Some predictions about the Donald Trump presidency
Trump will understand what Russia is up to and quiet down while still trying to get along with Putin. Trump will quickly learn this is a very complicated world
Forrest Cookson
Donald Trump is President of the United States. In my view his accession to the Presidency is legitimate. Given the long standing election system of the United States Trump won. The popular vote was greater for Clinton than for Trump but that is not relevant. Any first past the post system can give such a result. A party can win a majority in the Bangladesh Parliament but not win the most popular votes. One may not like the American system but it is what the Constitution sets out and so one has to accept Trumps victory. Another attack on the outcome is the belief that the various statements of the FBI Director on the Clinton use of a private email system along with the release of hacked emails from within the Democratic Party office influenced voters to support Trump to such an extent that he won the election. There is no evidence of this. Hundreds of things are happening in the final days of the election and the impact of each on the outcome is very limited, some canceling out others. Picking out a couple of such influences and claiming that they made the difference is meaningless. Many persons do not like Trump to be President and seize at straws to claim an illegitimate outcome to the election. This is just wishful thinking. Trump is the President.
What kind of a man is Trump? I can only assess his public persona. His character and behavior are everything that I was taught and believe to be wrong. He is a bully around people that are weaker than he is. He has no respect for women and treats them as objects for sexual exploitation. He acts as a man insecure in his own sexual capabilities. He used a feeble excuse to avoid military service to his country. This was not a protest against the Vietnam war but evidence that he is a coward. He believes that he is smarter than anyone else and has no understanding of or appreciation for the great intellectual achievements of humanity. He has no interest in clear analytical thought and probably does not have the IQ to manage it. He is dishonest and lies without realizing that this is wrong. He believes in manipulating laws, regulations and people to get his way. Winning is the only important thing and he measures winning by successful cheating in business and seduction of women. He pretends to be rich, but his true net worth, assets minus liabilities, is probably close to zero. He manipulates the tax system, he does not follow labor laws, he does not pay his bills, and he repeatedly failed as a businessman. He created and ran a fraudulent university that cheated the students foolish enough to enroll; his likely answer is that if you were stupid enough to enroll you deserve what you got.
His businesses tell the story very well. A rather silly reality television show, a failed attempt to get into the casino business, managing the Miss America business, building golf courses, several luxury hotels and selling his name for all sorts of things. There is no real contribution to the American economy in any of this. He does not manufacture anything He does not provide important services; at best these are low grade entertainment but socially disturbinggambling, reality television, sports for the rich, and beauty contests.
So this is the man that will be President of the United States for the next four years. Not someone you would like as your brother or to marry your daughter. Amoral, cunning, unprincipled, without a moral foundation, drunk on his own ego.
How will his Presidency work out? First, a few words about domestic developments and then a few words about the impact on international affairs. The U.S. economy is in good shape. It is near full employment, inflation is low, economic growth is what it is, a steady 2% per year. Wages are beginning to grow and we will see improvements in the income distribution as returns to labor rise relative to the returns to capital. Macro-economics works very slowly and the recovery from the financial crisis of 2008 is more or less complete. Trump will for the first two or three years benefit from the Obama economy. His policies are all designed to raise aggregate demand, the worst thing you can do; good economic policy at times of full employment focuses on how to raise productivity, encourage small enterprise, increase competition, and improve the education and health care systems. These two social systems show very high costs and poor returns for what is spent. When the economy is at full employment one needs the Government accounts to be in surplus.
Trump will scrap the Trans Pacific Partnership, a particularly foolish act. Thus will be lost a great opportunity to establish the trade rules for the future, which far transcend tariffs on goods. He will call for renegotiation of North Atlantic Free Trade Agreement to keep manufacturing jobs in the United States. In some way he will have to come to terms with the World Trade Organization that regulates trade disputes. The United States belongs to this organization as a treaty and so under American law is obligated to follow its procedures and rulings. Trump has threatened China with higher tariffs, accusing China of being a currency manipulator when in fact the Chinese central bank is trying to keep the Renminbi stronger not weaker, and generally accused the Chinese of unfair trade practices. Apparently unwilling to take these matters to the WTO Trump seeks bilateral solutions. All of this will end in confusion and legal arguments. Trump will be able to make some noise about what he is doing but the actual process of changing the structure of trade regulations will take sometime. Further, one can expect the EU, Japan, and China to fight back against changes in trade rules. Real change will take several years and prove to be much less than people have thought from the present hype.
Trump talks about deporting the illegal immigrants [12 million persons of who perhaps 1 million were brought in as young children, banning Muslims or people from countries where there are strong radical Islamic movements, and building a wall along the US-Mexican border. What is the reality? T About 250,000 persons are deported every year at present; the number of illegal immigrants is declining; there is a wall along parts of the US Mexican border and the cost and returns of extending it suggest it is not sensible to do so.
Health care is a very complicated area, hard to understand. There are some obvious principles: Everyone should receive a reasonable standard of medical care regardless of income; on the boundaries of medical research and advanced methods the rich will have advantage but this is not really a big deal. Health problems are best managed by primary care physicians and doctor assistants who deal with the same people year after year. Next, the cost of medical care in the United States has to be reduced. Third, the intervention of the Federal Government in medical care is excessive and more freedom to physicians is needed. In brief there are pros and cons of the Affordable Care Act of Obamas administration. It needs improvement, careful improvement based on real data and attention to principle. To abolish the ACA [ObamaCare] is an act of folly and the Republicans are not about to commit political suicide. We will see a lot of sound and fury signifying nothing.
The Dodd-Frank Act has been established to prevent another financial crisis, to protect consumers from exploitation by banks, and to avoid the need for another bail out of the big banks. It has some good elements and some bad. It makes life safe and cozy for the big banks but difficult for the small banks. The level of competition is going the wrong way, community banking is declining, small businesses that really need local banks are finding finance more and more difficult. Interest rates are low but you cannot get loans. My view is that this is a terrible situation. But Trump wants to reduce the regulations to help the large banks. The myth that large banks are needed to achieve economies of scale and be cheaper and more efficient is nonsense. Small banks rooted in the communities, that deal with small enterprises are what is needed. But the idea of competition in financial system is anathema to US regulators. Trump will mess around in this area but ultimately little change will be made.
Trump seems to view the world as a simple place where he can cut deals to change things. Good luck to him. The European Union will struggle on despite Trumps apparent support for people who want to destroy it. Chancellor Merkel is going to have a little luck at last. She stands with Obama as the two most moral and successful leaders in the developed world. The German and European economies are showing some signs of life; the American locomotive is coming back into action and combined with the monetary policy of the European Central Bank will get the EU growing faster. Trump is not going to derail this or change it in any significant way. When he learns of the deep complicated relations between the European countries and the United States he will stop talking the way he does and recognize that the European alliance is central to the security and economic welfare of the United States. Just as the Chancellor understands this for Europe and Germany. Trump may persuade the European countries to increase their defense expenditures, that is probably a good thing.
Trump will understand what Russia is up to and quiet down while still trying to get along with Putin. Eventually Trump will learn to trust the American Intelligence Community and not believe he knows best about everything. He will quickly learn this is a very complicated world.
American relationships with China are the most complex problem Trump will face. This is the area where I see the most uncertainty. China certainly wants to be the world hegemon.
The Islamic world presents the greatest challenge. This large number of persons is spread over many countries and many ethnic backgrounds. The United States will struggle with the issues of Iraq and Afghanistan, Syria and Egypt, even Israel and the Palestinians. But these are all small issues along side the rise of China on the one hand and the explosive growth of technology on the other.
The writer is an economist
