America’s first businessperson in the White House is doing more to destroy the American capitalist system than any previous president.
A strong market economy needs a robust middle class, mechanisms for upward mobility, and clear rule of law to grow and sustain itself over time. US President Donald Trump has little allegiance to any of these.
In the rush to fulfil campaign promises and sate the greed of corporate backers, Trump and his
Republican enablers are re-organising US tax policy in favour of the rich, gutting regulations and higher education, and ignoring long-standing norms and protections against conflicts of interest.
This new-found, but fleeting, Republican power has been made possible by the party’s condoning of a resurgent American tribalism known as racism.
What is poorly understood by many conservative Republicans is that unfettered capitalism will eventually destroy itself. Left to its natural trajectory, capitalism tends to concentrate wealth and power in the hands of a few, and the system implodes on itself because of limited demand from an emaciated middle class and shrinking competition in the marketplace.
Some intervention by the state, in the form of wealth redistribution and regulation, curbs the worst excesses of the system and allows it to be sustained over time.
The GOP tax legislation, likely to arrive on Trump’s desk in the coming days, massively cuts taxes for corporations and the wealthiest individuals in the country. While some middle-class households will see tax cuts in the short term, many will see just the opposite. The net effect is an end to progressive taxation in America and increasing wealth concentration at the top of the economic ladder. Over time, this new tax policy will effectively stifle consumer demand in the US.
Racism functions a lot like tribalism in other contexts because it fosters pre-capitalist thinking.
In the early 20th century, carmaker Henry Ford understood that the US economy worked best when you have a thriving middle-class. In fact, part of his rationale for raising wages was his implicit understanding that the company needed a middle class consumer base that would buy the Model T vehicles that Ford plants were producing.
Unfortunately, such enlightened self-interest is rare. It’s not that business people don’t understand this, but they want to have their cake and eat it too. In other words, business owners want a prosperous and educated middle class that is neither supported by more robust wages nor redistributive taxation policies.
The result in the US, until recently, has been an oppositional political system with one party, the Democrats, largely supported by workers and labour unions, and the other, Republicans, mostly buttressed by business interests and the wealthy.
The Democratic Party worked for higher wages, redistributive taxation, robust public education, and health and safety regulations, whereas the Republican Party sought a leaner government and limited taxation. As long as the two sides were relatively balanced, a modicum of redistributive taxation, public investment, and regulation curbed the worst excesses of the capitalist system and kept it running smoothly.
Trump’s evil genius was to overtly tap into the dark world of racism.
Racism functions a lot like tribalism in other contexts because it fosters pre-capitalist thinking. Rather than voting along class-based lines formed by shared economic interests, both tribalism and racism foster group thinking that cuts across class lines. As such, poor white workers are led to believe that they have more in common with their white capitalist bosses than their fellow workers of colour.
Thanks to racism, capitalist tycoons have been able to bamboozle poor working-class whites into supporting their agenda to jettison the moderating influences of progressive taxation and regulation that actually sustains a market economy over time.
Also in the GOP tax plan are a series of taxes on university education.
These include a new tax on graduate tuition waivers, a key way many post-graduates in the US are able to attend school, as well as plans to scrap tax deductions related to university student loans.These proposals would not only stifle the engine of the US’ knowledge economy, but they would destroy a key means of upward mobility in the country.
Last but not least, the Trump administration’s blatant nepotism and disregard for long-standing precedents on avoiding conflicts of interest signal a retreat from the rule of law, abandonment of meritocracy, and deepening crony capitalism.
Living in a country where the president remains heavily invested in businesses he promotes regularly and has a son-in-law as a key adviser, does not feel like the country I used to know as the US. While the US business sector may always seek to lower costs and maximise profits, it also needs a robust consumer base, a well-educated workforce, and an even-handed state to apply rules and regulations and hold all actors to the same standard.
Although businesses may chafe against the exigencies of the modern welfare state, more enlightened entrepreneurs understand that they have to pay their dues to sustain the system that feeds them.
In contrast, it is the bottom-feeders in the capitalist system that tend to focus on short-term profits and ignore the health of the system in which they are operating. These actors would just as soon as feast on the goose that lays the golden egg because they can’t see past the foie gras and imagine a better future for everyone. Sadly, such an actor is now running my country, and he is attempting to unwind history and return us to protocapitalism.
There now appear to be at least three possible futures before us.
The first and the most unbearable is that Trumpism continues to spread and the world further regresses into tribalism, primitive accumulation and environmental decline. The likes of Poland and the Philippines suggest that this is a possibility.
The second is that cooler heads eventually prevail in the US, Trump is forced out, and Republicans are held somewhat accountable for their support of a madman. Under this scenario, the worst policy stumbles of the Trump regime are at least partially unwound, and the US somewhat recovers from this very un-glorious moment.
The third possibility is that the US economy and society is so badly wounded by Trumpism that it never recovers and other nations recognise and avoid such blunders. These countries may move on to be the world’s new global economic powers. Under this scenario, American capitalism will be remembered as an era – an age abruptly ended by a backward president.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.