My View on the Trump Win! (Part 2)

Do you know how much China’s Xi Jinping is worth? I’ve seen estimates of $200 billion or more.

Do you know how much Vladimir Putin is worth? Again, I’ve seen estimates of $50 -$60 billion.

Well, the way I see it America just elected is own billionaire!

Trump put his wealth at the beginning of his presidential run at $18 billion. While sipping on Diet Coke – Trump is a teetotaler – with these two world leaders, he will be a poor man in the group.

And let’s be frank the perceived strong leaders of the world, like Xi Jinping and Russia’s Putin run authoritarian regimes. And that’s what people want! Their approval ratings from their respective peoples are sky high.

You maybe surprised by this but have a look at the chart below created by World Value Survey. Since the 1990s people the world over have been leaning to more authoritarian rule.

voila_capture-2016-12-09_07-56-34_am

Democracy, especially in the US and Europe, has become synonymous with political deadlock, and divided government and the people want to get things done, people want security and be taken care of.

Social scientist Talcott Parsons back in the 1950s stated that every social system goes through four phases, each having to deal with the supply and demand for social order over a sequential period of time spanning 80 years or so. Starting in the first phase, both the demand and supply of social order are high. In order words, everyone wants social order, and new institutions are built to offer that order. Early in the 20th century, after WW II, we started and built international institutions like the United Nations, and the IMF. And decided and built the world monetary system with the Bretton Woods conference. In the second phase, the supply of order is high, but the demand by the people for social order plummets. Long hair and free love were introduced in the late 1960’s famously eroding social order of the day as people wanted personal and individual freedoms. In the third phase, the demand for social order remains low, but the supply of order is also low. This occurred back in the 1990s and into the 00’s. Federal Reserve Chairman Alan Greenspan was called ‘Maestro’, for over looking a booming economy when the “Boomer” generation was fully employed, when optimism and the American economy soared. Individual freedoms were respected with little help needed from government. In the fourth phase, which unquestionably is the time period we have now entered, supply of order remains low, but the demand for social order rises. People want more social order, demand better financial outcomes. The people want to put up walls, protect what they have and demand more help and control from government over their everyday lives.

Can democracy, at this time, deliver social order fast enough to keep up with the demand for social order by the people?

No matter what issue came up on the campaign trail, Donald Trump said that he and he alone would ‘fix it’ and when pressed on details, he didn’t give any! And that was O.K. for much of America!

Yes, Trump is a bigot, dishonest and a promise-breaker as David Brooks said the week of the US election in the “New York Times.” And why not throw in sexual transgressor as well, as we all listened to the ‘hot mike’ of Trump speaking to Billy Bush ten years ago. But America didn’t care because in my opinion this election was about economics and not character.

And I will go a step further.

Who, in the field of economics today, is the bright light? The star economist we can all look up to in the likes of Milton Friedman, John Maynard Keynes or Canada’s own Robert Mundell. Who has the answers on what levers to push and pull to lead the Western world out of this current economic malaise that we have been stuck in since the GFC (Great Financial Crisis) of 2008?

When you reflect back on past presidents there was always an economist, with the ‘big brain’ that had the president’s ear on economic matters. John Kennedy had Walter Heller and his famous guidance on supply side tax cuts. Ronald Reagan had Arthur Laffer and Robert Mundell. Bill Clinton had the much-heralded team of Alan Greenspan, Larry Summers and businessman Robert Rubin (Time magazine called these three “The Committee To Save The World”)

Did George W. Bush have an economic thought guru? Nobody jumps out at me. What about Barack Obama? Again, nothing!

Maybe this is why we are in so much economic trouble?

Maybe, just maybe a bright light will emerge. See Trump during the presidential campaign argued for $5.3 trillion dollars in deficit fiscal spending over the next ten years as scored by the Congressional Budget Office (CBO). This equates to 2% of annual GDP growth over the coming years. (Interestingly Hillary’s economic plan when scored by the same CBO would have been negative or contractionary for US economic growth!)

That’s right, the Donald is going to go full throttle on fiscal spending. Who is the architect or brain behind this suggestion…we don’t know yet – maybe Trump himself – but governments are certainly looking at fiscal policy to jump-start their economically slow economies, worldwide. During the campaign Trump was proposing $1 Trillion in infrastructure spending alone including roads, bridges and transportation hubs to get America moving again, economically and literally.

And America said, “Sign me up!”

Maybe just maybe that’s what America voted on…economic growth, and not Hillary’s more of the same, or worse. And Trump was just the messenger, as imperfect vehicle he happens to be!

