Pundits are terrible at predicting presidencies; remember the hymns to the greatness of the Second Lincoln, the New Roosevelt, and the Democratic Reagan that wafted to the heavens during the Obama transition. And the pundits were even worse at predicting Trump's fate during the election; how many times did they predict his demise? But now, as convinced as ever of his incompetence and their infallibility, the punditocracy is telling us why the Trump administration is doomed to implode.
It's not that they don't have some good arguments to make. On the Left, many believe he will be a kind of American Mussolini or Putin, an authoritarian populist who enriches himself while attacking the fundamental institutions of democratic rule. On the Right, the fear is more that he will be an American Berlusconi, accumulating political power which he then fritters away in efforts to enrich himself and his family. Centrist technocrats fear he will be a bull in the global china shop, wreaking havoc through ignorance and carelessness more than malice as he shatters the rare and irreplaceable treasures of liberal world order. Business fears that ill-considered trade policies could set off damaging trade wars that would harm both the American economy as a whole and the many American corporations whose bottom lines depend on open global trade. When it comes to foreign policy, there are those who worry that Trump will be too dovish, giving away the store to Vladimir Putin. Others fear he will bring about World War Three by rash actions against states like North Korea and Iran.
There are many ways a Trump administration can fail, and the President-elect faces the most challenging international environment since the end of the Cold War, but after so many failed prophecies of Trump failure, it's at least a worthwhile mental exercise to speculate on how a Trump administration might actually succeed. There have been plenty of presidents in the past who came into office hated and scorned by the establishment who still made a mark on American history: Harry Truman, Andrew Jackson and Abraham Lincoln come to mind. What could make a Trump administration work?
The basis of any Trump Revolution would have to be energy. The shale-led revival of America's energy production was the most important economic development of the Obama administration, and Trump is likely to double down on it. The turnaround in America's energy fortunes is almost a miracle. Over the last ten years, U.S. oil production has grown by more than 3.6 million barrels per day—an output increase of roughly 75 percent. Natural gas production has seen similar joy, rising nearly 52 percent over the last decade. This hydrocarbon boom has defied the predictions of most analysts, who expected American oil production to plummet alongside falling crude prices over these past two years. Instead, the shale industry has relentlessly pursued innovations that have allowed it to keep the oil and gas flowing, despite unfavorable market conditions.
For the Obama administration, shale was the gift it couldn't live with and couldn't live without. The American shale boom did more than anything else to curb Russian and Iranian ambitions and kept the global (and American) economy booming even as the Middle Eastern order dissolved. The blue collar jobs that shale created, and the boost to American consumers that came from low energy prices, helped Obama win re-election in 2012 and helped keep 2o16 close.
Yet many Democrats, and many powerful Democratic donors, hate shale. They see the surge in unconventional hydrocarbon production as a driver of more climate change and they fear the impact of both extraction (earthquakes and groundwater pollution) and transport (by pipeline and rail). Many greens also fear the impact that lower-than-expected fossil fuel prices will have on the future of renewables. The cheaper and more abundant fossil fuels are, the harder it is to make the case for subsidies and regulations to promote the use of renewables. Some blue states (like New York) have banned fracking altogether; the Obama administration has sought to limit its use and opposed key pipeline projects.
The Trump administration will double down on shale. Skeptical of climate change, dismissive of most environmentalist handwringing, the Trump administration will view energy production as a simple win. Look for concerted efforts by regulators to open the taps on energy. Trump, never blind to the appeal of pork barrel spending, is unlikely to close down the renewable gravy train completely -- especially the farm-friendly ethanol racket -- but we can expect his administration to do as much as possible to encourage new production, new pipelines and new refineries. Regulations and tax policies are likely to be tweaked in ways that support production.
This works very well for core Trump constituencies. It's not just that Middle America loves low gas prices; producing and refining more oil and natural gas and building a new infrastructure of pipelines and other facilities to move it across the country will create tens of thousands of high paying blue collar jobs. More, the location of America's energy resources mean that the states that benefit most from an energy production boom will be Trump states: the Middle West, the Sunbelt and the Rocky Mountain states are where most of the energy potential is.
But there's more. Trump's popularity at home is likely to depend in large part on whether he can revive blue collar jobs. An energy boom offers the best prospect for growth in manufacturing jobs. Much of America's new energy bounty comes in the form of natural gas; this has significant implications for America's future industrial development. Natural gas can be exported, but it has to be liquified first -- and that adds significantly to its cost. American manufacturers in energy intensive industries can expect secure supplies of natural gas at lower costs than their competitors in Europe or Asia will pay. That matters to blue collar workers; the energy rich United States is becoming significantly more attractive as a manufacturing site for large, energy (and job) intensive plants.
What we know of Trump's economic plans looks like an effort to capitalize on this advantage. Reducing corporate tax will help pull industrial investment to the United States, especially from high tax Europe. German chemical and automobile manufacturers, for example, are under great pressure from high labor, energy and taxation costs. Trump's America, however unpalatable it may be to German diplomats, may prove surprisingly attractive to German industrialists. Additionally, Trump's plan to promote the return of some of the $2 trillion plus in offshore cash held by American companies overseas is likely to promote domestic investment, especially if corporate tax rates are also cut. Cheap energy and favorable regulatory treatment could well ensure a significant boost in investment in new production facilities during the first Trump term; that will make his voters happy and could solidify the coalition that swept him to the White House.
The immigration policies Trump supports will, all other things being equal, benefit blue collar workers if these policies start to work. If the border is less porous, fewer illegal immigrants will compete for the new jobs, and legal workers will benefit from higher wages. Limiting the supply of blue collar workers while taking a series of steps to raise the demand for them is a good way to push wages higher.
If any appeal defined the Trump campaign, it was his outreach to blue collar American workers, mostly though not exclusively white, and mostly though not exclusively male, who felt threatened and diminished by the economic and social shifts of the last generation. Trump's promise to Make America Great Again can best be understood as a promise to make blue collar life great again: jobs would be more secure and better paid, while blue collar workers would be more respected, less affronted and less condescended to.
Blue collar and middle class workers who voted for Trump were drawn by a sense that Trump understood them. Trump's roots are in the old American economy of building stuff rather than processing information. He is a real estate guy, not a software developer. The common strand uniting Trump's economic policy pronouncements during the campaign was a desire to promote and protect the old style jobs that once provided the foundation for the American middle class way of life.
Most elites have written these workers and their hopes off; they are roadkill on the information highway to the future. A world of app developers and currency traders doesn't have a lot of room for construction workers and highway builders. In the long run, the gloom and doomsters are right; the world is moving away from the old style manufacturing economy. But Trump may well be able to engineer a temporary stay of execution and create conditions in his first term that send a thrill of hope through the world of long suffering blue collar worker.
If he succeeds, and the outlook for blue collar America improves over the next four years, millions of voters in 2020 are likely to think that Trump has kept the promises that matter most. Since many African American and Hispanic voters would also benefit from rising demand for blue collar workers, Trump might well run stronger with minorities four years from now.
There are other ways that Trump has opportunities to upend American politics with policies calculated to solidify his electoral base. In particular, the conditions are ripening for a new wave of suburbanization in American life, one that would allow young people to escape the high costs of the cities. By promoting a new exodus to a new generation of exurbs, the Trump administration can expand its support among millennials and jump start a new era of rapid growth. We'll look at these in a follow up post; until then, the thing to remember is that, so far, Trump's critics have consistently underestimated him, and that he may have more chances for success in the White House than his opponents can bring themselves to believe.