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The Great Demolition: Will Trump's Economic Policies Reshape America's Financial Landscape?

2025-01-18 11:44:43.353000

As the November 2024 presidential election approaches, Donald Trump's promise to dismantle the 'deep state' has sparked significant concern among political analysts and commentators. Trump has vowed to fire thousands of civil servants and replace them with loyalists, a move that his running mate, JD Vance, supports. This plan includes controversial proposals, such as appointing Elon Musk and Vivek Ramaswamy to co-lead a new 'Department of Government Efficiency' aimed at reforming federal operations. Musk's role has been highlighted as emblematic of a new wave of conservatism, which seeks to align political strategies with capital interests. Kojo Koram notes that Musk's integration into Trump's circle reflects a shift towards a more tech-savvy and younger demographic, contrasting with the traditional conservative ideals defined by figures like William F. Buckley, who emphasized resisting progress. Critics argue that this threatens the very foundations of democracy and reverses over a century of progress made since the New Deal. Joseph Patrick Kelly's analysis emphasizes that the historical context of this issue includes the Gilded Age, labor struggles, and the Great Depression, highlighting the importance of a meritocratic bureaucracy over political loyalty. The number of individuals paid from the U.S. Treasury but working for private businesses and nonprofits exceeds three times the federal civilian workforce, suggesting that eliminating the federal workforce would reduce spending by less than 5%. Improper payments by federal agencies totaled an estimated $2.7 trillion from 2003 to 2023, raising questions about the effectiveness of current spending. Trump's governance approach has been criticized for lacking an understanding of government functions, as he believes it can be run like a business. Richard Murphy points out that the previous administration had experienced personnel that mitigated risks, whereas Trump's current team lacks such protections. His plan to cut the federal budget by $2 trillion raises concerns about mass unemployment and the societal implications of sacking employees. Additionally, Trump's intention to expel 11 million undocumented workers presents significant logistical challenges. This approach reflects a narrow view of governance, with potential consequences including a dysfunctional government and broader societal problems. The upcoming election not only poses a choice of leadership but also a critical juncture for the preservation of democratic values in America.

In a recent analysis, Martin Sandbu from the Financial Times highlights Trump's unpredictability in policymaking as a strategic advantage that serves his interests. This unpredictability is seen as central to autocratic leadership, with parallels drawn to figures like Putin, whose non-rational image aids his control. Sandbu notes that the government efficiency program led by Musk and Ramaswamy aims to instill fear through arbitrary firings, further complicating the political landscape. Musk and Ramaswamy plan to reduce the federal workforce by 75% and cut the number of federal agencies from 428 to 99, targeting organizations such as Planned Parenthood and NASA. The article suggests that Europe should focus on domestic investments amidst diverging central bank interest rates, reflecting the broader implications of Trump's policies on international economics. As the election nears, the interplay of unpredictability and strategic governance will be critical in shaping the future of American politics.

Jason Linkins from The New Republic introduces the concept of 'enshittification,' coined by Cory Doctorow, which describes the decline in service quality due to profit-seeking motives. Trump's administration, with allies like Musk and Ramaswamy, is expected to apply this concept to the federal government, potentially leading to the privatization of essential services like the U.S. Postal Service. Linkins highlights that while there is innovation within the civil service, the push for a purge of federal workers risks undermining essential government functions. Concerns also arise over the influence of the cryptocurrency industry on government regulation, with Princeton researchers indicating that economic elites significantly influence U.S. policy. This trend raises alarms about increased oligarchy and potential public disillusionment with government services, further complicating the narrative surrounding Trump's political strategy as the election approaches.

Zhengxu Wang from the South China Morning Post draws parallels between Musk and Ramaswamy's ambitions and the radical reforms implemented by Deng Xiaoping and Zhu Rongji in China. Both sets of leaders aim to overhaul their respective governments by streamlining bureaucracy and reducing government size. Historical reformers in China, such as Shang Yang, Wang Anshi, and Zhang Juzheng, laid the groundwork for significant changes. Deng's reforms in the 1980s opened markets and downsized government, while Zhu's reforms from 1993 to 2002 cut central agencies from 86 to 59 and reduced government payroll by 20%. Zhu's second round of reforms eliminated 15 ministries and 1.15 million positions, resulting in millions being laid off as state-owned enterprises were privatized. These historical lessons may provide insights for Musk and Ramaswamy as they navigate their ambitious plans for reform in the U.S.

In a recent opinion piece, Jonah Goldberg from the Los Angeles Times discusses Trump's rhetoric surrounding the 'deep state' and 'the swamp.' He notes that while Trump often uses these terms interchangeably, they refer to different concepts: the swamp represents the self-interested factions within Washington, while the deep state is perceived as a conspiracy theory. Goldberg argues that Trump's focus may increasingly shift towards combating the deep state rather than genuinely draining the swamp. He suggests that evidence indicates Trump may reward favored factions instead of truly dismantling entrenched interests, complicating the narrative around his anti-establishment claims.

Adding to the discourse, Thom Hartmann from the Milwaukee Independent warns that Trump's economic policies could undermine the American economy by dismantling the administrative state, which is crucial for protecting small businesses that have created over 13 million jobs since 1999. Hartmann emphasizes that small businesses account for over 43% of U.S. economic activity, and Trump's approach may lead to a recession, as historically, every Republican president since Nixon has caused one after altering tax and regulatory policies. The Brookings Institution reports that Biden's base represents 71% of economic activity, indicating a significant divide in economic perspectives. Furthermore, Trump's administration may jeopardize antitrust efforts by firing key figures like Lena Kahn at the FTC. Notably, Warren Buffett's recent sale of over $325 billion in stock signals anticipation of an economic downturn, while Musk's proposed $2 trillion budget cuts could severely impact Social Security and federal aid programs. This combination of factors paints a concerning picture of the potential consequences of Trump's economic policies as the election approaches. [41d12e02][4f0016ea][e67d74a5][c6e57924][2c45663a][b1160fba][c9b1dbb7][2739e0da][cebee45c][d040f8ea][26a10b75][3ed4f156][e78b2687]

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