What I’m expecting, and seems the stock market is expecting as well, is the Donald will hit the ground running after his inauguration with some simple acts that will show everyone worldwide that America is back to business. Including…

  1. A quick resolution on taxing the offshore profits of America’s multi-national corporations. There’s some $2.5 trillion of corporate cash just sitting in offshore countries sitting idle and not working in the US economy. With a stroke of a pen, that money can come back home and be put to work. The Democrats – principally Mr. Obama – didn’t want to make this deal to repatriate these funds at a low, maybe one time tax rate, but this is a crazy situation that must be resolved.
  2. And talking about taxes, Trump will finally do away with the 15% carried interest rule for hedge fund billionaires. This he promised in his campaign. Both Republican and Democrats bowed to the their respective moneyed special interests that the hedge fund billionaires played like a violin. Trump being an outsider can kill this hideous provision of the tax act that has allowed billionaires to only pay 15% tax on their earned income.
  3. The “Too Big To Fail” banks have to go back to the business of lending and extending credit to the US economy and not be stifled by various regulators – see my blog on Bank of America and Citigroup here. I’m not saying repeal Dodd-Frank, but it must be revised to help not impede, the big money center banks, to get back to business in assisting industry and consumers with expanding and starting new businesses. We have flogged these banks long enough. Nobody is obviously going to jail for perceived financial crimes of the GFC. The past is the past. Let’s get on with business!
  4. We need a president who can talk to big business. Cajole and give confidence to major business leaders that America is open for business. President Trump can go a long way to make the CEO Roundtable believe that the role of government is there to help not hinder. Capital spending by US corporations has fallen off a cliff. No company has the confidence to build a factory, hire workers and contemplate expansion. Trump can and will, in my estimation, give the green light for corporate America to start feeling good about themselves and see a future that is brighter than today. This is imperative if America is going to grow in the future.
  5. America needs to redirect itself from the 5 wars – per Peter Thiel: Syria, Yemen, Libya, Somalia and Iraq – that are currently going on. Is there anything to gain here? China doesn’t even bother with the Muslim world in terms of its military, but it’s there to invest! Precious treasure and too much blood has and is currently being spent with no victory in sight over the last ten years – just endless violence and hardship for all. If potential terrorists had a decent job and a family to support would they be so quick to strap on a suicide vest to end their precious and extraordinary lives.
  6. The American People need a helping hand. Spend anytime in the US, and unless you’re in some compound somewhere sunny and warm, you can’t help but see poverty and homelessness everywhere. As Peter Thiel referenced in his speech to the National Press Club, 64% of Americans over the age of 55 only have one years’ worth of savings and half of all Americans don’t have $400 in savings, if needed, for an unexpected emergency. This is crazy and unacceptable in a rich country such as the US. Obviously something is seriously wrong here and must be fixed.

Conclusion

America needs its economy to grow and flourish. Mr. Trump is certainly controversial figure, but maybe he can do enough things to get America out of this current political deadlock that can create the supply of social order that the American people are craving.

Maybe, just maybe Trump was elected to be an authoritarian centrist. To straddle Republicans and Democrats on throny issues that has bogged down government in the past. Just maybe Trump and his business negotiating skills can thread the proverbial needle and win the day.

We can all hope that this is the case… fingers’ crossed!

6 responses to “My View on the Trump Win! (Part 2)

  1. cobbiangrant December 14, 2016 at 10:26 am

    Brian! I am surprised at myself. Come full circle from laughing at the thought of Trump the bigot and cheat, to now thinking that, how can we get down the road, continuously borrowing to buy votes or have a real business man running these countries. The good life that we have must be paid for. We have to start running countries like a business or future generations will just be slaves to the debt. I have my fingers crossed on both hands……..Ian

  2. Larry December 14, 2016 at 11:05 am

    As distasteful Trump is, on many levels, I have tried to be hopeful that he might actually provide good government. Your articles help to highlight some ways I hadn’t considered. A well thought out and balanced view. Thanks!

  3. john stinton December 14, 2016 at 12:04 pm

    You know, Hitler did amazing this for the German Economy as well! Not saying it is heading that way, but I have heard things and seen things posted on the internet!

    • cobbiangrant December 14, 2016 at 12:14 pm

      John, I was very scared when this turkey won, but you know! he just might turn this gigantic ship around. Like I said, fingers crossed. If he gets to far out of line (Hitler style) the public there in the USA has more guns than every country in the world combined.

  4. cobbiangrant December 14, 2016 at 12:18 pm

    If that happened, the secret service would yell at him, Hey Donald DUCK

  5. john stinton December 14, 2016 at 4:13 pm

    suggest you bone up on history! Hitler made the German people believers with false economic growth through massive fiscal spending. One good terror act, and before you know it, Marshall Law is declared! I mean the American people accepted the patriot act!

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