Make America Great Again

Governments responded to the economic crisis with Keynesian abandon. G20 countries ran huge deficits as governments tried to stimulate their economies out of recession. America’s federal deficit hit 83% of GDP in 2009, and the overall debt to GDP went from 62% in 2007 to 99% in 2012.80 In December 2010, economists were talking about a slow recovery in America and an almost nonexistent one in Europe, and they were right.81

Economists also predicted that China would have an 8.6% GDP growth and 11.1% investment growth, with significant growth also predicted for India, the BRICS nations and other parts of the developing world (in particular, Africa). While growth in these economies has not been as robust as expected during the 2010s, most (with the exception of Russia) performed relatively well until around 2016 when significant economic headwinds emerged. These headwinds have varied in nature from country to country (e.g., declining foreign direct investment, serious and credible corruption allegations leading to political uncertainty, growing protectionism). However, most economists believe there has been a shift in the economic order of the world toward the developing world and that is not about to reverse. Initiatives such as China’s One Belt and One Road initiative and its involvement in African development reinforce this.

As slower rates of growth in the developed world became the norm, frustration was building within those countries amongst those who were feeling marginalized and left behind economically. Their economic concerns were coupled with growing fears about immigration, unfair trade, societal norms, and their place in society. While Donald Trump’s “Make America Great Again” campaign provides a window on the U.S. context, Brexit in the UK, and the rise of nationalistic governments elsewhere, for example, Austria, Italy, and Turkey, suggest that this is not an isolated phenomenon. Though Keynesian solutions were quickly applied to triage the 2008 crisis, budgetary discipline at the national level in many countries has been missing in action in the 2018 period. Budgetary deficits are ballooning in a number of countries at a time when most economists would suggest we

should be saving for a rainy day, creating escalating risk for a financial crash.83 For example, the Congressional Budget Office predicts the U.S. deficit to rise to $1 trillion by 2020 and 148% of GDP by 2047.84 This suggests the economic fallout that will accompany the next downturn will be exacerbated due to our level of indebtedness.