Reading Trump

Thanks to Trump, the world is now an interesting place, no matter which side you take.

Politicians, economists, activists, corporate institutions, US citizens and to a varying extent citizens of the world have a new animal to deal with at a time when there was no shortage of disruptive activity across the globe.

One thing that does stand out is the speed of his action both with his twitter handle and executive orders to fulfil the promises he made to his core constituencies, a benchmark that many politicians may cringe when going back to their voters.

The lead time to action a promise has just been crashed, thanks to a man who made millions itching to say “You are fired” to hapless apprentices; Sally Yates acting AG became the first victim in his new role as US President.

American President for American People

Fundamentally, this narrow definition works at a time when US foreign affairs position be it in Middle East, Russia, China, Asia, UK and the Europe is multi-lateral and less polarized. China may throw its weight around South China Sea and some skirmishes are expected, but China has enough domestic and economic issues to grapple with, as its economy stabilises or evolves. Alleged Russian hand in US elections results that favoured Trump is unlikely to evaporate the bonhomie, from the lows of Obama-Putin standoff on Syria.

That interpretation leaves counter terrorism action, intelligence and protection of offshore US assets as the greatest international stake.

Hence, it makes sense to be a more visible and active President for US interests like more jobs, lower taxes, infrastructure spends and greater safety.

Anti-establishment

The campaign to executive orders successfully harness the sense of distrust among middle class white American workers about a failed political establishment that doesn’t serve their interests, about a biased media and inconsequential economic policies, through some “un-establishment action”. The political gridlock in Obama’s last few years also created a perception of inaction and opaqueness.

The attack on media in the first weekend after assuming office is another extrapolation of his vitriolic campaign, with astuteness.

Clearly, policies that have “inclusive” characteristic or, Obama-like mass appeal are being shunted in favour of more radical definitive action, with a wedge visible to yes – his constituency.

And the beginning of counter-intuitive measures

US Department of Labor published Dec’16 unemployment rate stood at 4.7%; as per US Federal Reserve, the long-run normal level of unemployment is in a 4.5-6%.

US economy operated within this range for last 2 years.

Creating more jobs is and should be an integral objective of every Government in the world, however at a time when the economy is operating at long-run normal levels additional creation not only has inflationary implications, but also requires investment in skilling the new workforce entering the job market for productive return on investment.

The targeted immigration ban, Mexico wall, and H1-B visa new regulations put further curbs on the mobility of skilled and low cost workforce, and have xenophobic overtones that runs counter to American and more centrally Republican values.

It is also vital to note that America has not only been very supportive large economy on workforce mobility, but prides in it when compared to restrictions that one finds in UK or Europe.

While Trump has secured American jobs for American people, the wage and skill mismatch is a reality up ahead.

I am also inclined to believe that American corporations including those who were forced to make their investments in US than in Mexico or, elsewhere will look at multiple options to counter the higher wage costs from greater US employment through automation or, outsourcing. The objective of organizations is profit, and it is a reward for enterprise, capital, human labor and most critically to serve its customers sustainably. If bad politics triggers an increase in input cost, then an offsetting action will be triggered.

Automation technology that is on the rise, may just get another round of fillip in usage and innovation; again interesting to observe how this near term focus on jobs, performs on the long run.

Actual employment may not be in line with the action being taken.

Summing up

The basic idea of Trump politics is based on narrow and decisive definitions of politics, economics, media’s role and role of President. The shock-and-awe or, the resistance since his electoral victory are the emotions that he has successfully triumphed right through his corporate life. He knows his base of followers, and the anti-establishment theme that will allow him time with cynics who want this experiment to run its course.

For the rest of the world, time to be smarter than Trump.