Some preamble is in order. I am a member of the global advisory board of an Indian multinational. This company, originating in Tamil Nadu, has grown principally through acquisitions of businesses in many regions of the world.
In late October, a meeting of the advisory board was held in Charleston in South Carolina, US. The members were taken on a tour of the port of Charleston. The dock was dotted with BMW cars that are manufactured in the state and exported to the rest of the world, including Germany! The port had recently installed two new cranes. A Chinese company had won the bid amid competition from a Korean company. Donald Trump would unravel this idyllic world of globalisation. Well, that is the message of some 370 academics who signed an open letter exhorting the American public not to elect him as the next president of the US.
The learned professors are well within their rights to do so. But, they have taken liberties with facts and stretched them, fudged the distinctions between mean and median and tax rates and tax revenue share of gross domestic product, etc. They have ignored research findings that drive a stake through their arguments and hypotheses. Above all, the problem with their letter is that they have taken their fight to the manifestations (or symptoms) and not to the underlying causes. That has been the problem with American policymaking too, especially with the Federal Reserve. Of course, that is not a surprise since central bankers have mostly been academics.
Globalisation and free trade helped large swathes of the world become more prosperous. But one thing that was common between countries that were the supposed benefactors and beneficiaries of globalization and free trade is that intra-country inequalities increased. That is a reflection of the failure to ensure that winners compensated the losers of this process. The winners from globalisation imperilled it and the professors did not write letters to corporate leaders and governments warning them of the dangers of that. Had they done so, the Trump phenomenon may not have arisen at all.
But, tilting against manifestations is what the Federal Reserve has been doing for nearly three decades and more egregiously since the global crisis of 2008. Faced with a high mountain of debt and deflated asset values, they have taken to boosting asset values rather than addressing excessive levels of debt. In fact, debt has grown further since then. Asset prices have diverged from economic fundamentals in a big way again and the economy, after eight years of unprecedented and massive intervention by them, is perhaps beginning to respond.
But it might all be too little, too late for the costs of their policies have accrued far more disproportionately than the benefits that have begun to trickle in, now. In any case, it may be impossible to establish causality from their policies to the economic recovery after such a long lag.
So, what to make of the academics’ appeal? It is troubling that even at this stage—after the Brexit vote, the phenomenon of Jeremy Corbyn, Bernie Sanders and Trump and the rise of far-right parties in different parts of the world, the educated and the endowed are not seeing the follies of their ways. It is far easier to tackle naked self-interest than the one that comes in the garb of public interest. Most conservative politicians and businesspersons fall in the first category. It is easier to spot where they are coming from, miles away and be prepared accordingly. One has to be more vigilant against the so-called liberals. The purported altruism of the causes that they champion confers on them arrogance and certitude. Second, they are dangerous because self-interest could be driving the public posture of so-called public interest. So, what should the American voters do?
In statistical regression analysis, faced with a dependent variable with high variability (Y), an independent variable with low variability (X) would do a poor job of explaining the variability in Y. Similarly, tackling unreasonable ideologies and behaviour that have sprouted in some parts of the world requires a blended approach in which unreasonable methods have a role. Two, it is often said in America and it has never been truer than in the last quarter century that what is good for Wall Street is not good for the Main Street. Wall Street, for the most part, is solidly behind the Democratic Party candidate. Three, a Trump presidency would be most intensely, extensively and relentlessly scrutinized by the chattering classes. That is the best insurance against his presidency running off the rails of democracy.
Indeed, this election has shone an unforgiving harsh light on all the dirt in American society and politics and that can only be a good thing for the country’s eventual renewal. Other wannabe superpowers have worse fault lines and are in denial about them.
Therefore, in keeping with the traditions of self-styled intellectuals but with a fraction of their pomposity and exaggerated self-importance, this columnist endorses, with hope and trepidation, Donald J. Trump for the presidency of the United States of America. Notwithstanding this pretentious endorsement on my part, the election remains Hillary Clinton’s to lose, especially after the latest somersault by the Federal Bureau of Investigation. Under her presidency economic policies will witness a leftward lurch. Therefore her victory will turn out to be a pyrrhic one for economic liberals.
V. Anantha Nageswaran is an independent financial markets consultant based in Singapore.
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