The disaster, which is not. Why American business is not afraid of trump

For the first time since 1933 in the White house in Washington became a successful businessman (George Bush Sr., of course, also was a businessman, but to the presidential chair for many years he was in elected office). The emergence of a President from the familiar environment of the political establishment, with provocative behavior and ultraroyalists promises had been confident until that moment in the status of the Western political and media elite is poorly controlled tantrum that made refined humanists to forget about decency and produce words and actions that even trump himself would not have dared to afford.

Josef Joffe, editor of German weekly Die Zeit, in response to itself indecent, the question “How to remove trump from the White house to stop the disaster?” he said, “for Example, the murder right in the White house.” Economic editor of the Independent Ben Chu titled his article “Donald trump is an internal tragedy for America.” Scott Reid at the Los Angeles Daily argues that with the election trump Los Angeles losing the chance for the Olympics in 2024. The Week calls the win trump’s “the victory of racism over pluralism” describes the state of the readers as “emotional shock with elements of horror,” and urged to prepare for disaster — “America stands on the brink of the abyss”.

In recent weeks the fore the theme of “Russian trace” in the victory trump — even more remarkable, what exactly in Russia is chauvinistic xenophobia has always been held in high esteem and even six months ago on the multiple choice question “what country are afraid of influence of any country on its policy?— 1) Russia’s fear of U.S. influence; 2) in the United States fear the influence of Russia” — anyone familiar with the policy of a College student without hesitation would choose the first.

Difficult to say how largely due to such a panic and such a radicalization of the statements. Perhaps the fear of overstayers functionaries for cushy jobs and big salaries in the office. But many officials are leaving themselves, not waiting for the conflict. Perhaps the class hatred of bureaucrats to businessmen. But almost all bureaucrats work well with the business. May be the sincere belief of the Europeans and Americans that ideas trump to reduce taxes, to protect markets and to invest in infrastructure is detrimental.

Anyway, this fear reveals an amazing lack of confidence in the bicentennial Foundation of democracy, which they themselves “liberals” and “bureaucrats” are spending huge sums of money and employs many white collar workers will be able to resist the pressure of one expert on a TV show and real estate in just four short years.

There is another suspect — the reason is simply that trump do not understand the modern Western establishment, generations accustomed to certain rules of conduct and play.

The advertisement rules

The policy of the American government for a long time, a set of ideologies and traditions without regard to their practical feasibility. The extension of subsidized unions (excluding benefits); tax increases (despite the depression of production); growth in the number of benefits to the poor by earning (and demotivating employees and employers); cooperation in the name of democracy (whatever that means) and confrontation with those who do not want democracy; the inviolability of borders at any cost (including the cost of many lives and denying Nations the right to self-determination); the primacy of issues such as global warming or nuclear disarmament on the problems of extremism and instability outside the U.S. here is a partial list of the rules of thinking, which, according to the old elite, trump would have to comply.

Tramp would be closer to the elites, if uttered familiar words about universal equality, about the America of immigrants, the fight against poverty by the rich, the desire for a unified trading space in the world, scolded Russia cautiously welcomed the failure of the Iranian nuclear program, pretended that does not notice Taiwan, and shamefully silent about Israel. From trump waited to restraint in the name that a politician must lie or plausible, or within the standard discourse.

The real trump is fighter ideologies and patterns, just look at his business history. “We better get along with Russia”, — says the pragmatist, meaning: “Peace is better than confrontation, we were able to negotiate with the Russians.” “He wants to accept the terms Russian!” — terrified cry opponents. “Is it better not to negotiate?” — with astonishment asks trump that does not mean that he is ready to give Russia. But politicians don’t understand it, they are important principles, not the result.

Trump actually seems like the opposite of politicians. A politician sees his activity as a great service, for which the nation shares with him the taxes. This Ministry has immutable principles, but often has no purpose, no practical result. Trump as a businessman, has no principles at all and seem to see in his work the President of the goods that must be sold to voters.

In this sense, trump is absolutely consistent, believing, first, to sell a product, advertising should make it interesting and memorable. Second, the product must have at least the illusion of usefulness, to respond to the specific challenges of customers. And third, the blame for non-conforming goods advertising needs to be entrusted to anyone but the manufacturer.

