This week, Donald Trump will take the oath of office to be the 45th President of the United States. While predicting the course of an Administration in advance is liable to make one look extremely foolish in hindsight, the idea that Trump could end up being one of the most consequential Presidents in at least one, maybe even two, generations is not as absurd as it may seem.
Firstly, the horrified (and if one is being honest, even occasionally unhinged) reaction of many to Donald Trump the candidate AND Donald Trump the President-Elect (and not only on the left) is an indication that much of what we have known as the institutions (political, economic, and cultural) throughout our lifetime feel under threat (for better or worse). As vilified as Mitt Romney was, one has a hard time imagining the vast protests, the hysteria, and the attempts at delegitimization such as we are now witnessing, would have occurred had he managed to beat Obama in 2012. As hated as Mitt Romney was on the Left, he was a man of the establishment, largely polite, and a go-along-to-get-along type who would likely only have changed things at the margin. But with Trump, you have someone who not only is a brawler, but also enjoys the fight. It is almost like General George Patton with a Twitter account. In other words, some change is coming to the established institutions (how much remains to be seen, but it is unlikely to be zero). Usually when change happens, it is to the disadvantage of the “in-crowd”, hence the fear is that it could be a lot.
Secondly, Trumps Cabinet picks largely (with a couple of exceptions) seem to be reasonably solid. True, they are not picks that Hillary Clinton would have made, which by itself is going to upset a lot of people. But contrary to the anticipation/worry of some (on both sides of the political aisle), Trump has not loaded up his Cabinet with a bunch of Sarah Palin-types (i.e. people who are extremely ideological with thin resume’s and limited knowledge of the world). In addition, many of these people are coming into their roles with the idea of reshaping (or even substantially curtailing) the agencies that they are heading up.
These factors indicate that a serious attempt is going to be made to make major changes, and that the regulatory state is likely in for a makeover. Over the last 80 years, the regulatory state has kept expanding. Sometimes the expansion has been quick, and other times it has been slower, but the direction has always been the same. Furthermore, periodic regulatory reform has almost always meant more regulations being piled on top of old regulations. While lack of regulation is not what is ideal, for the last 80 years, the phrase ‘better regulation’ has nearly always meant ‘more regulation’. With the Trump Administration, it is possible to imagine a partial rollback of the regulatory state as well as a modified regulatory structure that better reflects the realities of a 21st century global economy. With shifting regulation, the rules of the economic game will shift, and with it the winners and losers.
Four to eight years of a Trump Administration could see a fundamentally changed economic landscape from what we are used to seeing, for better or worse. It is time to get ready.