Trump era risks hastening end of US dominance - economist

Standard Bank chief economist Goolam Ballim    (C)Gareth van Zyl

Former businessman Donald Trump’s elevation to the presidency of the United States could mark the beginning of the end for that country’s global dominance. This is according to Standard Bank chief economist Goolam Ballim, who spoke to Fin24 this week after delivering a presentation on the global and local economy in 2017. Ballim started his presentation by speaking about the rise of populism in the US and Europe. After being in power for just over three weeks, Trump has already controversially tried to block travellers from seven mostly Muslim countries. As part of his ‘America First’ rhetoric, he has also moved to pull the US from the 12-nation Pacific trade agreement and promised to build a wall between Mexico and the US.
“We do think this is an epochal moment and we're not saying that to be dramatic,” Ballim told Fin24 in an interview.
“This is seismic. Donald Trump comes to office with Republicans in charge of both houses of congress.
“So, he [Trump] not only has the capacity to use the Republican machinery to effect, but there are at least 50 million voters who have delivered this outcome and who have expectations that he will act on immigration, he will act on enhancing America's global interests. Trump era risks hastening end of US dominance - economist
 “He is playing to that so far silent number of individuals who are simply watching this from their televisions and nodding approvingly,” said Ballim.
Trump’s efforts to maximise US interests within its borders will also be closely watched from a global economic view, said Ballim.
“It could also in time result in productivity levels in America subsiding simply to the extent that it locks out the opportunity for more effective supply chain developments that effectively deliver greater productivity (and) greater production over the medium to longer term,” said Ballim.
In turn, a more inward-looking US could be the death knell for its dominant hegemony on the global economy, explained Ballim.
“Over the last couple of centuries we've had empires and more than a dozen of them at some time or another had reigned,” said Ballim.
“If Donald Trump pursues this course, it would only hasten the end of America's empire, of Western-led liberalism that was certainly charged by the United States and globalisation that was effectively pioneered by the United States. So, these are longer term dynamics,” he added.
In the short term, though, markets have been rallying amid a Trump presidency. But this in turn could be short-lived, said Ballim. In January, the Dow Jones industrial average for example broke through the 20 000 mark for the first time ever.
“Cyclically the markets seem to be cheering Donald Trump in addition to favourable economic data,” said Ballim.
“The Trump tray has added to the reflationary bias around the globe, equities are outperforming bonds, cyclical shares are doing better than defensive shares, base metals have outrun precious metals.
“At least over the near term, I think people are simply looking at the positive cyclical shock. In time, it will dawn on humanity, let alone other policymakers, that this could be an end of an era,” Ballim said.
“He is playing to that so far silent number of individuals who are simply watching this from their televisions and nodding approvingly,” said Ballim.
Trump’s efforts to maximise US interests within its borders will also be closely watched from a global economic view, said Ballim.
“It could also in time result in productivity levels in America subsiding simply to the extent that it locks out the opportunity for more effective supply chain developments that effectively deliver greater productivity (and) greater production over the medium to longer term,” said Ballim. In turn, a more inward-looking US could be the death knell for its dominant hegemony on the global economy, explained Ballim.

Source: Fin24