THE WORLD ECONOMY IN THE TRUMP ERA.

 

History and the economy progress in a cyclical way, or rather in a process of advance and slowdown of varying intensity. Both steps are necessary for the world to continue its path. Trump's arrival has not happened by chance, nor it is the result of an unpredictable political irruption. It reflects many of the changes that are taking place in many societies because of a long period of progress in policies of all kinds.

Often, the changes brought about by technological, political, or social revolutions advance much faster than the population's capacity to absorb them and this produces these moments of revision. The most paradigmatic case is the Roman Empire, which created a society a thousand years ahead of the times of history, hence the Middle Ages represented an enormous setback that slowed down the changes that did not settle until the Modern Age.

Another decisive phenomenon in the changes is that, although there is a certain international consensus or, let's say, a surge of voices calling for a complete rethinking, there needs to be a leader, a country that has enough influence and power to drive the historic changes. In this case, the arrival of Trump is very relevant for this new world to become a reality.

The description of all the changes would take years and the analysis of their impact much longer. It is necessary to focus on those aspects that I consider most relevant for their meaning or their impact. The change in mentality is determined by the change in the global economic paradigm of the last 25 years.

Let's take the Fortune index of the 50 companies with the highest revenues in the world. In 2000, of the 10 largest companies, 5 were from the United States, 4 from Japan and 1 German. In 2024, 8 are American, one from Taiwan and one from Saudi Arabia. If we look at the TOP 50, in 2000 there were 15 American, 18 Japanese and 6 German companies. In 2024, there are 25 American, 12 Chinese, 3 German and 1 Japanese company. Only this long-term perspective allows us to understand the revolution that has taken place in the world with the emergence of China and the continued growth of the United States.

In 2000, the European company with the largest market capitalization was Nokia with 219 billion dollars. In 2024 it is the luxury group LVMH with 344 billion dollars. In the United States in year 2000, it was Microsoft with 586 billion dollars and today it is Apple with 3.458 billion dollars, which clearly indicates the different direction of the most advanced economies in the world. Japan and Europe face another period of sharp decline while China and the United States will monopolize much more power in the coming years. Even the major European luxury companies have Asians among their stars, so it won't be long before we lose this leadership in design as well.

This scenario of less European and Japanese weight in the world and greater relevance of the two giants can lead us either to a great global war or to the creation of two great empires that will treat the rest of the world as colonies.

However, China faces more significant risks than the United States. Its political system, its declining demographics and the growing competition from India, which already surpasses it in population, will tend to reduce its importance in the world in the medium and long term, although it will continue to be tremendously relevant in the remainder of the decade.

In a world driven by two large poles that will be less concerned about climate change, European countries cannot remain on the sidelines of this trend in order not to lose competitiveness. Consequently, the major environmental objectives will be delayed for a few years.

The Draghi report on European competitiveness identifies the main European objective, along with the innovation gap and economic security, as the decarbonization of the economy. The green economy is not an opportunity for economic growth, it is a cost that we must assume in order not to condemn the planet to self-destruction. However, given the trends of the United States, China and India, investing resources in decarbonization without considering the criteria of competitiveness and greater efficiency will negatively affect the cost structure of European companies and deepen the crisis that we have already suffered in Europe since the beginning of the century.

Another aspect will be trade. The United States is much less vulnerable than China, which depends more on imports of raw materials and energy and on exports of consumer products to maintain its growth path. This gap is the one that presents the greatest danger for the geostrategic scenario. Faced with a more dominant and independent United States, China will need political expansion in Africa and the Pacific to find sufficient supplies for its shortages. But if China continues to hoard critical materials, the United States will be forced to face a crisis that will lead to a global economic crisis. The US could find itself in a weak position that would not be very encouraging for global security.

The domination of space by the United States and, to a lesser extent, by China, will mean that Europe and the most neutral countries will see their access to many of the advantages that will be obtained from the exploitation of space greatly diminished, although this will happen in the longer term. If Europe and its companies lose the space race, the effect on competitiveness and economic growth will be very negative. Space X has already launched more rockets into space than the rest of the world in its entire history and intends to create a constellation of tens of thousands of satellites in orbit. This is only possible with a public and private investment that no one else in the world can match and thanks to a unique gathering of talent in the world.

