state and local level by progressives, but also in coalition with just pragmatic people. I would say that progressive economists and progressive politicians should link up with what's happening on the state and local level, and get more involved in analyzing and helping to promote those kinds of initiatives.