Feb
2025
I’m So Bored With the USA: A Tale of Two Countries
DIY Investor
10 February 2025
“Welcome to the jungle, it gets worse here every day
You learn to live like an animal in the jungle where we play”
The two countries are the US and UK. The former is globally significant, the latter once was. Whilst the UK struggles to accept its insignificance, the US is redefining their role, effectively picking and choosing how to engage based on its alliances and interests
The US president signed an executive order on Thursday authorising aggressive economic sanctions against the ICC and travel bans on its staff, accusing the court of “illegitimate and baseless actions” targeting the US and its ally Israel.
Trump loathing for the court isn’t new, but it serves to highlight a fundamental tenet that the only law he believes in is that of the jungle. Everything is based on transaction and coercion based negotiations rather than diplomacy and alliances. The biggest beasts are hungry and the rest must flatter or flee; “might is right”.
His initial plan to destroy USAid, shows a callous disregard for life is sickening. It is also shortsighted; USAid has been a clever, low-cost foreign policy tool, costing <1% of the federal budget in the 2023, and much of the money went back to the United States. US foreign aid spending as a percentage of gross national income is far below that of most advanced economies. The beneficiaries of USAid will now look to other patrons. Perhaps China, who has already made herself integral to many development plans in Africa.
America’s status as the global superpower is predicated on the basis that no other nations has enough economic and strategic weight to create their own unilateralism, or a version of multipolarity that undercuts the US.
Trump’s transaction view of foreign policy segregates countries into three pools: clients, rivals and enemies. Countries can move these pools by deploying flattery and offering favours. Gone are the days of alignment based on mutual interest, legally binding treaties and democratic values.
This style benefits the geopolitical ambitions of Russia and China who equally understand might-is-right diplomacy. This legitimises the imperialistic land grab by Vladimir in Ukraine. For Beijing, an age of American unreliability offers lucrative avenues of economic and strategic expansion. China could become “the world’s most predictable superpower.”
As the worlds political direction travels further to the right, Trump as the world’s most influential hard-right politician is the global benchmark. If his hard-right isolationist, America first, national populism is seen to work it, and he, will become a role model.
‘This style benefits the geopolitical ambitions of Russia and China who equally understand might-is-right diplomacy’
A key part of Trump’s plan is imperialistic. Expanding the US by taking in the Panama Canal, Greenland, and Canada. Then there is his vision of a US owned/influenced Palestinian free Gaza. Finally, his latest foray is ending the Russian invasion of Ukraine. His vision for Gaza is driven by ethnic cleansing, and, if he is to bring Russia to the negotiating table, his solution for the Ukraine will see them ceding territory to the invader.
Whether or not the US expands its borders, there seems every prospect that Mr Trump will approve of Israel and Russia annexing land, emboldening others to use force to remake borders.
None of this is any benefit to the average American suffering from the cost-of-living in the OECD’s most unequal country. But, as Thatcher found with the Falklands War in 1982, a bit of jingoism goes a long way. Prior to the war she led a profoundly unpopular government, who’s policies had led to record unemployment and riots, post the war she rode a wave of nationalistic popularity, and, in a snap election in June 1983, won a 144-seat majority.
Whilst rather longwinded the point here is that Trump has the luxury of imperial strength to bolster his USA obsessed MAGA supporters to deflect from domestic policy failing.
His treatment of USAid very much plays to his MAGA audience, dismissing it as being “run by a bunch of radical lunatics, and we’re getting them out. I don’t want my dollars going towards this crap”. Elon Musk, one of Trump’s chief advisers called the agency a “viper’s nest of radical-left marxists who hate America”. “You’ve got to basically get rid of the whole thing. It’s beyond repair. We’re shutting it down.”
Trump, if he is to deliver domestically to the majority, needs to close the inequality gap. Rather than using taxes to redistribute wealth, he is relying on growth to produce a trickle-down effect to make the majority better-off.
‘Trump has the luxury of imperial strength to bolster his USA obsessed MAGA supporters to deflect from domestic policy failing’
This will be achieved by slashing spending thus shrinking the state, slashing regulation which supposedly makes it easier for businesses to succeed and cutting taxes which provides a greater incentive for people to work harder.