Trump says what he thinks and not what the rules prescribe policies and what voters want to hear, whatever they were. He is a good player, considers their actions on several moves ahead, especially when it comes to self-promotion. It seems that trump never intended to see the decree on ban on entry of nationals from several Muslim countries embodied in life — his goal was to demonstrate the part of voters, who waited on him of restrictions on the entry of migrants into the country that he would be happy to honor their wishes, but democratic politicians don’t give. I would venture to suggest that the voices of the apologists “of America without the Muslim immigrants,” trump for the next election for a secured, while the policy towards them in the country has not changed.

Similar moves trump does all the time — conversation with the President of Taiwan has attracted attention, but nothing in relations with China has not changed. The output of the TTP assigns to trump the voices of opponents of integration with Asia, meanwhile the TTP has yet existed only in paper projects, and nowhere to go. Surely the output from the TTP, a large number of ordinary voters, trump will perceive as the protection of the American market; meanwhile, it is a great gift to China, which Beijing is certainly appreciated and will be prepared in response to talk about more favorable to the United States terms of trade.

Other threats trump only look terrible, in exact accordance with the laws of advertising. About customs duties, which trump promised to enter before someone (and he) does not remember, and whether — in the us final consumption only 12% of the imports, while the share of China — a few percent. Americans will not be able to notice the rising prices, nor to many jobs in the imposition of duties.

China is also the introduction of the USA import duties may paradoxically even help reduced revenue producers will cause the stop of growth of wages, and the rest of the world the competitiveness of Chinese goods will rise. Chinese production is not replaced by American — too high a cost, even with a 40% duty. Rather, instead of Chinese goods (if the supply will be reduced) to USA will be goods from other countries from Brazil to Malaysia, and their place in the world market is the Chinese products. So it will be a duty or not, fundamentally the United States is not affected.

The issue of employment, which is so much trump and he promises to resolve it by “pressing” the production capacity of American companies back to America, it seems, used them only for self-promotion and has no long-term consequences. This problem is just too serious to solve it as a straight line. Historically, jobs in the US is much better created by the Democrats, not the Republicans, and the only business the President of the United States in the past — Herbert Hoover — was also the only one in the last hundred years who decreased their number in the time of his presidency.

America needs almost 40 million new jobs to solve the employment problem in its current form, to be able to get away from subsidizing almost 50 million people. The creation of such jobs simply by their transfer from countries with low average wages and low taxes on labor — the task is impossible: there is no economic incentive which would outweigh the eightfold difference in the cost of man-hour in the United States and Mexico.

Of course, corporations are making overtures to the President and he is accountable to the voters — for the first month of his reign received the promise to create (or to translate into the country) about 10 thousand jobs. Even if these promises are fulfilled, and this pace will continue, America during the presidency, trump will receive 480 thousand new jobs due to his policies, despite the fact that under Obama only for his second term, the number of new jobs exceeded 10 million, and today the US economy adds without any trump at 200 thousand jobs per month by inertia.

Of course, jobs in the industry grow at a modest 5,000 a month, and trump can triple this amount — but the big question is do they the usefulness for the United States: to artificially create half a million jobs in the engineering industry is no better than to revive gas lighting to give the work the lamplighters, or eliminate the PBX, to take the matter to telephone operators.

America holds the highest average wages exactly due to the fact that the is not placing in its territory of production with low labour costs, giving the opportunity to other countries. Moreover, the changes that are waiting for the labor market in the near future, will deliver to America a completely different problem, if not for presidential term, trump, the next ten years after: automation of production would eliminate all those jobs, which will create a trump, and many others.

In particular, a thing of the past, the profession of truck driver is the most common in men in many States USA today. These challenges America have to answer not trying to cling to the past, and creating jobs where they will still be needed (particularly in services and high technology), and reducing the workload on one person. Trump obviously does not claim to be a revolution in the field of employment — creating half a million jobs will add one million voters in the elections, and that is his goal.