The melting of the Arctic will open up a huge space on the planet to traffic and to the exploitation of the seabed. Russia has been positioning itself in this space for years, but the interest of the United States in Greenland, a country four times the size of Spain, must be understood in this line. The war for the resources of the north of the planet will open another scenario of attention and collision.

Another key aspect in the economy will be the deepening in the world of as a continuation of the process of digitalization of the economy started in the nineties. Europe has lost 40% of its competitiveness with respect to the United States so far this century due to its delay in incorporating new technologies and by remaining anchored in traditional industry that will be greatly hampered by the new technologies that will end up dominating the industry as a whole. If in 2002 China competed in 25% of the products manufactured in Europe, today it already competes in 40%, and will reach 50% at the end of the decade with much lower total costs and with a quality, in the worst case, similar to that of Europe.

The demographic element contributes very significantly to worsening these problems. While the birth rate is still strong in the United States, to which Latin Americans contribute significantly, in Europe the national population is already declining and obviously aging, while immigration will decrease every year in the face of worse economic prospects. Given the measures that Europe must adopt to reduce its competitiveness gap with the rest of the world, it is very likely that the trend will be the opposite and that there may even be negative immigration balances in Europe in the coming years, which will dynamite the labor and social protection structure.

In conclusion, the continued loss of competitiveness in Europe since the beginning of the century can only be reduced with a radical change in European policies, which will require the transformation of the economic and social model that has governed Europe in the last four decades.

As can be deduced from the above explanations, the role that remains for the company to reverse this scenario is reduced, but it is not irrelevant.

Given the growing wave of protectionism, the national approach to business must be intensified. If in the previous model internationality was an asset, governments will tend to protect their national companies. This will mean that business organization models will have to be more decentralized by country, renouncing the approximation by international verticals, since the methodologies, regulations and cost structures will differ by country and common approximations cannot be established for different nations.

Added to this we will see the reduction of international intra-company flows that will be more persecuted by this new wave of national preference. Companies will have to pay special attention to regulations that could affect the free movement of economic flows.

In the face of climate change strategies, we are not going to fall into denialism, however the mastermind of the new North American administration has been the greatest promoter of the electric vehicle. However, the need to increase energy independence and self-sufficiency will lead to an expansion of nuclear energy and to a lesser extent of fossil fuels, which will see significant growth in the coming years. Renewable energies will continue to grow but will have fewer incentives, so only in countries with greater efficient generation capacity will we find significant variations.

Europe needs to drastically reduce its energy costs to regain competitiveness, so the movement towards nuclear and fossil fuels will have a greater boost in the Old Continent. The matrix that we have been building for years makes us less competitive and this is a burden that we cannot accept in exchange for improving life on the planet while that others pollute more and eat up our market share. In addition, replacing Russia as the reference energy supplier with others has already consumed an enormous amount of resources and will make cost reduction difficult for at least ten years.

Bearing in mind that rich Europe has salaries comparable to those in the United States, the competitiveness gap lies in: the lower investment in Research, Development and Innovation in Europe in relation to the rest of the countries; in the cost of energy; and in the burden of regulation. This is because economic priorities are focused on social issues and that there is not enough talent and innovation infrastructure in Europe to absorb a significant increase in R&D investments in the short and medium term.

Companies will have to dedicate increasing amounts to R&D&I, which will force them to alter their cost structure, which will be impossible with increasing labor costs and with electricity three times higher than in the United States. Regulatory costs and land shortages contribute to lower European competitiveness and represent additional burdens. If there is no brutal action by governments to solve these problems, the situation will worsen.

The digitalization of the economy is the most significant element of this loss of competitiveness. Of the 50 largest technology companies in the world, only four are European. This gap explains why so far this century the European economy has grown by an average of 1.5%, that of the United States by 2.2% and that of China by 8.3%, very significant differences.

All these detailed elements imply that the greatest factor of economic growth in Europe in recent decades, international trade, will contract worldwide and Europe will lose a very substantial part of its main tool for growth. Let us consider that between 2000 and 2023 the weight of international trade in European GDP went from 30% to 46%, while in the United States it went from 25% to 26%. A foreseeable contraction of international trade will further weaken the European economy.

