United States’ withdrawal from globalisation
President-elect Donald Trump has won on the platform of anti-globalisation. He has attacked American companies for shipping jobs abroad. Many US companies have established call centres, research outfits or manufacturing facilities abroad, including in India.
Trump wants to bring those facilities back to America. He also wants to make the H1B Visa regime stricter. Many skilled personnel from India migrate to the United States under this visa and work for American companies.
They often displace Americans. Trump wants to reduce the number of H1B visas issued so that more jobs are available for the American workers. Trump has also attacked China for undervaluing its currency and thereby exporting large amounts of goods to America.
He wants to restrict these imports so that more manufacturing is undertaken in America leading to the creation of more jobs there. The picture painted by Trump is that globalisation does not work. It is necessary to look inwards again.
The central bank of the United States, the Fed, believes otherwise. It has raised the interest rates by a small 0.25 percent earlier this month. It has said that it expects to make three further increases in 2017.
The Fed has taken this step on the back of good employment data. The present unemployment rate at 4.6 percent is lowest in the last 10 years. The Fed has taken the view that this creation of jobs indicates a “heating up” of the economy.
The Fed believes that US Corporations have borrowed and invested leading to the generation of jobs. There is a need to slow down the economy otherwise it may get overheated. It has thus raised the interest rates.
This assessment of the Fed is suspect. Other reports indicate that a large number of American workers are so depressed that they have stopped looking for jobs. These persons are not counted among the unemployed because that figure is based only on those who are actively looking for jobs.