USA ... The Political Economy
The role of oil

Trump and Palin: Is America Becoming an Oil Kleptocracy? ... That such a substantial number of Americans want to see Trump as their president is an alarming signal.

Burgess COMMENTARY

Peter Burgess

Trump and Palin: Is America Becoming an Oil Kleptocracy? That such a substantial number of Americans want to see Trump as their president is an alarming signal.

Credit: Joseph Sohm Shutterstock.com

Takeaways

• Sarah Palin wanted to be a Chavez, not some conventional state government politician.

• It is not surprising that Palin endorsed Trump. He is a perfect leader of an oil-producing nation.

• Any oil-rich dictator would be happy to have Trump build one of his gorgeous palaces for him.

• That such a substantial number of Americans want to see Trump as their president is alarming.

Oil-producing nations are a mess. Go down their full list – from A for Algeria, Argentina and Azerbaijan via I for Iraq and S for Saudi Arabia all the way down to V for Venezuela – and you’ll see economic and political basket cases.

Many of these oil-producing countries don’t need, or like, democracy. They are ruled by narcissistic authoritarians who distribute goodies, talk of national greatness and stuff their own pockets.

Muammar Gaddafi, Vladimir Putin and Hugo Chavez come to mind. Eccentric, quirky, self-indulgent and totally devoid of self-doubt, they like to hear themselves talk and are very entertaining. They’re performers, not policy wonks.

They are, in short, wizards of Oz, selling snake oil to their grateful populace. Eventually, they turn nasty, making mischief in the rest of the world and oppressing and robbing their own people.

The United States of oil

Now, what does that have to do with the United States, an industrial giant and the world’s leader in technological innovation? Well, in recent years the United States did become the world’s largest producer of oil. Last year, it even started to export some of the stuff.

Of course, the United States has a huge diversified economy and its oil industry accounts only for a small portion of its GDP. It is still a major importer of oil.

Besides, oil is currently quite cheap. At least for now, you can’t live high on the hog by exporting it. All those oil kleptocracies that were rich and self-important are suddenly starting to pawn their family silver (if they have any).

And yet, the U.S. economy and U.S. society as a whole are sending forth dangerous signals. The United States has long been on a road to de-industrialization, sending manufacturing jobs to China, Mexico and other places.

The number of U.S. manufacturing jobs is down 15% from 2006 and it didn’t grow at all during 2015, which was otherwise a bumper year for jobs. Since 1985, the number of manufacturing jobs has dropped by 35%.

Role of Alaska

Notably, the United States also has its own oil-producing nation – A for Alaska. In the good tradition of oil nations, Alaska has long given out a freebie to all its residents out of its oil earnings.

It is also the only state whose citizens pay neither state income tax not a sales tax.

And, wouldn’t you know it? In 2015, as oil prices (and state revenues) plummeted, the state government gave out a record payout of $2,000 per resident. Meanwhile, the state is flirting with bankruptcy.

As pointed out above, oil-producing countries are often run by self-obsessed egotists. They detest the inner workings of democracy.

Politics in democracies is the “art of the possible” – a painstaking process built on compromises and constrained by checks and balances.

Come to think of it, the United States has an exuberant egotist quite similar to various characters among those oil rulers – Alaska’s Governor Sarah Palin. Actually, a former governor.

She quit her job when it became clear that she needed to run a state rather than, in the tradition of a more conventional ruler of an oil producer, to run her mouth on Fox News and at political rallies. In other words, she wanted to be a Chavez, not some stupid conventional state government politician.

Is it any surprise that Palin endorsed Donald Trump? The Donald is a perfect leader of an oil producing nation. He’s a casino magnate – and winning at a slot machine is almost as good as winning a Powerball jackpot.

Trump, Putin and Chavez

Given all his antics, beginning with his hair-do, one can quite easily imagine him dressing up in colorful military uniforms like Gaddafi or Chavez, or walk around bare chested like Putin.

Trump has already professed his respect for Putin. “He’s running his country and at least he’s a leader, unlike what we have in this country,” Trump said, responding to criticism that Putin is killing journalists and opposition leaders. Is this what Americans should expect from President Trump? An oil kleptocracy leadership?

To be sure, any oil-rich dictator would be happy to have Trump build one of his gorgeous palaces for him – complete with lots of marble and gold bathroom fixtures and populated with scantily clad Miss Universes.

Most important, Trump shares with them the belief in miracles and disdain for conventional politics. It is not an oversight that he hasn’t announced any realistic programs to grow the U.S. economy, to create jobs, to solve the illegal immigration problem, or to defeat ISIS.

This is Trump’s deliberate strategy and his audience is responding. Sizable segments of the U.S. electorate love him precisely for the ease with which he promises to solve everything in one fell swoop on his first day in the Oval Office. He just says that it will be great and waves a magic wand.

Needless to say, none of it will come to pass. Just as other nations of the type inevitably turn into oil kleptocracies, so will Trump’s America serve to stuff his pockets as well as those of his rich buddies like Carl Icahn, even more than it does now.

All of this will come at the expense of the sheep who elect him – who will be kept happy by the usual Wizard of Oz techniques.

Of course, the United States is not yet an oil kleptocracy. But the fact that such a substantial number of Americans want to see Trump as their president is an alarming signal.

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About Alexei Bayer Alexei Bayer is the Eastern Europe Editor of The Globalist. Eastern Europe Editor, The Globalist Alexei Bayer analyzes international capital markets, political risk and emerging market economies. He particularly focuses on Russia and Eastern Europe.

Mr. Bayer previously served as senior financial markets economist at the Economist Intelligence Unit and worked at Standard & Poor’s, serving as managing editor of CreditWire, an electronic bond rating service.

Born in Russia, Mr. Bayer has contributed to the op-ed pages of the Wall Street Journal, New York Times and Financial Times. He is also a columnist for the independent Russian business newspaper, Vedomosti. His debut novel, Murder at the Dacha, a mystery set in 1960s Moscow, was published in May 2013.