Finance and Economics — The World Economy: Our Election, Your Problem
A Trump presidency will be bad for the world economy and worse for places outside America.
It is not clear precisely how Donald Trump will govern, the extent to which he will carry out some of his scarier promises on trade and immigration, and who will be his economics top brass at the Treasury and in the White House.
But a decent first guess is that President Trump will be bad for the world economy in aggregate; and a second is that his actions are likely to do more harm, in the short term at least, to economies outside America.
When America has in the past stepped aside from its role at the centre of the global economic system, the damage has spread well beyond its borders.
In 1971, when Richard Nixon ended the post-war system of fixed exchange-rates that had America at its centre, his Treasury secretary, John Connally, told European leaders, "The dollar is our currency, but your problem."
This election result, to paraphrase Connally, belongs to America but is potentially a bigger economic problem for everyone else.
The scale and nature of that problem depend on the interplay of the two main elements of Mr Trump's economic populism.
The first is action to boost aggregate demand.
Mr Trump favours tax cuts and extra public spending on infrastructure.
The second element is trade protectionism.
He has pledged to slap tariffs on Chinese imports and to renegotiate the North American Free-Trade Agreement (NAFTA) with Mexico and Canada.
To the extent that he leans more on the first element and less on the second, the immediate damage to America's economy will be limited.
But even in that event, the net effect of a Trump presidency on economies outside America is still likely to be harmful.
To understand why, go back to the subject of Connally's gibe: the dollar.
As it became clear that Mr Trump would win the election, the greenback fell against rich-country currencies, such as the euro, yen, Swiss franc and pound, as investors sought a haven from policy uncertainty in America.
An index of its value against major currencies dropped by 2% in early trading on November 9th.
Within hours it had regained almost all the lost ground, as investors pieced together a positive story for the dollar, based on the prospects of a boost to demand in America's economy and an inflow of capital from abroad.
A deal between Mr Trump and Congress to cut corporate taxes, goes the logic, would spur flush American companies to repatriate retained profits held offshore.
It would also allow them to increase capital spending in America, because they would have more ready cash; and consequent profits would be taxed more lightly.