Trump at Davos – The Rooster Crows from The Rooftop (#208)

The World Economic Forum in Davos, Switzerland, is the rooftop of the global elite of business, finance, politics and the arts. It is an annual gathering of the World’s elite that Steve Bannon, Trump’s closest advisor, had thoroughly discredited in a Trump pre-campaign 2014 speech, calling it an anti-global worker ‘party of Davos’. The Forum in Davos is the nucleus of the global elite coming together to meet and come to an understanding with each other on advancing the agenda of the established ‘World Order’. For Trump, a professed outlier and disruptor of the established order, and the oft self-proclaimed ‘drainer of the swamp’, Davos is the belly of the beast. And yet to the surprise of many, Trump became the 2nd President in U.S. history to attend and address the World Economic Forum at Davos (not a common practice amongst U.S. Presidents), after Bill Clinton.

So it’s natural to wonder why Donald Trump would feel it necessary to attend the Forum at Davos, when it would have all the swamp denizens that Trump railed against in his campaign, and has the definition of the ‘Establishment Elite’ as his (primarily) sceptical audience.

One could assign a number of reasons for the unexpected move.

First, Trump is a perpetually preening rooster that craves high levels of attention and Davos provides that in spades, being the high profile annual global event that it is.

Secondly, this rooster loves to crow about himself, his great deeds, and the difference he is making since becoming President, and Davos provides the highest rooftop perch from which he can crow about his successes.

Thirdly, Davos also provides a unique opportunity for Trump to sell the World leadership on his ‘America First’ policy for global trade, and future American relationships with friends and foes; and Davos provides for that singular opportunity also.

So predictably, Trump crowed about his successes since being elected. And while no one is arguing that America is doing well (economically) under Trump’s Presidency, there is an argument to be made that it is neither his sole doing, nor is it exceptional, as his need to claim, ad-nauseam, indicates. The habit of exaggerating everything dilutes Trump’s message considerably, and the many inaccuracies in it practically nullifies it.  In his Davos speech he states:

‘... after years of stagnation, the United States is once again experiencing strong economic growth. The stock market is smashing one record after another and has added more than $7 trillion in new wealth since my election. Consumer confidence, business confidence and manufacturing confidence are the highest they have been in many decades.’

As we have come to expect, Trump riddled his speech with inaccuracies.

For decades, the United States has NOT stagnated economically. It has had some serious problems sometimes, but it has not stagnated. That has been Japan over the last 30 years or so.

After the disaster of the financial crisis of 2008, and upon Obama taking Office in the midst of the greatest economic catastrophe since the Great Depression, the American economy started on one of the longest albeit slow recoveries that is continuing today. It has been a practically unbroken upward climb since the crisis, almost 9 straight years. The GDP growth rate was relatively low, but considering the drag of the Global economies, some of whom were posting negative growths, it was mostly positive and accelerating. The current seeming robustness is some of Trump’s doing no doubt, but it is not his alone, and it’s not from a standing start, let alone the outright rout and free-fall that Obama had stepped into.

Trump’s statement ‘The stock market is smashing one record after another and has added more than $7 trillion in new wealth since my election’ while being generally true, is also a continuation of the same stock market that had climbed for almost 8 straight years under President Obama, and which Trump had repeatedly dismissed as an artificially inflated bubble, and therefore not worthy of recognition. He now gleefully takes credit for a soaring Market as the symbol of success for his economic policies (can’t wait to see who he’ll blame when the Market reverses, as it eventually must). But, for the sake of context and accuracy, here are the comparative numbers of how the American Stock Markets did in the ‘first year’ of Obama’s Presidency versus Trump’s:

S&P 500 rose: +43% under Obama; +23% under Trump;

Dow Jones Industrial Average rose: +34% under Obama; +31% under Trump; and

NASDAQ rose: +40% under Obama; +32% under Trump. 

[Yes the circumstances were different, but let’s not forget that Trump in his inaugural speech said that - “This American carnage stops right here and stops right now.” – indicating that he was inheriting a total disaster, which was a laughable statement in its sheer untruthfulness, as was his insistence of crowd size at his inauguration; but he wanted to set the bar of expectations very low, as he habitually does, to try and impress.]

He had in fact inherited an economy that had been growing steadily for years, and a stock market that had been in a near unbroken rise since 2009 (8 years).

‘Since my election, we've created 2.4 million jobs’ - the ‘Jobs numbers’ which Trump routinely dismissed as “phoney” under Obama, he now cannot wait to take credit for. The 2.4 Million jobs added in the 14 months since Donald Trump’s election in November, 2016, (which include almost 3 months of Obama’s Presidency, prior to his inauguration on January 20th) are surpassed by the last 14 months of Obama’s Presidency (2.8 Million)*, yet, Trump makes it sound that somehow the jobs numbers under his Presidency are extraordinary. They are not.  In fact they were handily beaten by Obama. (*source: Fact Check.Org)

Trump went on to say - ‘The World is witnessing the resurgence of a strong and prosperous America.’  