Economy wall

The same applies to money. The bureaucrat develops budgets that first knocks, the more you learn, the more you will knock next time. However, the “beat — master” applies to all cases, whether the military budget, knock the government, or taxes, hitting taxpayers. Conditional America, Hillary Clinton continued to approach the budgets purely bureaucratic: more taxes, more costs. Despite the fact that this logic is already evident leads to escalation of problems in social security, in medicine, in education.

Trump thinks about budgets in terms of “earn” and “save”, — terms, politicians are unfamiliar and therefore frightening, seeming harbingers of disaster, because they pull out from under the bureaucracy based its activities instead of my favorite “to collect and distribute” will be required “to create and use effectively.” Bureaucrats in horror accuse trump of the proposal to significantly increase the budget deficit and public debt. These accusations are at least incorrect in light of the fact that over the past 8 years, the U.S. national debt has increased from 70% to 102% of GDP and the Federal budget deficit — the total level of $ 2 trillion over the period 2000-2008 under Bush, to 7.3 trillion dollars under Obama. In practice, the trump offers nothing that would significantly increase the state budget expenditures.

A lot of moaning on the proposed trump program to attract $ 1 trillion in American infrastructure over 10 years. The figure sounds ominous, but in the meantime it’s only $ 100 billion per year. Infrastructure in the United States now spend 2.4% of GDP is $ 450 billion a year. Add $ 100 billion a year — slightly more than 20% increase, and made for a private account, — tax incentives, which will lead to attracting private money, will cost the United States only 0.6% of the Federal budget.

Another great theme is a wall on the border with Mexico. Trump insists on the construction of a wall height of 10 meters and a length from 1500 to 1900 miles. The independent evaluation, such a wall would cost $ 25 billion (trump says about $ 10 billion in his usual manner: “One does not build walls and nobody builds them so cheap”). Conversations around the walls is very much of voters it attracts, but the cost of it is less than a trump already saved on the reduction of a contract for production of F-35 money. In addition, trump offers to impose a tax on transfers of dollars foreign workers home. Given the fact that only Mexicans transferred more than 25 billion dollars a year, even 5% tax would give 50% of the cost of the wall for 10 years.

Trump claims that construction of the wall will pay Mexico, and partly it may be so. On the one hand, the United States may, as suggested trump, go to taxation of profits of companies not at the place of manufacture and place of sale, so the balance of the account of trading operations with Mexico (currently about $ 60 billion a year) will bring the US $ 12 billion per year. Mexico will not be able to argue against such a tax, as it is the same for all importing countries. Us corporations won’t mind, as their exports will be exempt from tax. On the other hand, to build the wall will be mostly Mexican workers (they are cheaper, but trump is building the cheapest of all), and the concrete for the wall will supply a Mexican company — the US has no nearby producers, and Chimentos Mexicanos and CEMEX have announced readiness to provide the required 339 million cubic meters of concrete. So Mexico is not for nothing.

A set of other initiatives trump — limit regulation, the green light to the pipeline projects, the introduction of a system for receiving immigrants on the basis of their usefulness to US and to support themselves, building a system of symmetric trade barriers and so on — does not look nor catastrophic, nor even potentially harmful, and it can not understand the criticism of trump, including violent. However, it announced a package of tax incentives and, in fact, no one has ever seen, and because it is impossible to judge its impact (short-term and long-term) budgets. But some of the ideas that are voiced by trump, seemed to be neither unreasonable nor a significant reduction in fees in the short term.

However, trump not only meets the open resistance around himself, he fails to even complement the public authorities — senior officials of the leave large blocks on the system gosadministratsii remain open examination is not enough. “One of the key problems today is that politics is such a disgrace, good people don’t go into government,” says trump, referring to his predecessors.

Many agree, including the trump too. A fierce critic of the new President raises concerns peculiar to the boycott of the trump system and possible failures in politics, they say, and high probability of impeachment. Independent observers noted a sharp radicalization, not only political elites but also the population opposed the trump among the different segments of society, perhaps for the first time in recent history the US is ready to rejoice in the failures of America, if only they could blame the new President.

Market optimism

However, business and markets, based on objective data, welcomed the victory of the trump and not fear for the fate of America. The world’s stock exchanges are growing at an accelerated rate, US inflation rises, GDP growth accelerated, the fed is going to raise rates in March — the second time in six months.

