by Michael Sonenshine
Not only was I wrong about Mr. Trump’s victory, I was also wrong about the outcome of the Brexit referendum this past June. Being wrong twice on such big event leaves me wondering what I’ve misunderstood or underestimated.
As a credit analyst and investment manager I also have to wonder how this event will impact the global economy in the months and years ahead.
For the record, I didn’t vote for the Donald. I voted for the Hillary. Growing up in New York I followed his career and grew to dislike his business style, how successful his business was.
I detested his campaign rhetoric. The words that come to mind are vulgar, sexist, racist and arrogant. Personality aside, I also believe he doesn’t have the skill set I want in a President.
Having said this, I believe he is intelligent and practical. What he lacks in experience he can compensate for in his selection of staff and cabinet. He leans toward economic liberalism and less government intervention and regulation.
My guess is that his policies and his cabinet will reflect these general principles. If this happens America’s economy will continue to improve and the lives of many Americans will be better.
I am optimistic he will bring smart, capable policy advisors and cabinet members into the administration, manage them well, listen with respect to Senate and House members on both sides of the aisle, he stands a good chance to take the country in a good direction.
Hopefully he will conduct himself differently, better, as a president than as real estate developer and as a political candidate. I’d love to see him succeed as a president and do great things for America.
My fear is that we’ll have an embarrassment in the White House who represents the worst things America can be rather than the best and makes decisions that turn America into a country filled with hate, violence, racism, sexism and everything else I heard come out of his mouth on the campaign trail.
I’ll be happy to settle for a neutral, boring, neither good nor bad, President Trump whose presidency goes down in history as unremarkable.
I’ve come to the view that neither of the victory of Brexit or the election of Trump reflects some fundamental paradigm shift in the way our world will function in the months and years ahead.
This is not to say we should ignore them. Rather, we should put them in perspective for what they are – clear signs that a rising proportion of the electorate rightly or wrongly fees disenfranchised, unheard, frightened and distrustful.
The victories of Donald Trump in the US and the Brexit campaign in the UK reflect the ability of politicians to tap into that sentiment and amplify its voice. In an open, democratic society these sort of victories are healthy. They encourage debate and they force policy makers to listen more closely to the needs of the population.
With this in mind, I highly 5 take-aways we can draw from Donald Trump’s victory.
Take-Away Number 1 – Spending More Doesn’t Win Elections
Recent campaign filings show spending on Hillary Clinton’s campaign was nearly US$700 mn, nearly 2.5 times the $250 mn. Donald Trump spent. Consider the failed campaigns of Donald Trump’s Republic rivals. Jeb Bush’s campaign spending was nearly $150 mn and he was one of the first to drop off the campaign trail. Other big spenders were Florida senator Marco Rubio ($150 mn) Ted Cruz ($130 mn) and Dr. Ben Carson ($80 mn).
Candidates can plaster the walls with posters and flood the airwaves with commercials incessantly but the law of diminishing returns is immutable. Preaching to the converted offers little value. People grow tired of hearing the message and start tuning it out.
Take-Away Number 2 – There’s a Big Gulf Between Rhetoric and Reality
Politicians compete not only by selling their view to the electorate, but also by saying things the electorate wants to hear. Campaigns are political theatre. After the election is over the winners face the very real task of governing and confronting realities.
During the campaign many politicians cast Donald Trump as a villain. He faced harsh criticism from within his own party and at times the exchanges became vituperative and personnel. It was a disgusting and vulgar chapter in America’s political history.
Now we face a new world. The election is over. The Republicans who control the House and Senate have a legislative agenda. Whatever legislation they propose must be acceptable to the President and vice versa.
The Republicans have a majority of just 1 in the Senate. Whatever Mr. Trump said about Washington on the campaign trail, he will have to work with his fellow politicians, be they Republican or Democrat or his presidency will be weak and ineffective and he’ll spend much of the next four years convincing the electorate to send different politicians to Washington.
Take-Away 3 – Trade Policy With a Big Stick
Trade and foreign policy are the areas where a president’s influence and powers are greatest. Mr. Trump has been an outspoken critic of NAFTA and similar free trade agreements. He sees such deals as an attack on US jobs and one of the reasons for the decline of manufacturing in the US.
When President Trump sits down to seriously study the history of free trade agreements he will see that the North American Free Trade Agreement (NAFTA), signed by President Clinton was negotiated principally by the elder President George H.W. Bush and that when the deal passed in Congress it enjoyed wide spread bi-partisan support. Historically the Republican party has been the advocate of free trade.
He’ll also find that since the passage of NAFTA nearly 25 years ago the US has entered into 20 other free trade agreements under the administrations of the younger President George W. Bush and the outgoing President Obama.
He’ll be pleased to know that the Office of the Trade Representative has evolved over the years to the point where it works on trade issues in as cooperation with 19 other Federal Agencies. It has offices around the world with a staff of 200 and 28 advisory committees taking input from more than 700 private sector citizens. Depending on how you look at it OTR either provides the real serious infrastructure needed to implement and administer trade agreements or it is a beehive of lobbyists and special interest groups.
Most importantly, when President Trump sits down to think about America’s trading policies he’ll quickly realise that trade policy has winners and losers on both sides of the fence and in both camps. It’s easy to point a finger and look at how many jobs left the US. But that’s only part of the story.
Another part of the story is that many of those jobs might have left the US in any case, free trade agreement or not. Also, many of the goods that Americans purchase cost less than they would otherwise in the absence of