Europe has abandoned its main assets to control inflation, so that local agricultural or industrial production for consumption in Europe has been replaced by Asia or Africa. Europeans have been able to maintain their purchasing power but have been undermining their future year after year. Regulations have done the rest, discouraging agricultural and industrial production in Europe.

The history of Europe in the last eighty years has been complex. It had to emerge from the post-World War II period by losing its main economic asset, which were its colonies, and thanks to an exceptional generation and the help of the United States it was able to build an industry in northern Europe that attracted millions of Europeans from the south. When the model was finally settling, the enlargement to Eastern Europe came. Suddenly, more than one hundred million Europeans became part of the broad range of European social rights, and we have had to do this by abandoning public investments to maintain the protection scheme. In short, we have lost valuable decades in undertaking social and economic changes that neither the United States nor China had to face, and this largely explains Europe's growing irrelevance

Ultimately, the world economy will witness a race to the death for critical materials associated with the digital revolution and the fight against climate change. China extracts 25% of the world's copper, 60% of the graphite and 70% of the rare earths, while it processes 75% of the cobalt, 70% of the lithium, 100% of the graphite and 90% of the rare earths. A restriction on the export of these products from China would further deepen the recession in Europe and provoke an escalation in tensions with the United States.

The competitiveness of the United States has grown by 15.5% in the last 20 years, by 11.8% in Germany, by 8.8% in the United Kingdom, but has fallen by 7.3% in Spain and by 5.1% in Italy. To understand the loss of wealth in Europe, it is enough to look at the map. The poorest state in the United States, Mississippi, has a GDP per capita of 51,300 dollars, while France with 47,000 dollars, Spain with 34,000 dollars, Italy with 40,000 dollars and the United Kingdom with 51,000 dollars are below. We produce more but with more people and less product per person, which means that we do not grow in factors of greater added value. The most paradigmatic case is Spain, whose employed population has grown by 27.35% in the last ten years, its GDP by 5% in real terms and its GDP per capita by 4.5%.

In short, Europe does not present itself as the most attractive place to grow your business. Until there is a structural regression, European economies will continue to slow down for all the reasons stated above. A radical revolution in the economy requires a renewal of the economic structure.

The European Union is now providing many benefits that are no longer sustainable. Its reduction could negatively affect cohesion among European countries and, consequently, Europe's greatest asset, the single market. If this collapses, and this is the aim of the two great powers, the recession will turn into decline, and this will put an end to the Europe we have known. Only a catharsis such as the one Argentina has had to endure could convince the Europeans to make a revolution, otherwise, in a few generations, Europe will be a theme park, full of old people and in economic decline.

LA ECONOMÍA MUNDIAL EN LA ERA DONALD TRUMP

La historia como la economía progresan de una forma cíclica, o mejor dicho en un proceso de avance y freno de distinta intensidad. Los dos pasos son necesarios para que el mundo continúe en su senda. La llegada de Trump no ha ocurrido por azar ni es consecuencia de una irrupción política impredecible. Refleja gran parte de los cambios que se están produciendo en muchas sociedades como consecuencia de un largo periodo de progreso en políticas de todo tipo. 

A menudo, los cambios propiciados por revoluciones tecnológicas, o políticas, o sociales, avanzan mucho más deprisa que la capacidad de la población para absorberlos y esto produce estos momentos de revisión. El caso más paradigmático es el Imperio Romano que creó una sociedad mil años adelantada a los tiempos de la historia, de ahí que la Edad Media supusiera un enorme retroceso que ralentizó los cambios que no se asentaron hasta la Edad Moderna.

Otro fenómeno decisivo en los cambios es, que si bien hay un cierto consenso internacional o digamos un auge de las voces que claman por un replanteamiento total, es necesario que exista un líder, un país que tenga la suficiente ascendencia y poder para impulsar los cambios históricos. En este caso, la llegada de Trump es muy relevante para que este nuevo mundo sea realidad.