Businessmen, of course, to better understand and what he says, and that’s what makes trump (and, of course, they, in contrast to accustomed to the Protocol of bureaucrats, not scary outrageous trump and he does not withdraw his obsessive lack of taste and measure — they are such characters used to). Bankers, manufacturers and investors have their view of the situation. From their point of view, the US has just passed an important test — the ability to preserve democracy and to learn from their mistakes.

Already the first event after the inauguration of the trump showed that in the United States, unlike countries where democracy is called dictatorship of the majority, the power is well distributed and the country is protected against voluntarism and revolutionary action, even the President. Of course, a smart player can use this to their advantage, and business knows this, and trump, devoid of modesty, not hiding, says: “I’ve been dealing with politicians all my life. All my life. And I’ve always gotten them to do what I need them to do”. But this use has hard limits beyond which not to go, even Trump. Several big businessmen from the US told me recently that they would not be surprised if years later, after the presidency, trump his term in the White house will be evaluated as a positive, but relatively boring.

Markets remember the story. And history says, for example, that the US economy depends little on the person of the President. Over the past hundred years the rate of growth of the markets under presidents Democrats and Republicans are the same, but crises come in cycles, regardless of economic policy of the White house or the first term is President or the second. The historians argue about the “Roosevelt plan” or Reaganomics as the triggers of economic change. Professional investors believe that the US emerged from the great depression through the Second world war, and instead Reaganomics worked the emergence of the market of information technologies and the rise of new economies on the back of cheap oil.

Not to say that business and investors are not waiting for trump at least the beginning of change in the sectors in which the consensus of the old political elite only exacerbate the problem. Many believe that the long overdue change in education, where the scale of benefits and subsidies drove prices to a level prohibitive for not having benefits families, and the excessive protection of the rights of teachers has led to a significant drop in the level of education in schools. Must be something to do with depressive affect business tax burdens, the growth of which is associated with the unjustified increase of the same benefits and subsidies. America can not cope with the enormous cost of the foreign operation, to put it mildly is not always meaningful and even less often successful.

It is time to critically assess the role of trade unions and their impact on the economy. Something to do with the very expensive and widely publicized program of development of health care, which expanded the circle of the insured, but unduly increased the cost of insurance for those who were willing to pay for it. In the end, from a business point of view if trump will not be able to do to improve, then at least it will not exacerbate the situation, as it would, become President, for example, Bernie Sanders.

Yes, trump has apparent problems with the formation of the device. But that, in addition to additional regulation, see the markets and business from the state apparatus? Representatives of business are usually for the reduction and argue that public administration is negative value added.

Finally, the most important thing. Markets generally uninteresting political debate. Investors still which hairstyle from the President how much he lies and what he likes more and which less. The markets are controlled by supply and demand for securities. What do the words (and deeds) of trump to supply and demand? First of all, that the supply of money in the stock markets will rise, taxes will decrease, which means people and companies will have more money for savings. The budget will be spent on the infrastructure, on the wall, for military purposes. America will occupy; Europe will have to print more money, as quantitative easing will continue; China will be forced to use their reserves, and they will be on the market, and so on.

US GDP, according to markets, will continue to grow for the same reasons. This means that the refinancing rate will rise, investment with debt markets might temporarily move in the equity markets (in anticipation that the equity markets and rising), and then, when the market prices of the debt absorb most of the growth rates, will reverse the flow — and in anticipation of this short debts are not losing their value.

Of course, the markets and business it’s not oracles. Disaster and the disaster to come suddenly, and that was true in 1998, 2003 and 2008. In addition, the markets underestimate sudden events involving the actions of trump (he as a businessman is able to calculate risks), and with the actions of his opponents do about the impeachment talk seriously. We should not forget about the fact that for the last 150 years four US President were killed.

But politicians in forecasting do better than markets. So neither the tranquility of the first or the second panic really do not say anything about the future. In February 2016 in Nevada trump in his usual manner said: “I love bad educated!” Well, we all deserve his love — we are not educated to today to predict the consequences of his presidency, and, apparently, it’s the only balanced position.