Making Socio-Enviro-Economic Progress after the Recent US Presidential Election
The election of Donald Trump to be President of the United States on November 8th came as a huge surprise to most of the media, experts on political matters and the general public. There were some very similar characteristics in this US Presidential election to the BREXIT referendum in the United Kingdom. The polls got the outcomes wrong, the 'establishment' made very conventional assumptions and then were very surprised at the results.
In retrospect the outcome seems somewhat understandable. In the US election, one of the important realities is that a high proportion of the electorate were opposed to what was going on ... more than 60% or even as high as 70%. Each candidate got about half of the votes cast (the popular vote) and Trump won because of the way the Electoral College system works ... a system that has existed in the US since very early in the country's history. The Presidential election is about choosing an individual to be the Chief Executive of the Country ... less important is the idea that the President is a representative of the people.
It is the people elected to Congress that have the role of representing the interest of the people ... their constituents. The Senate and the House of Representatives have a very different role than that of President, and this is where the ideas of the people have a platform for debate. Again there is a fairly even split between those who identify with the Democratic Party and those that identify with the Republican Party. The problem for the person elected President whether a Democrat or a Republican ... or a Trump ... is that real solutions to important problems do not fit neatly into the talking points of politicians or the media.
I think it is fair to say that most people agree with some things that are supported by the Democratic Party and some of the things that are supported by the Republican Party while at the same time being strongly opposed to other things that each of the parties support. This is a root cause of the messiness of democracy. It is also a big reason why devolution of decision making to States, Counties and Municipalities can be more effective and efficient than law making at the Federal level ... but some important things should still be subject to Federal law and regulation.
One of the big concerns that I have is that the election results have been driven by a very loose interpretation of facts ... specifically the factual incorrectness of a very large amount of what candidate Trump has had to say ... and disgusting remarks that have no place in a civil society. They have served Trump well in that they gave him a massive amount of media coverage at no cost, and made him appear like a very 'common' man. My impression is that Trump is not a 'common' man but rather an extremely arrogant and privileged human being who is comfortable with saying anything that will serve his selfish interest. Whether or not Trump's interest in 'winning at all costs' can be used effectively in the role of President of the United States is not at all clear. The United States is not particularly liked around the world, and the progress achieved during the Obama Presidency could easily disappear. Some people think that Trump is potentially will be the most dangerous person ever to have held the Office of President of the United States.
In 1960 when I was just 20 years old I had the opportunity to travel extensively in Canada and the United States. While there were many things that impressed me, I was disgusted by the way in which the business world treated the environment. I could not believe the state of almost all the great rivers in the United States that were huge open industrial sewers. Air quality was better than it had been in the UK in 1956 but Los Angeles was starting to suffocate under noxious auto emissions. Fast forward, the corporate sector has been dragged ... kicking and screaming ... into behaving more responsibly under the regulations promulgated by the Environmental Protection Agency (EPA). Under a Trump Presidency it is entirely possible that much of the progress that has been made in cleaning up the environment and making forward progress will be reversed.
There are indications that an era of 'profit at any cost' will be promoted by a Trump Presidency. The 'owners' who have done very well during the past 50 years may have opportunities under a Trump administration that will accelerate even further the wealth and income inequalities that are already a root cause of huge dissatisfaction.
As a global society we have to avoid a 'race to the bottom' where powerful economic actors are able to 'game the system' in ways that benefit themselves while doing damage to society as a whole and to the environment. This same business model has also got to be avoided within the United States as it needs to be avoided internationally.
When I listen to powerful individuals from both the political left and the political right, I am struck by a sort of tunnel vision that seems to drive their talk. The same type of tunnel vision seems to be in play when I listen to analysts of the capital markets and the communication officers of big companies and banks ... not to mention academics of almost every possible discipline! This is scary since from my perspective, the problems that need to be addressed are complex and have a multitude of impacts, both positive and negative.
The world will soon have a population of some 8 billion people. The population of the United States is around 1/3rd of a billion ... that is around 1/24th of the world total. A world where only 1/24th of the world's population matters, and everyone else is more or less discounted is a world that cannot work. Making America Great Again sounds a lot like this 1/24th is important and 23/24th just don't matter. As I see it, a better world is one where we all work together so that 24/24ths of the world's people are able to progress.
But this sort of thinking also applies to the American population within its own borders. There are some people in the United States that have done very well over the last 40 years, but there is a very large population that have seen their economic circumstances become more and more difficult over this time. The infamous 1% have done extremely well ... and another 20% or so are doing OK ... but around 70% are struggling. The group that is struggling are getting more and more worried about the future because what they are seeing is a lot of political talk and almost nothing that delivers anything worthwhile. Those that lean to the left blame the actions of the political right and those that lean to the right blame the actions of the political left. In my view both are missing the point ... with neither the conventional left of the conventional right having much understanding of the situation in all its complexity and what needs to be done.
To start off, using money as a measure on its own of how the socio-enviro-economic system works is a key source of dysfunction. It is high time that the myth that Central Banks can be effective in managing the performance of the economy should be exploded once and for all. They can fine tune a well running system, but they have no ability whatsoever to do much more. They have created the conditions for the impression of huge intangible wealth, but rather little that is tangible and real! In the banking crisis of 2007/8/9 the banks destroyed real quality of life for millions of people and the banks were saved by the creation of trillions of dollars worth of intangible money. There is something here that does not add up ... but it is how the money measure functions.
Productivity is seen as a good thing by most commentators of economic performance ... and yes, productivity has enabled the world to produce all the products needed in order for people to have the products they need. There was a time when production resulted from the use of a lot of labor, but as productivity has increased more and more production has been achieved with less and less labor. For a big population of workers in the United States, they are no longer needed to produce the products that are being bought to sustain quality of life simply because productivity has increased.
