Narendra C. Bhandari, Ph.D. is professor of Management at Pace University’s Lubin School of Business in New York and author of “Trade Equilibrium: A Multi-Generational Economic Policy” (Journal of International Business Research, Volume 13, Number 1, 2014, pp 91-104.)
“Before and after his election as president of the United States, Donald Trump repeatedly promised that he would do what is right for America,” Professor Bhandari wrote on The Hill’s Pundits Blog. “He won’t be sworn in for another few weeks, but he isn’t waiting to make moves for the country. He has persuaded Carrier Corporation to keep nearly 1,000 jobs in Indiana instead of moving them to Mexico. He has complained that Boeing’s cost of building a new 747 for future presidents is out of control and urged the federal government to cancel the order.
“Trump is against skyrocketing drug prices. Under the current system, Medicare and Medicaid buy products from the drug companies without competitive bidding. People wonder why the Department of Defense must make its purchases through competitive bidding. Trump plans to allow Medicare and Medicaid to negotiate prices too. This would bring drug prices down in general and would be a major relief for the public. Trump is critical of Lockheed Martin’s skyrocketing cost of its F-35 fighter jet program, which is a multinational, multibillion-dollar program primarily funded by the United States. Some U.S. allies, including members of the North Atlantic Treaty Organization (NATO), also participate in the program. Each jet costs more than $100 million. The program has been criticized for problems with its design, procurement and testing. Trump wants to bring down the cost of military hardware. Sen. John McCain (R-Ariz.), chairman of the Senate Armed Services Committee, has called for similar action.
“These are some examples of Trump’s efforts to fulfill his promises even before he has taken the oath of the office. His message is clear. The industry should control costs, reduce prices, increase productivity, and keep and create jobs. Many people, including both Democrats and Republicans, have expressed concerns and raised questions about Trump’s approach to alter some economic fundamentals. Some argue that his interference in corporate decision making is harmful to our system of free enterprise and free trade. But in an interview with Fox News this month, Trump said, ‘I’m a big free trader. But it has to be fair … we have lost, over a period of years, short years, 70,000 factories in this country … I mean, we’re being stripped of our jobs … and we’ve got to stop it.’
“Trump’s approach to dealing with various economic situations augur some far reaching, wide ranging implications for the American economic system. They would affect various aspects of the public and private systems of finance, production, and marketing of goods and services. They would heavily influence America’s international trade. Trump is looking at contracts from a businessman’s point of view as he tries to make a mark as a politician. He wants to keep and create jobs, cut costs, reduce waste and move away from special interests.
I believe these measures would help the United States save money and buy more defense related equipment, which in turn would create more jobs as it increases national security. One of the basic economic principles is that lower prices should lead to higher demand, higher production, more employment, higher wages and higher corporate profits. Initially, these numbers may not exactly workout like that. But eventually, they should.
“Trump’s approach to influencing major economic decisions is unprecedented. But we have to remember that he won the election in an unprecedented way. Things are different now. There’s a new commander coming to town.” [The Hill’s Pundits Blog, 12/28/16]