Political chaos could come to undermine America’s economic strengthby George Magnus / October 23, 2017 / Leave a comment
I referred somewhat flippantly in a recent column here to America becoming an emerging market. You might say correctly that the world’s largest economy is in a different league. I meant it differently, though, and not, of course, as a compliment. For along with things that investment managers assure us of, including high economic growth and better prospective investment returns, emerging markets also present higher risks. These normally boil down to some combination of a dysfunctional political system and weak standards of economic governance.
So, while the US is at the moment economically head and shoulders above the likes of Brazil, Turkey, Russia, and in most respects China, the question is whether it is converging with them politically. And if so, will that eventually threaten to compromise America’s economic heft? Is the US, in effect, compromising political and institutional progress made over many years?
President Trump and his entourage of billionaires and generals are having a palpable adverse impact on Washington politics, threatening US institutions including the media and the legal system, and railing against neighbouring countries and commercial allies. The governance problems that have erupted since the beginning of the year may have been predicted in general terms, but they have nonetheless come as a shock to America’s system, and to the rest of the world. The behaviour of the US administration is not so different from what we often expect in some emerging markets.
Far from “draining the swamp” in Washington, Trump has, if anything, filled it to overflowing. Few autocrats and one-party states behave differently. Wall Street’s influence in the White House remains strong. Allegations abound about links between ex-aides of Trump, who now work for big Washington lobby groups, and the hiring of ex-lobbyists into the Administration to win favour with commercial interests. There is much reported obfuscation about the public roles and private interests of members of the Trump family. Many journalists have been pursuing the Russia investigations, and looked into alleged lobbying by senior officials on behalf of foreign governments, the grey lines between Trump’s commercial and America’s political interests in foreign countries, and the use by senior members of the government of private jets.
“Far from ‘draining the swamp,’ Trump has, if anything, filled it to overflowing”
Washington was certainly not the epitome of squeaky clean government before 2017.…