Like most sane rational people, I’m still trying to work out how Donald Trump was elected to the US Presidency.

I find it hard to be believe every voter was motivated by racism but it is depressing that they choose to ignore that aspect of the campaign. Racism was part of what people bought, even if it wasn’t their prime motivation. This is best put by John Scalzi in the following post – The Cinemax Theory of Racism

I’m sure there was no one reason why those that did voted for Trump, but here’s my theory  of what drove some people:

That’s it. I will expand on this briefly but that is pretty much it if you’re not much of a reader!

In a market economy the pursuit of maximum profit is the key driver in business. More stuff is made than ever before in human history. Where the single biggest expense is labour costs there is an inevitable relocation of manufacturing to low cost, politically stable countries.

It’s not a conspiracy by a global elite, even though there is clearly an economic elite that gets richer as a result. It is simply the logical outcome of the economic system we have. We all participate in it and take advantage of the cheap clothes from Bangladesh and electronics from China. How many of us refuse to buy that new phone because of where it is made!

The impact is real though. Town’s and cities lose whole industries and become hollowed out economically and socially. Eventually something has to give. Trump and Sanders spoke to this issue but only one was left on the ballot come election day. Unfortunately it was Trump, people went with scapegoating minorities instead of recognising the underlying flaw inherent in the system.

There are three ways of reducing the drift to offshoring of good quality working class jobs:

1. Ownership of enterprises to be structured in a way that makes factors other than profit part of business strategy, e.g. workers co-ops, government ownership or partial ownership through a golden share. Volkswagen is 20% owned by the German state of Lower Saxony, and while they do manufacture throughout the world, it is hard to see them ever totally abandoning Germany with the current ownership structure.
2. Government intervention, e.g. capital control to limit overseas investment, tariffs on certain imported goods to offset the effect of cheaper labour, a ban on companies manufacturing below a certain percentage or certain type of key products overseas (arms industry anyone?), tax incentives for on-shore jobs etc.
3. International political instability, e.g. If relations with China deteriorate significantly, companies will need to limit their exposure to assets and capital being seized in the event of a total breakdown. This could result in a “flight for home”.

Taking a long view of history, all of these have been tried  during periods of economic upheaval but none have stopped the march of globalisation. What will happen under a Trump presidency and will it really bring back manufacturing jobs to the US? Who knows but  I don’t think option 1 is on the table!