Now that President Trump (it feels weird to write that) has entered the Oval Office and seems to have every intention of following through on an ‘America First’ platform, the paradigm that has governed the global political and economic order appears set to shift in ways that will be a significant change from what we have seen over the last generation or two.

One change is that it appears (based on what we know about Trump’s cabinet picks) that U.S. foreign policy is likely to have a more realist approach to it than in the past. The last three Presidents have engaged in foreign policy that was not interest-based, but rather based on their view of what America is or should be. Clinton used American armed forces in an altruistic manner to show that America is good. Bush used America’s armed forces to promote democracy (with the idea that would make us safer). And Obama basically tried to placate our enemies and disrespected our friends (with the idea that this would make us safer if our enemies didn’t hate us so much). All three of these approaches contain elements of simplistic, almost childish assumptions that either overestimates the capabilities of America (Bush trying to reshape foreign cultures in America’s image), or assumes that America needs to not be so “mean” or “pushy” or try to pursue its interests (Clinton and Obama).

Trump appears to recognize that America has the right to pursue its interests like any other country, that it should be willing to engage in alliances of convenience where necessary (i.e. with Putin if necessary), and that it shouldn’t try to make other countries be more like us or to like us at all. It appears that foreign policy under Trump will start with the world as it is, rather than how we would like it to be. By being based on realistic assumptions, Trump’s foreign policy has a better chance of success (from America’s perspective) than some recent Presidents.

Another aspect that will change is that economic policy (i.e. trade policy) is likely to be evaluated based on how it impacts America. While the Washington consensus over the last generation is that free trade is a good thing that leads to higher GDP growth (which it does, all things being equal, just in case you were wondering), the fact is that free trade has decimated certain sections of the country. In economic theory, free trade is good because not only does the economy get more stuff at a cheaper price, but the workers displaced out of the old inefficient industry (that gets offshored) can be used in more productive industries (which ultimately results in higher pay making them better off too). The fact of the matter is that this has not happened. Part of it is that the world that exists in economic theory doesn’t exist in reality. We don’t have a free market. Our economy is over-regulated. This hinders the formation of new businesses and new opportunities that might allow displaced workers to be absorbed at wages similar to what their old jobs were. What America has been doing over the last two generations with its promotion of free trade, increased globalization, and increased domestic regulation is that it has fostered the growth of middle classes in other countries, by decimating our own. While this (and the collapse of the Soviet Union) resulted in a world where America was at the single hegemon holding the world economic system together, it is also clear that many Americans are tired of paying the price for something where the tangible benefits accrue to other people. We can expect that as America begins to pursue its own narrow interests at the expense of others, the middle classes in other countries will weaken, perhaps leading to political change that lessens (not eliminates, but lessens) their ties to the United States. This will create an opening for our rivals China and Russia to begin to influence nations that they may not have been able to influence before.

 While many will decry Trumps policies (and some will undoubtedly deserve to be condemned), what we are getting is the natural result of multitudes of decisions that have been taken over the last 40 years. The world is moving towards a multi-polar international order because America has weakened (as nations and empires tend to do over time), without anyone noticing. In some ways, the forces that propelled Donald Trump to the Presidency can also be seen in other countries as well. Someone like Donald Trump does not become President because a country that is basically functioning pretty well gets drunk one night and wakes up to find that they have elected this man. Someone like Donald Trump becoming President happens because the system stops meeting the needs of a significant fraction of the country.

When a system stops meeting the needs of its people for a short time, the people simply vote the other party into office. When the system stops meeting the needs of its people for a long time, you get a Donald Trump. An ‘America First’ program will reshuffle the deck so to speak and redefine America’s place in the global order. While this may or may not end up being a good thing (it will depend on what policies are ultimately pursued), the shift is more due to a recognition as to how the world has shifted over time. The Trump Administration will not be inconsequential.