On January 20th 2025 a new American federal government assumed office and initiated a series of policy and program changes that are challenging the resilience of the modern socio-economy. It was the culmination of a series of political shocks in the new millennium stressing the global socio-economy built up over the last 250 years. The recent politically generated shocks are challenging the foundational causes for the success and sustainability of modern socio-economy. The system’s resilience is being tested.

Over the last 250 years the modern socio-economy reached previously unimaginable levels of incomes, wealth, health and quality of life. These levels were accomplished while overcoming major stress challenges including (1) the first global war i.e. the Napoleonic Wars during the first two decades of the nineteenth century, and (2) the global upheavals during the first half of the twentieth century, the World Wars and the Great Depression. In each case the global socio-economy was proven to be resilient and continued its path towards greater wealth, better health and fairer governance.

The new millennium brought another set of major challenges to stress the system. Traditional forms of stress included the financial crisis of 2007 then the convid-19 pandemic. Then political challenge, a kinetic war in Europe involving a major power.

On January 20 2025 the Political Backlash struck. It is expected that this may be most severe stress to the system. The United States, a functioning democracy, elected a government determined to undo many of the policies and practices supporting the progress of the modern socio-economy. The political science of this shift is beyond the scope of this post suffice to say that the vote is a form of revealed preference and voters have stated that they are unhappy with their economic situation. That is simple economics and their choice must be respected.

Changing the direction of the socio-economy involves at least three distinct steps.

First, change the global trade system. The American government has announced the erection of a tariff fence on its border. The fence is a 10 (?) per cent tariff on all goods sourced from other countries. Details are changed on an ad hoc basis increasing uncertainty and risk for American consumers, American producers with supply chains extending outside the US borders, and to suppliers in other countries.

The short-term intent is to incentivize the home-shoring of Goods production to the USA mainland. It is understood that this will be inflationary simply because American producers are drawn to the world’s lowest cost suppliers much as bears are attracted to honey. It follows that the home-shored production will be more expensive.

Home-shoring of supply chains is expensive. It requires the construction of the need public infrastructure including transportation, communication, financial, education and logistics. Building, not re-building because the supporting infrastructure does exist overseas and is not in the United States. Public infrastructure is expensive in terms of money and time, plus it requires co-ordination amongst all levels of government and social agents. This implies is high risk and uncertainty allowance making the home-shoring even more expensive. (Note: Critical elements of supply chains are mature and may have fully developed outside the United States, as such they cannot be re-shored because they were never on the US.)

Formal trade agreements between the United States and other countries were compromised. The rules-based trade system based on scientific discourse and evidence was unilaterally discarded by the largest trading country in the world.

Second, change from a science-based system to an opinion-based governance system. The American federal government with reviewing its support for evidence-based science from public libraries, to science agencies such as the Department of Health and Human Services, or independent universities drawing on a global student base.

Third, change policies from addressing income disparities to accepting market outcomes. Embedded in The Fiscal Year 2025 Budget Resolution (118th Congress) is the transfer of wealth and income from future generations to the present (huge deficit financing by debt), downsizing of programs designed to assist low income earners, and tax cuts disproportionally skewed for the wealthy.

The Political Backlash is in its earlier stages of implementation. It is organized and off to a fast, whole of government start. Resilience will be measured by the outcome of these pressures on (a) the American socio-economy and (b) the response of the rest of the world’s market-leaning economies. A subject for a future post.