The basis of any Trump Revolution would have to be energy. The shale-led revival of America’s energy production was the most important economic development of the Obama administration, and Trump is likely to double down on it. The turnaround in America’s energy fortunes is almost a miracle. Over the last ten years, U.S. oil production has grown by more than 3.6 million barrels per day—an output increase of roughly 75 percent. Natural gas production has seen similar joy, rising nearly 52 percent over the last decade. This hydrocarbon boom has defied the predictions of most analysts, who expected American oil production to plummet alongside falling crude prices over these past two years. Instead, the shale industry has relentlessly pursued innovations that have allowed it to keep the oil and gas flowing, despite unfavorable market conditions.Read more here.
...many Democrats, and many powerful Democratic donors, hate shale. They see the surge in unconventional hydrocarbon production as a driver of more climate change and they fear the impact of both extraction (earthquakes and groundwater pollution) and transport (by pipeline and rail). Many greens also fear the impact that lower-than-expected fossil fuel prices will have on the future of renewables. The cheaper and more abundant fossil fuels are, the harder it is to make the case for subsidies and regulations to promote the use of renewables. Some blue states (like New York) have banned fracking altogether; the Obama administration has sought to limit its use and opposed key pipeline projects.
...It’s not just that Middle America loves low gas prices; producing and refining more oil and natural gas and building a new infrastructure of pipelines and other facilities to move it across the country will create tens of thousands of high paying blue collar jobs. More, the location of America’s energy resources mean that the states that benefit most from an energy production boom will be Trump states: the Middle West, the Sunbelt and the Rocky Mountain states are where most of the energy potential is.
...Reducing corporate tax will help pull industrial investment to the United States, especially from high tax Europe. German chemical and automobile manufacturers, for example, are under great pressure from high labor, energy and taxation costs. Trump’s America, however unpalatable it may be to German diplomats, may prove surprisingly attractive to German industrialists. Additionally, Trump’s plan to promote the return of some of the $2 trillion plus in offshore cash held by American companies overseas is likely to promote domestic investment, especially if corporate tax rates are also cut. Cheap energy and favorable regulatory treatment could well ensure a significant boost in investment in new production facilities during the first Trump term; that will make his voters happy and could solidify the coalition that swept him to the White House.
The immigration policies Trump supports will, all other things being equal, benefit blue collar workers if these policies start to work. If the border is less porous, fewer illegal immigrants will compete for the new jobs, and legal workers will benefit from higher wages. Limiting the supply of blue collar workers while taking a series of steps to raise the demand for them is a good way to push wages higher.
Friday, December 02, 2016
How could Trump succeed?
Walter Russell Mead writes,