Question: Back in the day, you used to present an economic and political scan to local communications and local political engagement officers. I’m curious what you think the future might now hold for Alberta’s teachers and schools?
Answer: Well, I always look forward to dusting off my crystal ball and taking a gander in the direction of things that might come to be. Of course, if I were really good at this, I would be writing this column on the beach of my private Caribbean island — which, I assure you, I am not. Be that as it may…
In a previous column, I commented on the influence that events and trends in the United States (U.S.) have on Canada generally and on Alberta in particular. So, I think a good place to start is the return of Donald Trump to the presidency after a divisive campaign.
Even though Trump did not win the popular vote, his Republican Party has control of both the House of Congress and the House of Representatives and has been able, over time, to install a majority of sympathetic justices on the Supreme Court. This suggests that Trump will be able to pursue an agenda without the usual constraints.
At the core of this agenda is Trump’s consistent campaign promises to expel undocumented immigrants and to raise tariffs. Both of these proceed from a desire to “Make America Great Again” by returning to a time when the U.S. was the world’s dominant industrial economy with a thriving middle class employed in manufacturing goods for domestic consumption and to export to the world. All this began to change after the Second World War, as nations and businesses embraced the ideology of global free trade and its promise to provide a better quality of life for all by achieving efficiencies, fostering innovation and allowing people to buy a greater assortment of goods more cheaply.
Beginning in the 1970s, there emerged a neoliberal, rules-based system of free international trade that delivered on these promises. The problem was that the benefits and costs of this transition were not evenly distributed. Even as we and our American friends were all able to buy vastly improved televisions and smart phones more cheaply than could ever have been imagined, the simultaneous hollowing out of American manufacturing and extractive industries has had a devastating effect, economically and psychologically.
Trump’s solution is to scapegoat those who are seen to be taking the jobs of “real Americans.” These are first and foremost immigrants, and particularly those whose legal status in the U.S. is questionable. While the threat of mass expulsions and to end birthright citizenship may not come to pass, there will undoubtedly be new barriers to migration.
Of much greater concern to those of us on the northern border is the threatened imposition by the U.S. of sweeping tariffs or taxes on imported goods and services. Making imports more expensive presumably bolsters the viability of domestic American companies whose products would become more price competitive in comparison to those produced abroad. There is no such thing as a free lunch, however, and average Americans will pay for such a policy in the form of increased prices, resulting in a growth of general inflation and a higher cost of living.
But I think there is more to Trump’s tariff policy than simply shifting the terms of trade.
Trump wants to deliver sweeping tax cuts. To do this, he needs to reduce government programs, hence the establishment of the new “Department of Government Efficiency” to implement cuts, potentially in the trillions of dollars. I believe that the second element of the strategy is to substitute revenues from tariffs for revenues from taxation, effectively imposing a sales tax on imports.
From an historical perspective, this is not new. Before the Second World War, national governments’ largest source of income was tariff revenue. This was also an era marked by constant trade wars and a power-based international order where larger economies set the rules to maximize their own advantage at the cost of others. Occasionally when they got things especially wrong (homework: look up the Smoot-Hawley Tariff Act of 1930), they plunged the global economy into depression.
The imperative of maximizing government income from tariffs also undermines Trump’s assertion that his trade policy is in direct response to the uncontrolled flow of illegal immigrants and fentanyl over U.S. borders. By claiming that these problems constitute an “emergency,” Trump is cynically setting himself up to trigger a clause in the 2020 USMCA free trade treaty between the U.S., Mexico and Canada that would allow the U.S. to revoke the terms of the agreement that currently govern trade between the three countries. Those who believe that all we need to do to make this go away is to strengthen border control (looking at you Premier Smith) are in serious denial.
So, what does all this mean in practical terms for teachers and schools in Alberta? I’ll take a look at that in part two of this column in the next issue of the ATA News. ❚
Questions for consideration in this column are welcome. Please address them to Dennis Theobald at dennis.theobald@ata.ab.ca.
ATA Executive Secretary