La descripción de todos los cambios llevaría años y el análisis de su impacto mucho más. Resulta necesario centrarse en aquellos aspectos que considero más relevantes por su significado o por su impacto. El cambio de mentalidad viene determinado por el cambio en el paradigma económico mundial de los últimos 25 años.

Tomemos el índice Fortune de las 50 empresas con mayores ingresos del mundo. En el año 2000, de las 10 mayores empresas, 5 eran de Estados Unidos, 4 de Japón y 1 alemana. En el año 2024, 8 son americanas, una de Taiwán y otra de Arabia Saudita. Si nos movemos al TOP 50, en el año 2000, había 15 americanas, 18 japonesas y 6 alemanas. En 2024, hay 25 norteamericanas, 12 chinas, 3 alemanas y 1 japonesa. Solo esta perspectiva a largo plazo nos permite entender la revolución que se ha producido en el mundo con la irrupción de China y el crecimiento continuado de Estados Unidos.

En el año 2000, la empresa europea con mayor capitalización bursátil era Nokia con 219 billones de dólares. En 2024 es el grupo de lujo LVMH con 344 billones de dólares. En Estados Unidos era Microsoft con 586 billones de dólares y hoy es  Apple con 3.458 billones de dólares, lo que indica claramente la distinta dirección y magnitud de las economías más avanzadas del mundo. Japón y Europa afrontan otro periodo de franco declive mientras que China y Estados Unidos monopolizarán mucho más poder en los próximos años. Incluso las grandes empresas del lujo europeos cuentan con asiáticos entre sus estrellas, por lo que no tardaremos mucho en perder también este liderazgo del diseño.

Este escenario de menor peso europeo y japonés en el mundo y de mayor relevancia de los dos gigantes, nos puede abocar o a un gran enfrentamiento bélico global o a la constitución de dos grandes imperios que tratarán al resto del mundo como colonias.

Sin embargo, China afronta riesgos más relevantes que Estados Unidos. Su sistema político, su demografía decadente y la creciente competencia de India, que ya la supera en población, tenderán a reducir su importancia en el mundo a medio y largo plazo, aunque seguirá siendo tremendamente relevante en lo que queda de década.

En un mundo impulsado por dos grandes polos que se verán menos preocupados por el cambio climático, los países europeos no pueden permanecer al margen de esta tendencia para no perder competitividad. En consecuencia, los grandes objetivos medioambientales se verán retrasados algunos años.

El informe Draghi sobre la competitividad europea señala como el principal objetivo europeo, junto a la brecha de innovación y a la seguridad económica, la descarbonización de la economía. La economía verde no es una oportunidad de crecimiento económico, es un coste que debemos asumir para no condenar al planeta a su autodestrucción. Sin embargo, ante las tendencias de Estados Unidos, China e India, invertir recursos en descarbonizar sin atender a los criterios de competitividad y de mayor eficiencia, afectará negativamente a la estructura de costes de las empresas europeas y ahondará la crisis que ya sufrimos en Europa desde comienzos de siglo.

Otro aspecto será el comercio. Estados Unidos es mucho menos vulnerable que China que depende más de las importaciones de materias primas y energías y de las exportaciones de productos de consumo, para mantener su senda de crecimiento. Este gap es el que más peligro presenta para el escenario geoestratégico. Frente a un Estados Unidos más dominador e independiente, China necesitará de una expansión política en África y en el Pacífico para encontrar suficientes suministros de sus carencias. Pero si China continúa acaparando materiales críticos, Estados Unidos podría encontrase en una posición de debilidad que no sería muy halagüeña para la seguridad global.

El dominio del espacio por Estados Unidos y en menor medida de China, implicará que Europa y los países más neutrales verán muy disminuido su acceso a muchas de las ventajas que se obtendrán de la explotación del espacio, aunque esto llegará a más largo plazo. Si Europa y sus empresas pierden la carrera del espacio, el efecto sobre la competitividad y el crecimiento económico será muy negativo. Space X ya ha lanzado más cohetes al espacio que todo el resto del mundo en toda su historia y pretende crear una constelación de decenas de miles de satélites en órbita. Esto solo es posible con una inversión pública y privada que nadie en el mundo puede alcanzar y gracias a una reunión de talento única en el mundo.