Well actually, ‘The World’ is witnessing a defensive, retreating, protectionist America that is voluntarily abdicating its position of World leadership. And as for a ‘prosperous America’, it is a little early to say what long term effect Trump’s policies will have, but the ‘World’ saw it doing well under Obama, as witnessed by the one of the greatest bull markets and one of the longest declines in unemployment rates ever. See for yourselves.

‘We've massively cut taxes for the middle class and small businesses to let working families keep more of their hard-earned money.’ 

Trump’s tax cuts are neither the most massive nor are they unique, Ronald Reagan, Bill Clinton, George W. Bush, and Barack Obama with his rescue packages, all cut taxes significantly, and in the aggregate some of their cuts would have been more significant than Trump’s. He maintains the tax cuts were meant to really benefit the middle class ‘working families’, but as every bi-partisan organization that has crunched the numbers has said, the tax cuts disproportionately benefit the wealthy, including Trump and his family, in spite of his comical assertions to the contrary, and the tax cuts greatly benefit the major corporations. Yet, in spite of the numbers proving it, he and the Republican hierarchy press the lie that the tax cuts were for the benefit of ordinary American working families. 

In his speech Trump also railed against excessive regulations and ‘unelected’ bureaucrats and bragged how he was decimating both in order to unleash America’s potential that was being stifled by both. Some of us who keep an eye on recent history, know that the excessive gutting of regulations, and the reduction in oversight, has resulted in catastrophic excesses and abuses in business and the financial markets that did horrific damage to the American and global economies, wiping out Trillions in wealth, impoverishing tens of millions of ‘ordinary working families’ and setting back the prosperity of the Country by decades.

While excessive regulations and overburdened bureaucracies will definitely stifle economies and countries (the examples of large socialist countries being proof enough), America is not those countries. But America’s ‘greed is good’ crowd needs to be intelligently restrained, while an adequate number of professional (non-corrupt) bureaucrats are critical to the smooth running of any country (anyone who has waited endlessly to have government departments process anything will attest to that).

The gutting of regulations invites a repeat of damaging economic history driven by pure greed and unfair practices, and the decimating of government departments, to cull bureaucrats, invites chaotic government functioning, as is happening under Trump’s dysfunctional administration. 

Trump went on to stress how he was going to do what was best for America, just like he expected other national leaders to do what was best for their respective countries. But then he went on to castigate them for taking advantage of America through unfair trade practices. Well, to be a bit cynical, the leaders are doing what’s good for their countries, which according to Trump’s insistence is exactly what they are supposed to be doing.

In more rational terms, countries take advantage of their strengths, be it low labour costs, technological superiority, low raw material prices and abundant availability, or proximity to markets. And, over the decades, to be sure, America has taken full advantage of all those benefits as it went up against the older dominant countries of Europe, and of course Great Britain. Now that some of the advantages, particularly lower labour costs, have shifted to countries like South Korea, Taiwan, Thailand, India and China, America still holds an overwhelming advantage, and that is its dollar being the global ‘Reserve Currency’. That one fact gives the U.S. a huge advantage over all the rest of the countries.

Nevertheless, there are certain practices that need to be addressed in global trade, the most important one being ‘intellectual property theft’, and to a degree protectionist practices and tariffs, and industry subsidies. But then even the developed countries indulge in those, including the United States. So rather than addressing the problems in an honest open way, by acknowledging its own shortcomings and advantages, and proposing an open forum for correcting the age old imbalances with others, Trump invites retaliation and open trade wars by blaming other countries and not his own, and by promising punitive actions.

According to his frequent exhortations, other national leaders will continue to act in the best interest of their own countries, for that is what they are supposed to do, including retaliating against any punitive actions taken by Trump and his administration. That is why negotiating and engaging in constructive deal making is more productive than unilateral actions and threats; countries generally do not react well to the later. North Korea being a prime example of Trump’s tough guy belligerence badly backfiring.

In an integrated World where every country, especially if large and economically important, is in many ways dependent on others, even if it is for their consumer’s market, let alone for finance, technology, raw materials, labour or military defence, a country cannot stand alone, not even the United States.

By pushing the “America First’ agenda so aggressively, and in such an antagonistic way, Trump automatically puts the other countries on notice and on the defensive. Target countries that Trump singles out for special push-back, for previous perceived wrongs, like Mexico, China, the E.U., and even Canada - start to look elsewhere to protect themselves from any possible long term damage to their exports. And that hurts America.

At the end of it all, and even at Davos, its Trump’s constant and irritating assertions that since his election all economic indicators have improved dramatically, from Obama’s and other previous administrations absolute disasters, both on the economic, as well as on the foreign policy front. Those assertions presume that the rest of humanity is moronic and unable to recall anything prior to his ‘greatest ever’ inauguration. If any of it was true, there would be no issue, but of course, nothing could be further from the truth. Trump stepped into a considerably stabilized and improved World, both economically speaking as well as geo-politically. His immediate predecessor Barack Obama did all the heavily lifting, particularly – and the entire World knows it. So for Trump to stand in front of some of the best informed people in the World at Davos and crow about his singular accomplishments is to prove that he is the moronic rooster that is crowing that it’s the best most brightest dawn, while it is still dark. Unfortunately, in his ‘State of the Union Address’ it will be more of the same embarrassing self-congratulatory inaccuracies crowed as ‘false dawns’.