Economic Outlook 2017

At the 2017 Economics Society of Northern Alberta Outlook conference held on 8 December at the Chateau Lacombe, Associate Professor of Political Science, Greg Anderson spoke to the possible impact on Alberta from the election of Donald Trump. (Anderson is a specialist in U.S.-Canadian relations.) His talk “The (Dis)United States of America and POTUS 2016”- placed the election results in the broader context of global events such as the Brexit vote and immigration crisis in Europe. (POTUS stands for President of the United States.)

In observing that filmmaker Michael Moore predicted Trump’s victory in Michigan (a state that Moore is quite familiar with), Anderson recounted the shock and paralysis of the Clinton camp on election night. Trump was much better at tapping into the grim economic realities facing many workers in the rust-belt states (Ohio, Michigan, Pennsylvania) than was Clinton. The Republican party (GOP) did remarkably well in state elections as well with two-thirds of Governorships now held by republicans. Not only did the GOP retain control of the House of Representatives but the feared return of a Democrat-controlled Senate did not happen. While much of the pre-election buzz was about a GOP falling apart, it is now the Democrats that are reeling.

However, since the Executive power is distinct from the legislative power, a “unified government” does not mean that Trump will have carte blanche to push any agenda he wishes.  According to Professor Anderson, the new President will have to deal with party leaders in the house and the Senate who have firm views about policies on budgetary deficits, entitlements, trade, and immigration.

greg-andersonIn reviewing the Cabinet choices thus far, Anderson observed that prior to the election most Republican foreign policy experts had abandoned Trump. His choice for Attorney General, Alabama Senator Jeff Sessions is tough on immigration. Wilbur Ross, Trump’s pick for Commerce Secretary, was involved in the steel industry, and will lead a trade protectionist agenda.  China has been the subject of trade action for dumping steel into U.S. markets in the past. Steve Mnuchin, a former Goldman Sachs Partner and hedge fund investor becomes the new Treasury Secretary with a mandate to reform the tax code. A recent appointment has been Iowa Governor Terry Branstad as Ambassador to China. This is an interesting pick since  Branstad developed a personal relationship with President Xi Jinping when Xi was studying agricultural policies  in the U.S. Finally. the Cabinet will contain several former generals include James “Mad Dog ” Mattis as Defence Secretary, General Michael Flynn as National Security Advisor (former Defence Intelligence Director), and Marine General John Kelly as Secretary for the Department of Homeland Security a dysfunctional department of 230,000 employees and byzantine oversight by Congress. 

A key vacancy is still Secretary of State with Mitt Romney and General David Petraeus still in the running.

The implications of a new administration are vital in a number of areas- specifically trade, labour and travel mobility, and energy and environmental policies. Anderson noted that the Prime Minister was willing to talk about NAFTA which may not be a good opening position. While Trump is a pragmatist who can walk back on promises, Canadian assumptions that Canada will be treated much differently than Mexico by a bureaucratic juggernaut such as Homeland Security, may be optimistic. On NAFTA, Canada and Mexico’s economies are much dependent on U.S. markets that any re-negotiations will be difficult.  On energy and environment, Scott Priutt, the new EPA Administrator is a former Attorney General of Oklahoma, who sued the Obama government on coal regulatory changes. (This suggests perhaps a four-year holiday for the fossil fuel industry south of the border with important ramifications on investment decisions by Canada’s energy industry.)

During the question period, Anderson in reply to questions about Trump and the media, referred the audience to the Kennedy School of Government at Harvard’s presidential election post-mortem.  The post-mortem features key actors in both parties’ election campaign teams. This year the Clinton leaders were particularly bitter about the media coverage, suggesting that Trump was never held to account, and the FBI Director Coney’s handling of the email investigation.  He added that he was troubled by the advent of “fake news” and the belief that the mainstream media is “lying.”  While there are many more sources of information, changes in media, has meant a decline in investigative journalism. The UofA political scientist also highlighted Trump’s capacity to connect with blue collar workers, while Clinton’s fear-mongering in the late stages of the campaign plus her reliance on celebrities to boost campaign rally attendance in the final few weeks of the campaign, marked a desperation and political miscalculation.

In speaking with Dr. Anderson after his speech, he offered the advice that Canadian governments, business association, and businesses to work closely with counterpart regional organizations, sharing with common interests.  Building a common position and approaching Washington and Ottawa is a better plan that relying on federal leadership.

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A summary of the economic diversification panel (Gil McGowan, Martha Hall Findlay and Trevor Tombe) and feature speaker Avi Lewis will be posted shortly.

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