Fly on the wall Part II

trump

I took the time to read the first part of this article that I wrote when Trump won the nomination of the Republican party in an attempt to recapture the past. The future has an uncanny way of happening gradually so that you always end up wondering how your reached where you are. It sneaks up slowly but before you realize, you are in the future.

For a long time, in third world countries, there have been rulers (I am consciously not using the word leader) who are ruling exactly because they lack the key quality of humanity and are able to ruthlessly suppress dissent and do not feel the pain of the disenfranchised citizenry. Be it Zimbabwe where people are suffering under hyper inflation but Mugabe would not let go or Syria where people are getting killed and fleeing in the millions.

At the very root of the dysfunction is the tyranny at the local level. Then comes the dysfunction at the international level where alliances are forged for specific interests and defy the natural affinity of ideology at times. A case in point is India which is a multi-cultural, multi-religious democracy but has been always discriminated against in favor of non democratic and religion based Pakistan as a policy tool to keep the country in check and also to provide a distraction for Russia. Of course, this is my impression based on what I have seen so far. Whether any thought went into this strategy or it just unfolded as it did is not clear to me. A billion people in India have had their progress constantly interrupted by this policy but still are making progress, albeit much slowly than they are capable of. The brain drain of intelligent, highly qualified and law abiding citizens for better opportunity in USA and Europe has been a big drag on the economy.

The country at the apex of the world order, pulling the strings is the USA. It is one of the strongest and greatest countries in the world. It would stand to reason that its people should also be living the highest standard of life possible. If that was true, we would not have the election results we had with the Trump victory. At the root is the income inequality that has come due to policies of the government over the years. It has also come because of the capitalistic greed that has seen aggressive cost cutting to boost the bottom line because everyone wants good quality at low prices (I call it the Walmart effect). In order to make sensible profits with low margin, the volume has to be high. After cutting all costs the final element of cost cutting was improving productivity by automation (robotics) or outsourcing to low wage countries.

It is a basic economic principle that capital flows to the most efficient use. If the government does not introduce thoughtful policies to direct capital flow, it impacts real people. It is difficult to retain manufacturing jobs in a developed economy because automation is so advanced that it takes over jobs and on top of it, there are a lot of poor low wage countries that can do the job cost effectively. Despite all his hyperbole, If Trump were to try to get manufacturing back to USA, the wage levels will increase the product cost and would not be affordable. This will impact everything from food (agricultural labor and tax on imports) to automobiles and clothes etc. The solution is higher education for high end jobs. If locals do not get higher education, foreigners will come to get higher education and end up staying to fill high end jobs.

Currently supply chain is so integrated across countries that breaking up trade deals would be very harmful for companies and as a result for the employment levels if these companies relocate or go bust. But increasingly, I am having second thoughts  about  my own education and am thinking that I should have an open mind and learn the reality of Trump’s way of doing business. Why should sovereign debt be sacrosanct? if Trump pays 25 cents on the dollar to the debtors of USA, let us actually see what happens instead of relying on Economics books to tell us. May be nothing bad will happen? Why believe in the doctrine of mutually assured destruction and go ahead and test the hypothesis anyway?

Who knows, may be climate change is really a hoax. Let Trump reopen the “Clean Coal” mines and get the poor folks back to work and of course let fracking get going to add to the global oil glut. Also what if USA gets out of the Paris accord and does not pay? The others have to breath air too and would chip in to do everything possible to fight environment change. This fits in perfectly with what we have seen so far about the Trump approach. Taxes not paid means some one else pays for the road on which his car drives or the airport that his plane lands etc. Any way, becoming the president of USA is a big deal and he has achieved it despite the many character flaws reported by the media. I wish the best to Trump so he can deliver to his base that has imposed their trust on him.

As Clinton said, we need to have an open mind and hope for the best. To all the Americans, I wish you the best of luck from the outside. I am still rooting for you and hope you come out stronger and stay the leader that you have been so far. I also hope that your politics does not devolve into third world politics which prevents progress, development and human rights.

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