Photograph Source: Tia Dufour, White House – Public Domain
In Donald Trump’s make-believe world prices are falling, the economy is booming, he is bringing peace all around the world, and gas costs less than $2.00 a gallon. But in the real-world inflation is increasing, the economy is stalling, wars are continuing, and gas costs more than $3.00 a gallon.
Ordinarily, we shouldn’t be bothered too much by the dreams of a 79-year-old suffering from dementia, but we have little choice but to bothered when that person is the president of the United States. Trump’s unreality is interfering with the reality for the rest of us in a very big way.
One way his hallucinations matter in a big way is his failure to come to grips with the fact that China is now the world’s dominate economy. By the end of this decade, the I.M.F. projects it to be nearly 50 percent larger than the U.S. economy.
There is not much that the U.S. can do about this large and growing disparity. It can and should make sure that we have secure supply-chains for essential items, as the Biden administration tried to do. We also should take steps to promote economic growth here, not just to compete with China, but also to improve living standards for low and middle-income households. But we also need to come to grips with a world where the United States is still a very important actor, but no longer the world’s dominant economic power.
To my view, that would mean finding areas of cooperation with China for mutual benefit. The most obvious one would be sharing technology in health care and clean energy. It benefits both nations and the whole world if pandemics can be prevented or contained, diseases like cancer can be cured, and we manage to limit the damage from global warming.
Unfortunately, Trump seems determined to go 180 degrees in the opposite direction. His Secretary of Health and Human Services, RFK Jr., just threw a massive sledgehammer into the country’s biomedical research system by nixing mRNA research and haphazardly cancelling research grants in a variety of other areas.
The story on climate technology is even worse. Trump is actively trying to destroy the solar and wind industries, with a special animus towards the latter. He also is trying to block the transition to electric vehicles, taking away the credits put in place under the Biden administration. Meanwhile in China, electric vehicles already have more than half the market. Electric cars are cheap and recharging times are short.
With the world rapidly turning towards cheap and reliable clean energy, Trump has the United States doubling down on fossil fuels. This will have ramifications throughout the economy, most obviously in the power-hungry AI industry. China’s leading developers have the advantage of both being far more energy efficient and also having access to cheap and abundant electricity.
With all the ways Trump is acting to sabotage the U.S. economy, it seems far more likely U.S. GDP will be lower than the I.M.F’s projections for 2030 than higher. Beyond the attack on biomedical research, Trump is attacking university-based research more generally. His extortion efforts directed against pretty much all the major research institutions will impede progress everywhere. Many researchers have already moved to Europe, Canada, or elsewhere, where they don’t have to worry about a politician cutting off their funding in a temper tantrum.
Colleges and universities were also a major source of export earnings, as students from around the world saw getting a degree from a school here as an important credential in a wide variety of areas. That is not likely to continue to be the case when we have an administration that claims the right to deport them at any time for any reason. This will be a problem for foreign visitors more generally, whose travel contributed almost $220 billion (7.3 % of export earnings) to the U.S. economy in 2024.
Trump’s mass deportation will slow labor force growth to a trickle, as there will be few immigrants to offset the large-scale retirement of baby boomers. This slowing labor force growth was not factored into the I.M.F. projections.
Trump has also burned bridges with pretty much all of the United States’ traditional allies. While Europe, Canada, and the rest might humor Trump by accepting his trade deals, they are working as quickly as possible to diversify exports away from the U.S. market. On its current course, the United States will both have less economic leverage and virtually zero goodwill by 2030.
There is no inherent problem with a country other than the United States having the dominant world economy. After all, the rest of the world dealt with it for the last 100 years, and most countries did just fine. However, the United States would be much better positioned to deal with China as the pre-eminent economic power if we had leaders who lived in the real world. We don’t at present, and it is not clear at what point in the future this could change.
This first appeared on Dean Baker’s Beat the Press blog.
The post MAGA 2.0: Making China Great Again appeared first on CounterPunch.org.
This content originally appeared on CounterPunch.org and was authored by Dean Baker.