The economic philosophies of Democrats and Republicans are drastically different.
While neither party is intent in dismantling the predatory capitalism that extracts surplus value from workers, Republicans are more interested in reinforcing such capitalism and “free markets,” while Democrats are more interested in ameliorating the effects of predatory capitalism and regulating in ways that produce somewhat more equitable results.
Democrats are more likely to protect and support workers, while Republicans are more likely to oppress them. Thus, many Democrats advocated for an increased minimum wage, while Republicans have opposed it.
Conservative Dems are likely to be supportive of free market rhetoric. There were liberal Republicans (I think they are now extinct) that would side with Democrats on some issues.
We can expect Republicans in the House and Senate to eliminate regulations, lower taxes, and support the “business climate.” The stock market has actually gained.
Is this sustainable?
Economist and Harvard President Lawrence Summers acknowledges that the Republican approach to the economy might “drive major increases in investment and hiring, setting off a virtuous circle of economic growth and rising confidence.”
The International Monetary Fund (IMF) predicted world economic growth at 3.4 percent, with US growth at about 2 percent, and robust growth in China and India, where growth is likely to exceed 6 percent. But the IMF cautions that restrictions on global trade would constrain global growth.
Who will benefit?
Certainly, not the folks at the bottom. Indeed, one might attribute the Trump victory to the fact that macroeconomic growth indicators have not quite trickled down.
The heavily pro-business Republican leadership is counting on the trickle-down to create jobs for the 99 percent. They can’t force capitalists to use the proceeds from their tax cuts for jobs. When banks were bailed out, they held onto the money that politicians hoped they would loan to small businesses to start growth and economic expansion.
African-Americans with moderate incomes (about $35,000), lower-income people, and the economically vulnerable are not likely to gain in the “new economy.” Businesses, however, are likely to do well. Is America made “great again” if economic vulnerability increases? I think not!
There is likely to be tension between the Trump administration and the Federal Reserve. How quickly will the interest rate be increased? What impact will it have on the “average” American?
Hard to get
Millennials who have been saving to purchase a home (those who have paid off student loans) will need to save even more to accumulate down payments. And Ben Carson, who is likely to be secretary of HUD, is not likely to do anything to make their quest for homeownership any easier.
President Obama stabilized the economy. The unemployment rate is below five percent, growth has been stable, and the stock market has been strong. The benefits of this strong economy were not evenly distributed, though. It is even less likely that the benefits of the growth that the IMF predicts will be evenly distributed. Markets don’t distribute benefits fairly. Political will is a factor in fair and even distribution.
We know that Republican free market economic philosophies suggest that there is no political will for fairness. We will experience macroeconomic ecstasy and microeconomic angst with economic indicators looking strong, and individual experiences looking far more troubled.
What’s next for the economy? The one percent will benefit, and the rest of us will experience increased vulnerability. As Summers said, “Hope for the best, plan for the worst.”
Julianne Malveaux is a Washington, D.C.-based economist and writer.