El deshielo del Ártico abrirá un enorme espacio del planeta al tráfico y a la explotación del subsuelo marino. Rusia lleva años posicionándose en este espacio pero en esta línea debe entenderse el interés de Estados Unidos por Groenlandia, una país con un tamaño de cuatro veces España. La guerra por los recursos del norte del planeta abrirá otro escenario de atención y de colisión.

Otro aspecto clave en la economía será la profundización en el mundo de la Inteligencia Artificial como continuación del proceso de digitalización de la economía iniciado en los años noventa. Europa ha perdido un 40% de su competitividad con respecto a Estados Unidos en lo que va de siglo por su retraso en incorporarse a las nuevas tecnologías y por permanecer anclada en la industria tradicional que se verá muy lastrada por las nuevas tecnologías que acabarán dominando a la industria en su conjunto. Si en el año 2002 China competía en el 25% de los productos fabricados en Europa, hoy ya compite en el 40%, y llegará al 50% al final de la década con unos costes totales muy inferiores y con una calidad, en el peor de los casos, similar a la europea.

El elemento demográfico contribuye de manera muy significativa a empeorar estos problemas. Mientras que la natalidad todavía muestra fuerza en Estados Unidos a lo que contribuyen significativamente los norteamericanos de origen latino, en Europa la población de origen nacional ya se reduce y obviamente envejece mientras que la inmigración se reducirá cada año ante las peores perspectivas económicas. Ante las medidas que deberá adoptar Europa para reducir su gap de competitividad con el resto del mundo, es muy previsible que la tendencia sea la contraria y que incluso pueda haber saldos negativos de inmigración en Europa en los próximos años, lo que dinamitará la estructura laboral y de protección social.

En conclusión, la pérdida continuada de competitividad de Europa desde comienzos de siglo, solo podrá reducirse con un cambio radical de las políticas europeas, lo que exigirá de la transformación del modelo económico y social que ha regido en Europa en las últimas cuatro décadas.

Como puede deducirse de las anteriores explicaciones, el papel que le queda a la empresa para revertir este escenario es reducido, pero no por eso es irrelevante. 

Ante la creciente ola de proteccionismo, deberá intensificarse la aproximación nacional a los negocios. Si en el modelo anterior la internacionalidad resultaba un activo, los gobiernos tenderán a proteger a sus empresas nacionales. Esto significará que los modelos de organización empresarial deberán ser más descentralizados por países, renunciando a la aproximación por verticales internacionales, ya que las metodologías, regulaciones y estructuras de costes diferirán por países y no podrán establecerse aproximaciones comunes a diferentes naciones.

A lo anterior se unirá la reducción de los flujos intra-compañías internacionales que se verán más perseguidos por esta nueva ola de preferencia nacional. Las compañías deberán prestar especial atención a las regulaciones que pudieran afectar al libre movimiento de flujos económicos.

Frente a las estrategias de cambio climático, no vamos a caer en el negacionismo, no obstante la cabeza pensante de la nueva administración norteamericana ha sido el mayor impulsor del vehículo eléctrico. Sin embargo, la necesidad de aumentar la independencia energética y la autosuficiencia, llevará a una expansión de la energía nuclear y en menor medida de los combustibles fósiles que verán crecimientos significativos en los próximos años. Las energías renovables continuarán creciendo pero contarán con menores incentivos por lo que solo en los países con mayor capacidad eficiente de generación encontraremos variaciones significativas.

Europa necesita rebajar de forma drástica sus costes de energía para recuperar competitividad por lo que el movimiento hacia lo nuclear y los combustibles fósiles tendrá un impulso mayor en el Viejo Continente. La matriz que llevamos construyendo desde hace años nos hace menos competitivos y esto es un lastre que no podemos aceptar a cambio de mejorar la vida en el planeta mientras que otros contaminan más y nos comen cuota de mercado. Además sustituir a Rusia como proveedor de referencia de energía por otros, ha consumido ya una enorme cantidad de recursos y dificultará la reducción de costes al menos durante diez años.

