• America First comes with a price



    US PRESIDENT Donald Trump appears to have aggregated one contradiction after another onto his administration even in the short time that it has been in power. Let’s take as an example his strong objection to free trade and American investments overseas, which have long been touted as essential elements of a globalized free market. During his two months of presidential transition, Trump is said to have persuaded many an American company that has long set up factories in emerging markets, to create so-called new jobs in America.

    But on closer examination, this would appear to be a rather strange policy. Trump has long led a global business empire that is not lacking in foreign investments and joint ventures. But so far, we have not heard of any plan to pull some of these Trump overseas enterprises back to America. In fact, Trump did not even deign to set up a blind trust into which to pour all his business interests so as not to give rise to conflicts of interest when he makes decisions as the American President, but has only handed over control of his business empire to his children.

    Nowadays, there are a number of international businessmen, some from this part of the world, who have openly flaunted their close business association with Trump. After Trump’s electoral success, some even contemplate pulling a similar trick of running for political office in their respective countries.

    This is indeed something very intriguing. Just imagine, in the not so distant future, there will be established a series of primarily right-wing regimes around the world, mainly helmed by unabashed oligarchs. It remains to be seen whether such a global power scenario will be a “co-prosperity sphere” bent on economic development, or a “hell’s gate” into which the pitiful interests of the working masses would be ruthlessly ground.

    And free trade has indeed brought about plenty of benefits for the average American consumer. I wrote previously of the overly strict American federal and state regulations, as well as the powerful labor union force, being the primary factors that contribute to rising business costs. But in any case, American consumers are still very much in need of the various daily necessities as well as essential services. In order to maintain affordable prices for the consumers, American businesses could not help but relocate overseas to manufacture and to provide long-distance services (such as telephone inquiries), which are routed back to the US with little or no tariffs. Even if we disregard the various products made overseas that must have been utilized by Trump’s businesses as well as the numerous overseas-produced election memorabilia, if American businesses were to heed Trump’s call to relocate production and services back to America, would the American consumer be able to continue to enjoy relatively cheap prices anymore? Will price hikes become the inevitable costs of Trump’s much vaunted “America First” policy?

    In recent days, Trump has again employed executive orders to remove or reduce many regulatory items seen by the Republicans as burdensome to businesses. He essentially ordered a “go slow” on the enforcement of the financial regulatory “Dodd-Frank Act” (passed during the aftermath of the global financial crisis), just as he did with Obamacare. In my humble opinion, Trump need not trumpet the “recall” of American businesses from overseas. As long as he continues to smartly issue executive orders or work with the majority Republicans in the US Congress to usher in further relaxation of federal regulations in finance, environment, labor and other sectors, many American businesses would line up to come back to the US. This is because although the apparent business costs in emerging markets are much lower than in the United States, their latent political, social and economic instability, coupled with hidden costs such as bribery, would actually render the overall business costs much higher than initially thought.

    Of course, there is also a hidden price to be paid for the repatriation of American businesses overseas. It would for example foreshadow a decline of American influence in the economic performance of many a developing market country. This would create further “depreciation” in American strategic, political and diplomatic dimensions. And to bring labor-intensive industries back to the US would almost certainly run into the counter-problem of not having many willing hires in America. American businesses would thus have to think twice before making that momentous decision. Market economy is endowed with an “invisible hand”. It can be encouraged and stimulated, but if it is forced to perform certain deeds, the reaction may be quite huge, ranging from the aforementioned price hikes, to a perhaps unintended suppression of the urge to consume. By then, it would indeed be an uphill task to revive the rundown American economy.


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