President Trump?

Perhaps the best view in Chicago is to stand on the south side of the Chicago River near the North Wabash Avenue bridge. The bridge shares its name with an ominous event. At the end of the 18th Century after Independence, the new United States attempted to pacify the inland for settlement by conducting a war against the American Indians. On 4 December 1791, near the Wabash River in Ohio, General Arthur St Clair, with around 1,000 officers and men, sought to attack a group of Indians of the same number. Imagine his surprise when they attacked him instead. The result was that 832 Americans were killed. This meant that around one quarter of the entire US army of the time was wiped out.

Standing at the south side of the Chicago River at this point gives us a view of two of the most beautiful older "sky scrapers" in Chicago. We first see the Wrigley Building built in 1931 and the Tribune Tower completed in 1925. But perhaps the most impressive building is the one directly on the north side at 401 North Wabash Avenue. This is the seventh tallest building in the world at 415 metres from base to the top of its spire. It has emblazoned upon its side five enormous letters. They spell the name TRUMP.

Donald Trump has over a period of a generation built one of the great US hotel and casino companies. In the process, he has made his own name a household brand. Some political columnists describe him as a marketing genius.

Analysis published by the New York Times suggests that in the current campaign for the Republican nomination, Trump's marketing skill, together with his name, have given him some US$2billion of free media publicity. At the time of writing, he is the frontrunner for Republican nomination at the Republication Convention in Cleveland in July.

What the polls say

Even though Trump is the frontrunner, we must ask the question as to whether he would win a general election. To answer this question, we can look at the general election matchups published by Real Clear Politics. This website takes a number of available polls to calculate the electoral appeal of a two person competition between nominees.

One of the surprises we find is that when we compare Bernie Sanders against possible Republican nominees is that he gains the largest electoral advantage. For example, Sanders in a matchup between Sanders and Trump - Sanders receives 54.7% of the vote and Trump receives 37.2% of the vote. The result is that Bernie Sanders beats Donald Trump by a whopping 17.5% of the vote. In comparison, Hillary Clinton, in a competition against Trump, would gain 50.0% of the vote and Trump would gain 38.8% of the vote. This would mean Hillary Clinton would still beat Donald Trump by 11.2% of the vote.

Sanders would beat any Republican nominee by a larger amount than Clinton would. In terms of electoral popularity, Clinton is the worst candidate for the Democrats. Yet she will probably win the Democratic nomination. Trump is also the worst candidate in a general election for the Republican Party. Yet he will likely win the Republican nomination. In both cases the candidate that will likely win the nomination for their own party is the worst candidate in a general election. Yet in a two candidate matchup, Hillary Clinton will beat Donald Trump. Democracy does not seem to be selecting the best candidate, however democracy is successfully selecting the least worst candidate.

What the poll data then tells us is that it is unlikely that Donald Trump will win the general election and become the next US President. It is more likely on current poll data that Hillary Clinton will be the next US President.

What if?

Still, we must explore what will happen if the polls are wrong. What would be the policies of a Donald Trump as President? Writing in The Australian newspaper, economic historian Niall Ferguson has described Donald Trump as a populist. Ferguson notes that populists were common in US politics from 1870 to the end of the 19th Century. The most successful populist was William Jennings Bryan. He campaigned against the Gold Standard and sought for it to be abandoned. He believed that the abolition of the Gold Standard would support rising wages for American workers.

Ferguson noted that populists tended not to be successful in presidential politics in the United States. They were successful in Latin American countries where presidents were not limited by constitutional restraints.

Ferguson pointed out that populists may be either from the left or the right of politics. He noted that Juan Peron of Argentina was a populist of the Right. On the other hand, Hugo Chavez of Venezuela was a populist of the Left.

Populists tend to have three major components in their economic program. The first is protection against imports. This is often achieved through import tariffs.

The second is restrictions on immigration. Trump has famously promised to build a wall on the Mexican border paid for, he says, by the Mexicans.

The third element of populism is usually expansion of the Federal Budget deficit. Budget deficits are expanded to provide favours in return for the support of the populist president.

What are the results?

Import barriers tend to result in demand switching. This means that demand is switched from imported product and services to domestically produced goods and services. This increases domestic demand but decreases the long term incentive for the economy to compete.

Restrictions on immigration tend to support real wages in the short term. In the long term, they reduce the availability of skills and labour to allow the economy to grow.

Expanding budget deficits also increases demand in the short term. In the long term demand is reduced as the debt has to be paid back.

What we can see from each of these elements is that populism can be very successful in the short term. Yet it is short term success purchased at the cost of great long term damage.

Donald Trump, if elected to conduct his populist agenda, may actually be successful and popular in the short term. Unfortunately, this success and this popularity may be purchased at the cost of long term damage for the US economy. The name emblazoned at 401 Wabash Avenue may recall disasters equal to those of early American history.