Teniendo en cuenta que la Europa rica tiene sueldos similares a los de Estados Unidos, el gap de competitividad radica en: la menor inversión en Investigación, Desarrollo e Innovación en Europa en relación con el resto de países; en el coste de la energía; y en la losa de la regulación. Esto se debe a que las prioridades económicas se centran en lo social y a que no existe suficiente talento e infraestructura de innovación en Europa para absorber en el corto y medio plazo un aumento significativo de las inversiones en I+D. 

Las empresas deberán dedicar cantidades crecientes a I+D+I, lo que obligará a alterar su estructura de costes, lo que será imposible con costes laborales crecientes y con la electricidad al triple que en Estados Unidos. Los costes regulatorios y la escasez de suelo contribuyen a la menor competitividad europea y suponen lastres añadidos. Si no hay una acción brutal de los gobiernos para resolver estos problemas, la situación se agravará.

La digitalización de la economía es el elemento más significativo de esta pérdida de competitividad. De las 50 empresas tecnológicas más grandes del mundo, apenas cuatro son europeas. Este gap explica que en lo que va de siglo la economía europea en su conjunto haya crecido de media un 1,5%, la de Estados Unidos un 2,2% y la de China un 8,3%, unas diferencias muy significativas.

Todos estos elementos detallados implican que el mayor factor de crecimiento económico de Europa de las últimas décadas, el comercio internacional, se verá contraído a nivel mundial y Europa perderá una parte muy sustancial de su principal herramienta de crecimiento. Pensemos que entre 2000 y 2023 el peso del comercio internacional en el PIB europeo pasó del 30% al 46%, mientras que en Estados Unidos pasó del 25% al 26%. Una previsible contracción del comercio internacional debilitará aún más a la economía europea.

Europa ha hecho dejación de sus principales activos para controlar la inflación, de manera que se ha sustituido la producción local agrícola o industrial de consumo por Asia o África. Los europeos han podido mantener su capacidad adquisitiva pero han ido limando año a año su futuro. Las regulaciones han hecho el resto desincentivando la producción agraria e industrial de Europa.

La historia de Europa en los últimos ochenta años ha sido compleja. Tuvo que salir de la posguerra mundial perdiendo su principal activo económico que eran las colonias y pudo construir gracias a una generación excepcional y a la ayuda de Estados Unidos, una industria en el norte de Europa que atrajo a millones de europeos del sur. Cuando por fin el modelo se asentaba, vino la ampliación al Este de Europa. De pronto, más de cien millones de europeos pasaron a formar parte del amplio elenco de derechos sociales europeos, y esto hemos debido hacerlo abandonando las inversiones públicas para mantener el esquema de protección. En definitiva, que hemos perdido décadas valiosas en acometer cambios sociales y económicos que no tuvieron que afrontar ni Estados Unidos ni China, y esto explica en gran parte la irrelevancia creciente de Europa

Finalmente la economía mundial asistirá a una carrera a muerte por los materiales críticos asociados a la revolución digital y a la lucha contra el cambio climático. China extrae el 25% del cobre, el 60% del grafito y el 70% de las tierras raras del mundo, mientras que procesa el 75% del cobalto, el 70% del litio, el 100% del grafito y el 90% de las tierras raras. Una restricción en la exportación de estos productos desde China ahondaría más en la recesión en Europa y provocaría una escalada en la tensión con los Estados Unidos.

La competitividad de Estados Unidos creció en los últimos 20 años en un 15,5%, un 11,8% en Alemania, un 8,8% en Reino Unido pero se redujo en España en un 7,3% y en Italia en un 5,1%. Para entender la pérdida de riqueza de Europa basta con echar una mirada al mapa. El estado más pobre de los Estados Unidos, Mississippi, tiene un PIB per cápita de 51.300 dólares, mientras que Francia con 47.000 dólares, España con 34.000 dólares, Italia con 40.000 dólares y Reino Unido con 51.000 dólares están por debajo. Producimos más pero con más personas y menos producto por persona, lo que significa que no crecemos en factores de mayor valor añadido. El caso más paradigmático es España cuya población ocupada ha crecido en los últimos diez años un 27,35%, su PIB un 5% en términos reales y su PIB per cápita en un 4,5%.

