Trump thinks that bullying corporations, such as Ford and Carrier, and aiding others, such as Google, will boost output and employment. This is an expansion of corporatist policy the likes of which have not been seen since the fascist German and Italian economies of the 1930s. If this thinking persists, there will be more interference in the business sector to protect incumbents and block newcomers. This will clog the economy’s arteries, most likely preventing far more innovation than it stimulates among the established insiders.
Policymakers must wake up to the dangers of resurgent corporatism under Trump. Such an approach to today’s economic stagnation and deprivation threatens to drive a silver spike into the heart of innovation – and the American working class.Trump holds a corporatist central planning view of economic policy as did the German and Italian leaders during the 1930s.
Phelps is correct, if Trump continues down this path, it will suffocate innovation and only benefit corporations close to Trump and his ruling team. It will stagnate the economy.