This is all theory, often referred to as supply-side economics, or neoliberalism. To-date this has been tried numerous times in many countries including both the US and UK from 1980 onwards.
As the graph below illustrates, it has led to increasing inequality:
As such, there is no logical reason for it to be different this time.
There is, however, one difference; Trump’s policy of tariffs. American industry, like that in many developed economies, struggles to compete with the low-wages of developing economies. In effect, developed economies have been the victims of the post 1990 new world order, in which liberal capitalist values dominated under globalisation and free trade.
What this meant was that much of the developed world’s manufacturing industries found themselves unable to compete, leading to deindustrialisation. The imposition of tariffs would, in theory allowing them to compete, and the additional cost of the imported goods create a level playing field.
This, in itself is inflationary, and this always becomes more of a burden for those on lower incomes.
This, again is a luxury the UK doesn’t have. Our manufacturing industries are so moribund that it would take years to revive them. We would simply end-up importing inflation, which leads only to higher interest rates.
Last week, the BoE cut interest rates to 4.5%, and also downgraded growth expectations from 1.5% to 0.75%.The Bank also suggested that productivity, which Chancellor Reeves wants to improve, has declined.
The chancellor responded saying the government would be “taking on the blockers (to growth) and ripping up unnecessary regulatory barriers, to get more money in people’s pockets”.
When will she learn; Biden delivered the fastest growth of an G7 country, but the wealth stayed at the top. Eighteen months ago, her boss, the PM, summed-up this idea saying the “nonsense” ideas of trickle-down economics were finished.
‘When will she learn?’
Part of this drive for growth will be getting the slackers off benefits and back to work.
Liz Kendall, the work and pensions secretary, when asked about a DWP survey saying 49% of people on these benefits think they will never be able to work, Kendall said:
“I don’t blame people for thinking that they can’t, because they’re stuck on a waiting list for treatment. They haven’t had the proper support that they might need from the job centre or the skills that they need to get the jobs, we’ve also got to create more jobs in the areas that need them most. So I’m under no illusions about the scale of the challenge that we’ve got.
“I believe more of those people could work. But even if we just start with those who say they can, we need to do more to get them back into work.”
In the autumn budget, Reeves committed to keeping the £3bn of disability benefit “savings” the outgoing Conservative government planned. It is now expected that a package of spending cuts will be finalised in the next fortnight, in what the Times describes as a “radical overhaul of welfare” that could see hundreds of thousands of disabled and chronically ill people lose their benefits.
‘the universal credit “limited capability for work or work-related activity” category would be abolished, which would require often severely disabled or ill people to make preparations for work’
Under one option reportedly being considered, the universal credit “limited capability for work or work-related activity” category would be abolished, which would require often severely disabled or ill people to make preparations for work. That could see claimants lose about £5,000 a year.
These ideas have been ongoing but have escaped attention. Since the election last July, Labour ministers have been repeatedly dripping rumoured benefit crackdowns to the right-wing press, from specific plans to remove fraudsters’ driving licences to vague pledges to get hordes of people off out-of-work sickness benefits.
Clearly, the ongoing ascent of Reform in the polls has spooked Labour. Their response is the same as the Tories before them, to become Reform and ape their policy ideas.
Last week, Labour launched online adverts that only serve to endorse Reform’s position on immigration. One slogans says “Labour hits 5-year high in migrant removals”. This endorsement of Reform benefits only Reform, indicating that they are dictating the political discourse and increasing their support. The same applies to an imminent run of grim campaigning videos that will focus on deported immigrants, following them “from detention in early morning raids to transfer from bleak immigration removal centres to waiting planes and … footage aboard flights out of the country”.
Also, they seem to be disconcerted by the flood of rich people endorsing Farage and Reform. Last month, Chancellor Reeves weakened changes to non-dom status after hearing “concerns” from business leaders. In contrast, concerns from disabled people, along with multiple thinktanks and charities – about the proposed disability benefit cuts have not had the same effect.
Disabled voters are apparently expendable. Wealthy potential donors less so. Unfortunately, this appears to be systemic and has normalised the impoverishing and isolating of disabled people while protecting the assets and power of the privileged.