En definitiva, Europa no se presenta como el lugar más atractivo para hacer crecer su negocio. Mientras no se produzca una involución estructural, las economías europeas continuarán con su ralentización por todos los motivos expuestos. Una revolución radical de la economía exige renunciar a muchos beneficios que ya no son sostenibles, lo que puede afectar negativamente a la cohesión entre los países europeos y en consecuencia al mayor activo que tiene Europa que es el mercado único. Si este quiebra, y ese es el objetivo de las dos grandes potencias, la recesión se transformará en decadencia y esto acabará con la Europa que hemos conocido. Solamente una catarsis como a la que ha tenido que llegar Argentina, podría convencernos a la mayoría de europeos de hacer un revolución, si no, en unas generaciones, Europa será un parque temático, lleno de ancianos y en decadencia económica.

Drivers of success under the Trump and Musk new order. ( I ) The new political environment

 

Drivers of success under the Trump and Musk new order.

( I ) The new political environment

Conservatism and Liberalism have been fighting each other under different approaches since the independence of the United States and the nationalist revolutions in Europe in the eighteenth century.

We believed that the conservatives were serious and circumspect people, with profound religious sentiments. They pursued the protection of their small businesses or farms, the respect for traditional families, and everything outside of this equation was a threat. They had a strong localist, or nationalist or imperialist ambitions.

Liberals were pursuing individual and human rights, progress, globalization, decolonization, the free market, rational values more than religious ones and separation between church and State. Liberals in the United States became egalitarians close to the European socialist parties.

Today the discussion has changed, but it is not new.

Since the victory of Eisenhower in 1952, the neoconservatives ruled the Republican Party in alliance with moderates like Nixon and liberals like Nelson Rockefeller until the arrival of Donald Trump to the White house in 2017. Donald Trump was a liberal that understood the transformation of the Party in the early years of this century and assumed its basis.

The most conservative movement in the Party has been the Paleocons. They were born against the Federalists in the early years of the United States. They took a main role during the leadership of Robert Taft totally opposed to the Roosevelt’s New Deal. The Paleocons defended restrictions to immigration, isolationism, opposed to multiculturalism and supporters of apartheid policy. They dreamt of a Government under the Bible and the power of God. The movement came back with the Tea Party and religious movements under Bush administration, and after the defeat of Mitt Romney, the last neocon, in 2012, took the leadership of the Party.

It is almost impossible to define the Trump´s ideology, probably because it does not exist. His life is a long contradiction. Ha has changed values and priorities to be always successful. The victory justifies whatever change. He is pragmatic. He will conduct government as a small farm owner in the Midwest and international relations like a driver of a herd of cows from Texas. He is to make a big revolution in international diplomacy, or as I would say he is going to kill the traditional way of relations among countries. As the herd is the top priority, if he needs to cross a private property, he will do it, if he needs to occupy a private pond, he will do it and if it has to sacrifice some cows for the sake of the expedition he will do it, if he does not need to make friends he will not do it. But this is just personality, there is nothing substantial behind.

Elon Musk is different. He is the richest man in the world, and he is not the son of Rockefeller or Prince Salman. There are not big contradictions in his life. He is a traditional conservative in politics, human relations, values, but a liberal in the sense of a strong future vision. The conservatives want to keep the world frozen. Musk wants to make a revolution. In certain way he wants to replicate the Chinese model, one state two systems. Where China puts Communism, Musk puts an Edmund Burke or Carl Schmitt, the traditional conservative ideology, but where China puts capitalism, Musk puts more capitalism. He is not afraid about immigration and globalization, he is concerned about safety and no fair competition, he is convinced the world must move towards clean and sustainable mobility, to a clean energy and to Space. He is not afraid like conservatism of free speech; he fears the monolithic speech that has been spread over the last few decades. He believes that people must take care of themselves. The approach to low-income people is compassion or private solidarity and provide opportunities but reducing the duties of the governments to minimize inequalities. As much money is in the private pockets more opportunities for growth with a clear Paretian approach. In this sense he is very closed to traditional European liberalism.

American liberals or socialists have a different approach following Rawls´ theories. Just the growth of poor people is the measure of the health of an economy, no matter what happens with the middle class, it is the position of low-income people that counts. Liberals assign to the government the obligation of redistribution of everything it doesn´t matter if economy collapses or grows, which it is important is to take the money from private pockets to be put in Government´s box to be spread in those people with more needs, deducting its own significant expenses.