The equation is simple: Productivity up ... Payroll Down ... Profits up
But there is even better news for owners of companies ... even more profit can be earned by using modern technology to enable production on the other side of the world where payroll costs are especially low, and issues like workplace safety, environmental responsibility are more or less unregulated. Since the Reagan years ... say for the last 30 years ... outsourcing production to low cost low regulation countries has been growing rapidly. I like to point out that the decisions to outsource production and remit money overseas (especially to China) have been made by private sector business leaders optimizing for profit and not by government. Some may argue that it is being done because government regulations are too onerous in the United States ... to which I would respond that history chows that companies have proved totally incapable of disciplining themselves to be responsible in both the workplace and with respect to the environment without government intervention and the requirement for compliance with rules.
Over the past 40 years, leaders in the United States ... leaders in politics, business and finance ... have made many important decisions, and mainly decisions that have been good for those that have been owners rather than those that have only been workers. This became more and more problematic over the years as the net wealth of working people moved from being quite positive to seriously negative. If someones wealth decreases, but is still reasonably positive after the decrease, quality of life can be maintained ... but when wealth decreases and goes from being reasonably positively to seriously negative, quality of life is going to go down and especially stress is going to go up. In the 1980s and 1990s many working people had net assets, but since then working peoples' balance sheets have been 'under water'.
In part this came about by very powerful economic actors in the banking and financial services sector promoting 'financial inclusion' that made it possible for working people to access more credit. This enabled all sorts of consumption today while putting off the financial reckoning into the future. In the period 2007/8/9 this reckoning came to a head and a housing bubble burst together with an implosion of most everything in the financial services sector. The US Treasury ... that is the taxpayer ... and the Central Bank did what they could to help most of the financial institutions survive, but did relatively little to make ordinary people whole after these people's lives had been turned upside down by financial operatives.
Something similar went on with academic institutions. They have grown using the fiction that more education guarantees more income and a better life ... without talking very much about the burden of student debt that was being imposed on the students to pay for the education, and the fact that job opportunities in the future were not going to be anything like what had been the norm in the increasingly distant past.
In short ... there is a substantial population in the United States that has little reason to admire the performance of the establishment ... whether academic, political, banking or business ... which has done very well for itself while doing rather little for everyone else. It should come as no surprise that 70% of the people casting votes were unhappy with the situation and want change.
The open question is whether President Elect Donald Trump can deliver change that makes a difference to this constituency of unhappy folk. He might be able to do, and he might be able to do it because of his commitment to political disruption and change.
There are some things ... many things ... that one does not want to see disturbed, but 70% of the electorate wants some things to change significantly and quickly and for the better.
I have been a resident of the United States since the 1960s. My recollection of the period was that every State in the country was in the process of building out the Interstate Highway System, wages were an order of magnitude more than they were in Europe and the United States was working to get to the moon before the Soviet Union. Fast forward through the last 50 years, and investment in infrastructure has been minuscule, there has been substantial GDP growth and improvement in productivity with none of the value of this distributed to workers but all of it accumulated by owners. There has been social progress in many ways, but the economic dimension of social progress has been unimpressive. The fact of growing extreme economic inequality has not been addressed in a meaningful way, even though it has been a growing reality for around 40 years!
Every incoming President in the last fifty years has wanted to reduce the size of Government (at the Federal level) and for all practical purposes every one has failed. Many observers would agree that the efficiency of most government operations is very low and that there is room for much efficiency improvement. Business can do most things a lot more efficiently than government, and it may be that a President Trump can do something to improve the efficiency of government in ways that has not been done in my lifetime.
Back in the 1970s and 1980s when I was living in and around New York, Donald Trump was responsible for a number of projects in Manhattan that got into the news. He was responsible for the rehabilitation of the old derelict Commodore Hotel which is now the Grand Hyatt. It was an impressive transformation, carried out in a very creative way and a significant success. There was also Trump's project to fix the Wollman Skating Rink in Central Park ... something that had bogged down within the New York City bureaucracy. Another successful project was a new Trump development on a site on 3rd Avenue at 68th Street formerly occupied by a derelict hospital property and a long time local eyesore. Knowing something of these projects makes me comfortable with the idea that Donald Trump has some ability to get things done. At the same time I am also aware that he is not a particularly 'nice guy', has a powerful will to win and is not shy about gaming the system where it is in his own interest. The system in Washington needs some of the Trump toughness ... but applied in some of the complex situations in the international arena could be problematic.
My guess is that some of the initiatives that need to be done ... and ones that a President Trump might want to do will have a high money cost that will be problematic for the politicians in Congress because of the Government Debt. The upgrading of infrastructure will cost the public sector in terms of money but will will be excellent for the national economy in terms of upgraded more efficient infrastructure and good for people in terms of improved job opportunities. The replacement of Obamacare with something that is better will be good ... there are huge opportunities to improve the performance of the US health sector and a large number of established incumbents that are doing very well with the status quo even though health for people is significantly compromised. Strengthening the military and improving security at all levels is a worthwhile initiative with huge potential for being done in a massively more efficient manner ... again something that is difficult with so many established incumbents who are unwilling to embrace much change. .
My impression is that Donald Trump has been a user of the law to get the best possible financial results for Trump interests. It would be good if the law was written and applied in ways that will work to get the best possible results for the people of the United States and the people of the World. There is a nasty connection between people in power, the politicians and legislators, the lobbyists and the use of law. Sorting out this mess is a big challenge, and it is possible that Donald Trump understands this arena better than most. Whether he will want to do anything about it is not yet obvious ... though it is am important part of the concept of 'draining the swamp'.