Whatever its result, the election will likely bring more uncertainty, not less.
Following the short, sharp resolution of the Brexit situation, economists have turned their attention to the next geopolitical flashpoint: the 2020 US election. But those looking for a decisive fix for the world’s economic woes are going to be disappointed.
Red vs blue
President Donald Trump has taken the global economy on a roller-coaster ride since he was elected in the halcyon days of 2016, baiting Europe into a tit-for-tat trade spat and China into a full-scale trade war. Given the extent to which the current trade wars have impacted consumer spending and trade globally, four more years of poorly thought-out, Trump-brand protectionism isn’t necessarily the answer.
And that’s without going into the decisions that aren’t set government policy; primarily the (possibly extrajudicial) killing of America’s enemies that will invariably dent consumer confidence and bump up the price of oil while creating lots of value for Raytheon and Boeing shareholders.
While Trump’s presidency hasn’t been wildly successful or popular, analysis from Moody’s Analytics shows that the only thing that could prevent him from getting back in is unusually high Democratic voter turnout or a tanking economy. However, a stoush with Iran could also keep Trump in power due to the American superstition that it is bad luck to switch presidents during wars in the Persian Gulf.
Long-shot Republican challengers, including Joe Walsh and Bill Weld, are likely to retain the broad strokes of President Trump’s economic agenda in the unlikely chance that they win both the Republican nomination and the election. However, both candidates have vowed to end the ongoing trade war should they be elected.
Blue vs red
However, some might prefer to take their chances with Trump rather than the Democratic Wild Bunch. There are currently no less than four candidates considered to be frontrunners in some way or another; Joe Biden and Pete Buttigieg, who stick closer to the Democratic Party’s neoliberal centre, and Elizabeth Warren and Bernie Sanders, who stray substantially further left.
While any Democratic victor will probably reset most of Trump’s economic agenda – for example, the Southwestern US won’t be getting the fiscal stimulus that would have been provided by building the wall – there’s a range of other reforms that a Democratic president could implement.
One of those is breaking up large American tech companies, including Facebook and Twitter. While most Democratic candidates support launching anti-trust investigations into the tech giants, Ms Warren has the most developed plan. That plan would mean categorising tech companies with an annual global revenue of $25 billion or more as “platform utilities” that would be prevented from owning both the platform i.e. Facebook and the participants on that platform. Platform utilities would also be prevented from transferring or sharing data with third parties, while federal regulators would be empowered to reverse “anti-competitive” mergers.
All leading Democratic candidates also support some form of “Green New Deal”, a potentially unfeasible infrastructural development and policy program designed to prepare America for the onset of runaway climate change. That could mean massive infrastructural spends and investment in communities currently at risk from climate change, as well as job training for workers displaced by the shuttering of coal plants and oil refiners.
To pay for the Green New Deal, a Democratic candidate might institute wealth and carbon taxes or divert funds from military spending. However, all four candidates vary wildly on how they would implement such a scheme.
Things get more complex on the trade war front. Mr Buttigieg supports the use of tariffs as part of a broad-based trade policy, while Mr Biden would likely scale down the intensity of the trade war and attempt to negotiate with China, sticking to his free market guns. Both Ms Warren and Mr Sanders could substantially widen the trade war to include a number of climate change-related issues; China remains one of the world’s largest polluters, and any candidate that pursues a green agenda will be under pressure to act here.
It’s clear that whatever happens with the election, the outcome is likely to create more uncertainty, not less. Whether it’s through the implementation of radical new policies or a continuation of the same rocky road we’ve been on since 2016, the global economy is set for a shake-up.