However, this is an old discussion. The feeling today is that middle classes with low salaries are suffering the new policies. Governments are bigger and bigger to meet their new duties, and people with lower salaries feel they pay the party but are not getting the benefits. They feel discriminated themselves by the new priorities when they are the taxpayers, the workers, the professionals, the pioneering. Small private businessmen see how Chinese competition destroy their competitiveness and feel that State´s subsidies go to big corporations dominated by a privileged community engaged to the government. They see that housing is a luxurious asset and they are not qualified to receive a house from governments, they see that land and cost of industrial infrastructure is not affordable for their businesses when it is almost free in China or India, that they pay a significant cost for energy due to environment ambitions, and they assume the bill and restrictions of climate change that is just applied for western countries.

Summarizing, the new points of the new Trump-Musk policy are:

a) Prioritizing individual traditional rights like life, free speech, private property, against new social rights.

b) More accent in religious values than in so called” woke ideology.

c) More protectionism to avoid insane competitiveness.

d) Control of immigration to keep traditional values in our societies and safety.

e) Bid for new disruptive technologies with no restriction to compete against China.

f) Create a fast drive to the future in new scenarios like Space, Artic, Seabed.

g) International relations based on businesses more than values revolutionizing the way of conducting international diplomacy.

h) Prioritize economy over climate change.

But they don´t share some important topics:

Trump wants a strong Federal State, compensating less taxes with more debt, promoting public investment, restricting the power of states in key topics like family, abortion, military power, justice, environment protection etc. He does not believe in free and independent justice. Trump is a traditional conservative, peculiar but very linked with the right wing of traditional Republican party. it was not so radical in the past, but today he has found it in this ultra conservatism position, a niche that led him to the White house.

Musk is a liberal in traditional European way, promoting free competition, innovation, prioritizing economy and talent over control of immigration, less state with less duties, less public expenses, less public investment. He has a global approach; isolationism is not an option like in Trump. In the tradeoff between safety and freedom, he opts for the last one.

It is too early to define who will win in this ideological and political battle between Musk and Trump, and what will be the new order, but we can be sure that we will see in coming years things we never thought. We are at the doors of a new big revolution in the West that will affect the whole world.

Is Europe ready for this new order?

It is difficult to answer due to the big differences among European countries. The feelings and ambitions are very far from those ones in US. In Europe, everyone looks for a subsidy -companies, professionals, farmers-. Everyone defends universal and free healthcare, a public pension system financed by taxes, etc. However, this model is obsolete because it is against demography. Everyone sees the government as the solution to the problems and nobody as a problem itself. All far right movements look for more state, more government to satisfy the demands of their new supporters that feel the current system prioritize to others, they believe in Keynes and Galbraith more than in Hayek or Friedman.

Europe has a structural problem, its demography. We are older and we need to replace this old people with young ones because our birth rates are in the underground; then, the only option is immigration, and we see it as a problem. Or we put old people to work, or we have more children (that is not going to happen), or we are to die. If Europe is not consolidated as a State and we stay as small countries in a world with new giants in Africa and Asia, we will be irrelevant in a short time

The far right and neonationalist parties don´t have a solution for these problems, they are lying to people. Closing borders, fighting against woke ideology and keeping subsidies will bring more poverty and then we will be on the hands of the Russians and Americans after two thousand years of world domination. Europe needs a third way and Musk is closer to the solution than Trump.

What can the US allies expect?

The Trump administration’s allies will be those countries that share their political view, neither historical nor cultural reasons will be relevant in this new age. American interest will be the only topic in its agenda. China is the big threat and the enemy in this competition for the world leadership. The rest of countries including north Korea or Russia will be friends or enemies depending upon their contribution to the American goals. Each European country will begin from scratch in the new scenario of relations with US, a big challenge.

If Trump is lucky like in his first mandate, his program will go ahead, however I am afraid that sooner than later all his positions will be under test and then we will check if MAGA means to come back to neoconservatism or keep the isolationist and pacifist positions.