President as C E Ohhh!

Many of those that elected President Trump voted for him because he was a business man. They thought if he could run a successful business empire, 4 bankruptcies notwithstanding, he should have transferable skills to run the country efficiently. The case is often made that people successful in business will almost certainly be better at running government than career politicians and it is clear President Trump believes this also.

Whilst there may be superficial similarities and some overlapping skill sets, such as managing people and negotiating there are profound differences which in truth mean the two jobs are not just quantitively different they are qualitatively different as well.

Firstly, there is a level of accountability in government that is far in excess of that of both public and private companies. It is one thing to give a motivational speech at the staff conference to a group of people who’s careers depend in large part on your view of them. It is a wholly different issue to have your every utterance picked over by your peers who have a career interest in demonstrating that what you are doing is wrong.

The relative power and ability to challenge of, on the one hand, staff, customers and shareholders and on the other Congress, pressure groups and the media is immense. In the former case the executive has an information resource which translates into a real power advantage. In the latter it may often be the case that citizens, think tanks and pressure groups are much more informed about an issue than the President. Worse they can demonstrate in public his ignorance.

There is also an important difference in the relationship between means and ends. In most businesses there is a fairly well defined objective in terms of growth and profit. There may be debates about how this is achieved but those debates are largely within a relative well defined area. In politics the ends are often in question and the means so diverse and contested as to reignite challenge as to the nature of the ends.

Another huge difference lies in relation to the transparency of the processes of government and business. Even where there is not out and out secrecy there is much within business which remains behind the corporate veil. Intellectual property law, commercially sensitive data, compromise agreements for staff leaving organisations all provide more (or less) legitimate protections of corporate information. In liberal democratic governments the presumption is of the peoples’ right to know and only in clearly specified areas, such as national security, is there an ability for the state to limit transparency. Even then there is often oversight by independent individuals to ensure policies are not being breached.

Leading a country is about persuasion, consensus building and the ability to compromise. Running a private business you are the principal owner of is unlikely to be a good learning environment for those skills. Indeed it is very unlikely that direct challenge of any kind is going to flourish. From his behaviour in the course of the campaign and his month in office no one is going to describe President Trump’s management style as collegiate.

He clearly cannot tolerate anyone questioning his view of the world. His behaviour in the recent press conference confirmed this. He is hectoring and plain rude when he deals with people who do not simply say “Yes, Mr President”. His style betrays a lack of real confidence. He seems to need approbation and confirmation of his brilliance.

His continued attacks on Hilary Clinton are instructive, they are those of someone who, despite having won the election, is not convinced he has beaten her. At one point in the press conference he felt compelled to state. “I won the election.” Who was he trying to convince? Himself?

It looks very unlikely that President Trump will learn from his mistakes. Difficult when you do not think you have made any. He will plough on as he has started. As time goes by more and more people will say no to Mr Trump, eventually even those within his “team” will start to abandon him. He will become ever more beleaguered. The outcome is unlikely to be good. There is a chance he may resign in a fit of pique and speak to “his people” about how he has been undermined by the Washington establishment.

Alternatively he may start to manufacture reasons for dismantling the bulwarks of liberal democracy. He has already started undermining the legitimacy of the courts, the press and the opposition in Congress. With a divided America the opportunity for authoritarian action should not be underestimated. The idea that “it can’t happen here” was challenged by Sinclair Lewis in the 1930’s when populist right wing parties were growing across Europe. His warning has a new currency which should not be ignored.

Many see President Trump as an outrageous clown, a gift to the satire industry, a reason to open Twitter to see what latest irrational rant he has supplied for our entertainment. This is a mistake. President Trump is a dangerous liability.

He has identified a genuine and difficult problem. The existing political elite of Republicans and Democrats have failed to protect the interests of many millions of ordinary Americans. That issue will remain after President Trump has gone. Once he has gone if the narrative of “elite conspiracy” gets hold there are a lot of very angry and very well armed Americans who’s remaining faith in democratic change might be destroyed. If he does not go he may well become a genuine threat to American democracy.





Worse than Fatal Distraction

The risk map of the world is looking pretty sick at the moment. There are a number of risks which have enormous potential for dislocation and harm and the likelihood of their crystallising is increasing remorselessly. The following are just two very different issues each of which is capable of having a massive impact on the lives of everyone on the planet.

By far the most important and increasingly urgent issue is climate change. The evidence for the reality of its connection to man’s use of fossil fuel is so well established I take it as a given. The deniers no longer deserve the compliment of treating them as susceptible to rational argument. The problem is we are nowhere near to taking the scale of actions needed to keep the temperature increase below 2 degrees celsius. Much good work has been done and alternative energy is making real progress but the pace of change has to accelerate significantly if we are to achieve the targets agreed by 190+ countries  at the Conference of the Parties in Paris in 2015.

