Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
The ABC’s of Fiat Money - 13th Dec 19
Why Jo Swinson and the Lib Dems LOST Seats General Election 2019 - Sheffiled Hallam Result - 13th Dec 19
UK General Election 2019 BBC Exit Poll Forecast Accuracy Analysis - 12th Dec 19
Technical Analysis Update: Tadawul All Share Index (TASI) - Saudi Arabia ETF (KSA) - 12th Dec 19
Silver Miners Pinpoint the Precious Metals’ Outlook - 12th Dec 19
How Google Has Become the Worlds Biggest Travel Company - 12th Dec 19
UK Election Seats Forecasts - Tories 326, Labour 241, SNP 40, Lib Dems 17 - 12th Dec 19
UK General Election 2019 Final Seats Per Party Forecast - 12th Dec 19
What UK CPI, RPI INFLATION Forecasts for General Election Result 2019 - 11th Dec 19
Gold ETF Holdings Surge… But Do They Actually Hold Gold? - 11th Dec 19
Gold, Silver Reversals, Lower Prices and Our Precious Profits - 11th Dec 19
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Will the US go Protectionist? 

Politics / US Politics Apr 07, 2008 - 08:35 AM GMT

By: William_R_Thomson

Politics It's a ritual that repeats every four years, first during the US Presidential primaries and then later the election itself – the candidates stomp the prairies, and industrial heartlands, with promises to better the lot of the American worker in today's global economy. Fair trade not free trade is a particularly popular slogan. Then comes the election and the installation of the new President and it is more or less business as usual: more free trade agreements, more Doha rounds and more mock battles between the Executive and Legislative branches over environmental and health and safety standards, which are the codes words official Washington uses for its fairly mildly protectionists policies. Globalisation supported by huge commercial and financial interests pushes ahead remorselessly.

The primaries this year have been no exception. John Edwards campaigned far to the left for the union vote. Hillary Clinton has run against her husband's NAFTA agreement that effectively created a North American customs union and has asked for a ‘timeout' on future trade deals. She has won the blue collar vote overwhelmingly. Obama has also shifted to the left as the campaign has developed. Only McCain, the Republican candidate, has declared himself a free trader but the odds are against him winning the November election.

So is it business as usual or is this year really different? Whilst one should not read too much into primary campaigns there are substantial grounds to believe this election is significantly different than any for more than a generation and could well have a quite profound social and political impact. The United States Presidential elections have tended to go in approximately 36 years cycles as regards policy and a change in the dominant party. The time for change is upon us.

The Republicans generally controlled the White House from 1896-1932 (from McKinley to Hoover ) following a small government, generally free market approach. The Democrats took control in 1933 with Roosevelt and controlled the commanding heights of policy till 1968 with a high tax, relatively highly regulated, big government regime. The Republican revolution began in 1969 and gathered momentum under Reagan, who was elected in 1980 on a platform to roll back the state. The revolution has largely run into the ground under the Bush administration and the economy and the whole financial system are now possibly facing their most profound challenges since the 1930s.

A new paradigm is waiting to be created. Operating under the rubric of the ‘war on terror' government expenditures and regulatory measures have mushroomed since 911 whilst, incredibly, taxes have been cut. The result has, of course, been the explosion of debt, governmental and private, and a speculative orgy financed by the country's creditors. An authoritarian surveillance state has arisen. The hangover is now facing the United States , so the next few years are likely to be very different from those spurred by the Reagan revolution and its descendants.

The disparities in wealth created by the late finance boom have come at a time when the US blue collar worker is incredibly now worse off than he was back in 1970 in terms of real, after tax income. That is a generation and a half of decline, something unprecedented in American history where every generation is supposed to do better than its predecessor. His union job and the accompanying health benefits and pension have been outsourced overseas and he has been forced to take lesser skilled and less highly paid remuneration. He has survived by having his wife join the labour market and using his house as an ATM until recently. Now that game is over and he is facing a tough retirement. In recent years the middle class has also suffered a similar incomes squeeze as globalisation has expanded its reach upmarket and into the service areas – and the middle class votes.

So within the US some class envy is surfacing and a mood emerging is emerging to trim some of capitalism's excesses and address certain broken social issues, including affordable health care and college education, as well as rebuilding the domestic public infrastructure of roads, bridges etc., where there has been woeful underinvestment for a generation or more.

The probabilities favour a Democrat being elected as president in November coupled with enhanced Democrat majorities in the Congress. If that happens, change will be inevitable. Those changes will include changes to the health care system to provide some form of universal access, increased income taxes on the highest earners, increased government spending in general and increased regulation of financial services, in general, and banks, in particular. This may have to be the costs for the substantial bailout of the banking and housing markets in the wake of the present ongoing debacle that was evidenced by the Bear Stearns emergency.

But will it mean the country goes protectionist? Probably not in a major way on trade. Future deals will become harder to negotiate and even more fraught than they are at present, with a greater regulatory burden that panders to domestic US interest groups such as labour and the environment. But the powerful commercial interests in favour of globalisation will remain and will probably prevent anything too dramatic happening.

Equally on the financial front, one can expect plenty of loud voices demanding transparency against sovereign wealth funds taking over US corporations but, at the end of day, an accommodation is likely in most cases. After all they have the money, and money follows the golden rule – he who has the money makes the rules. If an accommodation is not reached then the role of the US dollar's position as the world's sole reserve currency is even more endangered than it is at present.

In conclusion, the United States is going to have to adjust to a somewhat different position in the world than it has enjoyed since the end of the Cold War; an era of lower growth and a restructuring of its economy to meet new and emerging needs and of a greying population amid the turbulence of change as power shifts in the world to the BRICs. If the US is being challenged then the impact will be felt everywhere to some degree. But the chances of a new Smoot-Hartley Act, which brought on the great Depression of the 1930s, are, hopefully, one lesson that has been well learnt.

By William R. Thomson
Private Capital Ltd.
Hong Kong

William R. Thomson Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules