When historic globalization unfolded within a regime of very low tariffs and the gold standard in 1860ā1914, many national governments argued that the state would collapse without the traditional high-tariff revenues and that the introduction of a broad income tax would be impossible. As it turned out, tariff income became largely irrelevant; the system of income taxation worked and became a reliable source of government revenues. Nascent international organizations were also partly effective; however, the International Court of Justice, established in 1899 with strong support from Russia in order to limit conventional armaments races, was not strong enough to avoid imperialist rivalries and World War I. It was only after World War II that the US helped to create several new international organizations, largely dominated by the US itself, which contributed to international cooperation and the policy monitoring of member countries and thus to more stability and prosperity worldwide. The International Monetary Fund (IMF ) and the GATT (General Agreement on Tariffs and Trade)/World Trade Organization (WTO ) are two key organizations in this respect, and since 1952 regional integration in Europe has also presented a model for multilateral cooperation in a regional context, supported by the US. Under President Trump, there is a new international policy paradigm as he is weakening international organizations and is no longer providing the traditional presidential support to the concept of European Union (EU ) integration; instead, during his presidential election campaign, he has argued that Brexit is an extremely positive development and that more such cases could be expected. Unorthodox populist policy has taken a grip of the US in the form of Donald Trump. However, should one expect that there is indeed a structural US populism and what specific reasons have brought this about?
In the US, the median household income has stagnated over many years (i.e. the income of that household which splits the income pyramid into 50% richer households and 50% poorer householdsāa useful measurement concept for the representative household). Modern globalization plus digitalization have brought an enormous income gain for the top 1% of income earners in the US; had the development in the US in this regard been as modest as the equivalent gain of the top 1% in France, there would probably have been no election victory for Trump in the presidential election of 2016. At the end of the first decade of the twenty-first century, the annual US median income was around $57,000 (a typical value over several years in the first decade of the twenty-first century) which implies that net of health-care expenditures, assumed to be 17% of income, the effective monthly income (āeffectiveā here means net of health-care expenditures) of the average household is much smaller. This is not much more than a typical German or French household would have as an effective income; with health-care expenditure being only about 11% of income and vacations being more than twice as long as for US median income earners, Germany and France also have a life expectancy almost three years longer than that in the US. It is also noteworthy that the US infant mortality rate is above that of Western Europe, significantly so since 1985āanother three decades of this transatlantic infant mortality rate gap implies that the US population would be 50 million lower than it would have been if the US had an infant mortality rate equivalent to those in Western Europe (for Organisation for Economic Cooperation and Development (OECD) comparisons on infant mortality and life expectancy, see Appendix G) . The first US president in whom I developed a particular interest was Thomas Jefferson. I recall a visit to the Jefferson homestead while I was in the US attending a Schumpeter Society Conference in Charlottesville (University of Virginia), and many years later, I received a German edition of Jeffersonās description of his Rhine tour in 1788. At the time, Jefferson was the US ambassador in Paris and met up with John Adams (who would later also go on to become president) in Amsterdam. Adams was on a farewell tour in The Hague and traveling through the Netherlands, where he was negotiating the US national debt with Dutch bankersāmuch to the reassurance of Jefferson, who would later become third president of the US. Jefferson was a practical man who wrote many observations related to the growing of vines (eager to learn from European viticulturists and winemakers, later bringing grapes to the US), building houses, the scope of poverty and so on, all observed during his journey through Holland and along the river Rhine (and also to Frankfurt/Main, Mannheim, Strasbourg and then back to Paris). When leaving Holland and journeying further to the northern parts of Germanyāthen part of Prussia (Germany was established only in 1871)āJefferson (1788) noted (sic): āThe transition from ease and opulence to extreme poverty is remarkeable on crossing the line between the Dutch and Prussian territory. The soil and climate are the same. The governments alone differ. With the poverty, the fear also of slaves is visible in the faces of the Prussian subjects. There is an improvement however in the physiognomy, especially could it be a little brightened up. The road leads generally over the hills, but sometimes throā skirts of the plains of the Rhine. These are always extensive and good. They want manure, being visibly worn down. The hills are almost always sandy, barren, uncultivated, and insusceptible of culture, covered with broom and moss. Here and there a little indifferent forest, which is sometimes of beach. The plains are principally in corn, some grass and willow. There are no chateaux, nor houses that bespeak the existence even of a middle class. Universal and equal poverty overspreads the whole. In the villages too, which seem to be falling down, the overproportion of women is evident. The cultivators seem to live on their farms. The farmhouses are of mud, the better sort of brick, all covered with thatch. Cleves is little more than a village. If t...