‘we are left with a government that appears directionless, and with no sense of purpose’
When all of this is summarised we are left with a government that appears directionless, and with no sense of purpose. Comparisons with Blair and New Labour are red herrings. They had a project: “accept the Thatcherite settlement, but humanise it using the tax revenues flowing from an unsustainable economic model centred on the City of London.”
When that model fell foul of the GFC, the Labour establishment were out of ideas, which is why Corbynism, which offered a clear alternative narrative, became party policy. Today, the arty appears to have again run out of ideas.
The problem.is inequality; our economic model has stopped offering sustained rises in living standards and improvements to the majority. There are two possible outcomes; “Either voters are offered an alternative, which means challenging the concentration of wealth and power in the bank accounts of a few. Or voters may simply conclude that democracy no longer delivers, and be susceptible to messages that blame migrants and other stigmatised minorities for decline. The latter is now on the ascendant across the west, because the former is missing in action.
However this is where opinion polls become misleading.
In a recent Ipsos, researchers found that C. 66% of Britons hold a negative view of Trump. Other surveys have suggested that we now think our ties with Europe should take priority over the US,
At first glance, this doesn’t chime with Reform’s surge in popularity.
The Daily Telegraph quoted research by another pollster who found, “Many British voters admire Trump’s approach – on policy but, more importantly, on what amounts to his sheer determination,” he wrote. Endorsing this were quotes from participants: “I would like to see a British version of Trump”; “I could sit here and have a conversation with him and listen to him and believe him. Whereas our politicians, I don’t trust them one bit.”
“I would like to see a British version of Trump”; “I could sit here and have a conversation with him and listen to him and believe him. Whereas our politicians, I don’t trust them one bit.”
Even if Trump is seen to succeed it is highly unlikely that his policies can work over here. Whether or not anyone likes it the US has the economic might to do what we can’t.
Copying Reform and being tough on immigrants and benefit claimants, and pandering to pressure from the uber rich wont help either Labour or the country. People need hope, they need actual jobs, not illusory ones based on zero-hour contracts, and homes to be able realistically aspire to owning. Government alone can’t achieve this, the private sector needs to step-up an invest, especially pension funds who hold hundreds of billions of pounds.
Risk brings rewards, rewards can generate hope!
“Take my hand and we’ll make it – I swear
Livin on a prayer”
Today, and by rather an esoteric route I try to consider how Trumpism might work for the UK.
This is clearly very relevant as Reform and Farage have such momentum. Whereas, Labour, bereft of ideas, are becoming a tribute act. On the one hand it’s a sanitised version of Trussomics and growth at all and any cost. On the other hand they are becoming Reform picking on immigrants and benefit claimants.
In summary, Starmer and co. haven’t got a clue what to do!
The US is still the world’s dominant economy. Trump, in recognition of this, is using this strength to dominate foreign policy. It’s either his way of tariffs, or his way or he withdraws support.
A classic example of this will be seen in Ukraine. He wants the war over, and will use the threat of withdrawing financial and military support from Ukraine to bully them into a settlement.
This plays to the gallery, his MAGA supporters lap it up. It’s the US ruling the world. They might be right today, but tomorrow this will see the influence of both Russia and China increase.
Domestically, his supply-side policies might succeed with the support of tariffs, but at the expense of rising inflation. And, as we know inflation impacts the lowest paid the most. He might create prosperity and jobs, but so did Biden. What Trump won’t do is lower inequality. He doesn’t want to; he’s a rich man with rich friends and advisers, who want to get richer.
This isn’t what the UK needs. The solutions might be long-term but if they were delivered in a coherent strategy that gave hope to people we might have a chance.
The only problem is, I don’t believe it
Lyrically, we look to Trump’s “might is right” policy with Guns ‘n Roses “Welcome to the Jungle”. We finish on a positive note with a karaoke classic, Bon Jovi and “Livin’ on a Prayer”.
That might be as enjoyable as it gets!
Philip.
@coldwarsteve
Philip Gilbert is a city-based corporate financier, and former investment banker.
Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s
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