At the outset an apology to the admirers of Franklin Delano Roosevelt. He was the 32nd President of America.
That done, tomorrow it will be four months since Donald Trump became President of the US for the second time. In those 120-odd days he has shaken and stirred both the world, and the US economy, inside out. And he has done it erratically and unapologetically.
Naturally, his policies have met with a huge amount of resistance and criticism. That’s to be expected when someone junks the received wisdom.
Given how much Trump is being lambasted, mocked and lampooned, any other politician would have backed down. But he is bashing on regardless because, whether you agree or not, he has a very clear idea of what he thinks is needed to make America a great economic power once again.
But how much bigger can it be than it already is? After all, its GDP is now around $30 trillion. China in second place is around half that. So almost by definition Trump cannot add much to the American GDP, maybe a trillion if all goes well, and that too because of inflation rather than any dramatic increase in output.
This is not because all his policies are wrong. It’s because unlike another President, Franklin Roosevelt, nearly a 100 years ago, who transformed the way the world thought about economics and made America great again, Trump has only four years to do it.
But Roosevelt, however, had gone ‘on and on and on’ as Margaret Thatcher had wanted to, for four terms. He would probably have won a fifth as well had he not suddenly died in 1945. This long innings forced a constitutional amendment that imposed a limit of two terms per person whether continuous or with a break.
Roosevelt’s revolution
The world has forgotten what Roosevelt did. It was not very different from what Trump is doing: shake and stir things up. He called his policies the New Deal. It was implemented during the first 100 days of his first term.
It comprised a near-total rejection of the orthodoxy till then and he brought in the idea that the state should, and would, play a much greater role in the economy. In 1932, this was as revolting an idea to the prevailing orthodoxy as Trump’s policies are now.
As an aside, let’s also note that in 1936, a British economist called John Maynard Keynes, working independently in Cambridge (UK), came to the same conclusion. Roosevelt’s policies then acquired intellectual respectability. The government became the stabilising force for the economy.
Although no one said anything nasty about Keynes, lots of mean things were said about Roosevelt. The worst epithet of the time was ‘socialist’ and Roosevelt was routinely called one. He was also accused of trying to centralise power in his own hands and called a fascist. The attacks on Roosevelt were just as angry and widespread by a totally bewildered Establishment as they are on Trump today. But after the end of the Second World War in 1945, Roosevelt’s revolutionary ideas became the orthodoxy.
This sort of thing happens in all walks of life. In science they call it ‘paradigm shift’. The term was invented by an American historian and philosopher of science, Thomas Kuhn. He said new ideas that threaten the old ones are always vehemently opposed.
“Novelty”, he wrote, “emerges only with difficulty, manifested by resistance, against a background provided by expectation.” Trump meets these criteria fully, as did Roosevelt.
Kuhn said whenever there is some big crisis, inevitably new ideas to deal with it pop up. Sometimes they work. Sometimes they don’t. But always, out of all this, a new paradigm or way of looking at things, emerges.
Roosevelt did that. Now Trump is doing it. The style was dismaying in the 1930s. It’s that now also. We will have to wait for the new orthodoxy to emerge.
Trump’s 747
Roosevelt, incidentally, also speculated in land and his lifestyle was lavish. He also routinely spent far more than his opponents in elections.
Last but not least, in the context of Trump receiving a Boeing 747 as a gift from Qatar, Roosevelt was also a voracious collector and during his presidency received all sorts of things, some quite expensive. The list is there on the Internet. The gifts he received went to the Roosevelt library.
Trump’s plane, too, is headed eventually to the Trump library. That would be the first time a hangar is called that. But then the man is himself quite sui generis.