If we are to achieve the reduction in fossil fuel required it means well in excess of 50% of the proven reserves currently on energy providers balance sheets will  be stranded in the ground. Clearly, this will have a major economic impact. The more delay in addressing the issue means the greater the threat from runaway climate change, or the greater the dislocation to the economy when action is taken, or both. As risks go, making planet Earth uninhabitable is about as bad as an impact can get.

The second major area of risk is the continued financialisation of the global economy. The issues which preceded the 2007/08 credit crunch and subsequent Great Recession are still with us and indeed growing again. Trade imbalances, growth of debt – public and private, lax regulation of the financial sector and threats of even that being weakened.

It is not just millenarian communists who think the financial system is inherently unstable. Hyman Mynsky, an economist widely seen as having identified the mechanisms leading to the credit crunch identified a cycle of investment behaviour which inherently lead to crises over time. Initially cautious investment strategies become less and less so as a benign environment lulls people into a false sense of security. Following this of course there is, what has come to be known as the Minsky moment where creditors look down and find, like Wile E Coyote (Road Runner), they have run off the edge of debt mountain and there is nothing holding them up but their hubris.

The financial sector now completely dominates the real economy and economic decisions are overwhelmingly determined by financial considerations. We have, what has been called “quarterly capitalism” where long term growth and productivity are sacrificed to short term dividend payments.

This financialisation of the economy has driven a massive increase in debt. In 1950 the average level of private-sector debt across advanced economies was 50% of national income. By 2006 it was 170%. Adair Turner, Chairman of Financial Service Authority in 2008, charts the growth of debt and argues it is now a major source of instability in the economy and needs to be much more effectively regulated.

The credit crunch and subsequent Great Recession confirmed the scale of the impact of financial crashes. They are notoriously difficult to predict but perhaps more worryingly with the continued growth of the financial sector and the contraction of the state it could well be that, next time, some institutions are too big to save.

There are of course a host of other major sources of instability and risk. The growth of public debt, automation of jobs and growing intra-state inequality.  Political instability in the Middle East, the Ukraine, the South China Seas, North Korea generate the potential for international conflicts and the risk of nuclear exchanges. They also sustain the environment, albeit with great help from the developed world, for international terrorism. A terrorism which generates enormous amounts of fear in the Christian West and enormous numbers of dead people in the Muslim Middle East.

Whilst the risks are all very distinct with different drivers and consequences they do have one thing in common. They are global risks. They can only be properly addressed by concerted, international, government action. And what are we in the process of doing? Separating, building walls, exiting international agreements, imposing religiously discriminatory travel restrictions, constraining international trade, generally pulling up the drawbridge.

Since the outcome of the US election commentators and politicians from all sides in the States and abroad have attempted to put a positive spin on the matter. From a mixture of wishful thinking, and patriotic desire to rally around the head of state a number of reassuring stories have been woven. Some argued the campaign rhetoric would prove to be just that and evaporate once the keys to the Oval office had been secured. Others claimed Mr Trump was really a smart guy who would recognise his need to surround himself with advisors that knew what they were doing. Yet others suggested that within the Whitehouse machine there are people and mechanisms to prevent a rogue president from doing something completely stupid. There were even those who thought that the shock of victory would somehow jolt Trump into being a rational human being when he faced the awesome responsibility of office.

As time has passed and he has pull together his team and started signing executive orders the truth has forced itself into the light, when something looks like a duck, walks like a duck, is called Donald and quacks you have got to give up believing its going to be a swan.

Neglect of the challenges facing the world is not President Trump’s style, he seems absolutely determined to make them worse. His climate change denying beliefs mean he has put someone in charge of the Environmental Protection Agency who feels the link between climate change and human activity remains to be proven.

His campaign pledges about dealing with Wall Street are to be taken forward by ex Goldman Sachs trader Stephen Mnuchin as Treasury Secretary and it looks like their first action is going to be to review the Dodd-Frank “Wall Street Reform and Consumer Protection Act”. What betting they are determined to strengthen it to something like the more radical Glass-Steagall Act, repealed by President Clinton, which had the intended consequence of preventing financial crashes!

His approach to international relations seems to be to fight fire with petrol. First he alienates the whole of the Muslim world, if not all the Muslim states, by attempting to impose a religiously discriminatory immigration ban. Beyond that is the threat of a much more aggressive screening programme for immigrants. One can only imagine what that will look like. Ellis Island may yet become the only point of entry. He rapidly moved on to charge his defence staff with providing  options to defeat IS, options which might have been considered “off the table” under the previous administration.

President Trump is not politics as usual. Dealing with him politicians need to recalibrate their basic assumptions about how diplomacy and international relations and international co-operation work. The result of the US election has to be respected and realpolitik means efforts need to be made to establish a working relationship with the “leader of the free world”. But one should sup with this man with a barge pole. It is not just that he is completely incompetent, he cannot be trusted .

In more stable times he would be a fatal distraction from the real job of governments, right now he is even worse than that.