What Trump’s Victory Means…
Many in the shipping world are worried, or at the very least, deeply concerned, if a Trump victory will disrupt the current order of global economy.
The concern is also about the impact on the shipping industry. Though the US is not a big ship‐operating and shipbuilding country, the fact remains that a lot of American money is funding global shipping.
With so many shocking pronouncements, during the election campaign, will Trump take action in ways that will cause huge shocks in the way ships are managed and operated?
Here is my take for what it is worth.
Trump is a great dramatist, a great actor. He has shown this repeatedly in reality TV, where high drama is his forte. This means that the Trump on the campaign trail is not the real Trump. The real Trump is a careful, calculating, successful businessman, who has exploited every tax loophole, who has used the US legal system to his benefit and choses the right person for the right job and built up his fortunes in a very short time . His success on the commercial front is not a fluke. He has done it for himself, and he feels he can do it for the country. His success is because of careful planning, calculation and execution; and the drama element has always been a part of it. Trump Towers portrayed high‐class elegance, and names like Taj Mahal, enforced the perception of high‐class. Employing similar tactics in the political field, he could tap into the psyche of the public and capture their imagination, with these grandiose schemes. His campaign was a stroke of genius. He knew exactly what the people wanted to hear. He delivered that repeatedly, unvaryingly, in short powerful speeches, that made a lasting impression on simple folks in rural America. The urban population in America is sophisticated, multi‐racial, highly educated, and very broad minded.
The rural population, on the other hand, is somewhat overwhelmed by the growth of technology, by the swift changes taking place at the workplace (with loss of jobs to China, India and Mexico), and they are unable to assimilate these rapid changes. The scenario is not unlike what happened in Brexit. All the cities voted against Brexit, but all the rural areas, voted for Brexit. Most of Trump’s slogans and statistics were misleading. He thundered that he would levy very high tax (double digits) on steel from China. He probably knew very well, that the steel from China is already taxed (since May 2016 at over 500%) at a very high level. Respected economists are united in their opinion, that it is better to transfer low cost jobs such as garment manufacture and furniture manufacture, to poorer countries. This will release those employed in these activities to get trained and go for higher paying jobs in the US. The consumers can get better clothes and furniture at much lower costs. The economists point out that this benefits both high cost economies and low cost economies. Trump turned it around and made a big issue of American jobs getting stolen. The US government made the mistake of not providing an alternate livelihood or training to those who lost their jobs, because the jobs went away to foreign countries.
These people were angry, and they could not care less about the national or international economy. There are a couple of trillion dollars of money from US corporations parked outside because of the crazy US corporate tax laws. The tax rates within the US are high and increasing. All these issues, appeal to the core concerns of the American people. When he took the podium, and thundered that he would destroy this inequity, and bring jobs and money back, people believed him. On the other hand, Clinton, repeatedly identified herself, with incremental improvements, in the economy and job situation. Unfortunately, for most people, “Incremental” was not enough. People wanted drastic, radical and powerful solutions. They certainly wanted to hear about them, and believe someone who could promise them. Clever Trump, sensed this mood, and played his high drama to the hilt. It did not matter that he had this awful track record of treating women, abusing immigrants, avoiding tax, having over 5,000 lawsuits and so many other negatives. People wanted to believe in someone, who will offer to correct the existing situation. Trump also used social media to the hilt. Those who know American history know, that Jack Kennedy won because he exploited television, and Barack Obama won because he exploited the internet, and now Donald Trump won because he exploited Social Media. So what then? Going forward, Trump is not going to do anything as crazy as he sounded during the election campaign. He needs to keep the people and the country together and my guess is that he will do it. At the same time, he will bring about some very dramatic and interesting changes, most of which may assist American economy and even the global economy. Consider his bringing in over two trillion dollars of US corporate money parked outside the US.
If he permits a small tax on it, say 5‐7% and allows them to bring the money into the country, two trillion dollars will flow into the banks of the US. Its effect on the economy, on job creation, can be huge and dramatic. He can cut down individual and corporate income tax, by say, 50%. This is a huge incentive, for businesses and a lot of cash in the hands of the people; particularly, American people, who will go back and buy more goods and services. Americans do not believe in saving as much as other nations. When there is demand for more goods and services, there will be more construction and more industries and more economic activity. Let us look at the above scenario on shipping. Certainly, it will be very beneficial ‐ more raw materials, more finished goods, more petroleum products, movement and all this can only help shipping. I may be totally wrong, but a scenario that I am painting, may very well come true.
I welcome your comments.
By
Dr. Vis
President
Viswa Lab
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