Finance: Research, Policy and Anecdotes

A beautiful day

It was not a landslide, but it was also not tight – the drawn-out US elections were only drawn-out because of the peculiarities of the US election system, organised on the county and state-level, underfunded and technologically challenged. The elections were a clear vote against Trump (with the popular vote difference most likely amounting to four or five percentage points once all votes have been counted). The obvious question for many outside observers (and many Americans) is why the vote difference was not even larger – Donald Trump received more votes than he did in 2016. Why would voters support an authoritarian crook? Lots has been written about this; one answer lies in one of my summer readings:  The Righteous Mind, by Jonathan Haidt, a social and cultural psychologist who argues that moral judgments and political opinions arise not from logical reasoning, but from gut feelings and “groupish righteousness”, in turn driven by culture; liberals, conservatives and libertarians have different intuitions about right and wrong as they prioritize different values. As powerful as this explanation is, however, over the eight years since this book has been written, another important development has taken place: alternative facts.  Watching CNN and Fox one might get the impression that they report about different countries. What in the UK are the open lies and mis-representations by the Brexit press, are right-wing radio and TV stations in the US – the result: conspiracy theories about child-trafficking rings, Bill Gates, COVID-19 etc.

 

Will this  be the end of Trump and Trumpism? Well, a lot will depend on what happens next to private citizen Donald Trump. He is facing a fair number of lawsuits that he was able to delay by being a sitting president. The outstanding tax charge will most likely come up shortly as will the billion or more of debt repayments. So, in one thing he was right: the presidency might have cost him dearly.  There are talks about him running again in 2024 – he would be 78, as old as Joe Biden will be in a few weeks. A lot will depend on what will become public in the next few years on his shady business dealings over the past decades, his tax evasion and his corruption. There has been only one previous president (Grover Cleveland), running for a second non-consecutive term after having lost reelection.  While one might think that today’s politics is too fast-moving (there has not been a losing presidential candidate presenting himself for a second time since Richard Nixon in 1968) for Donald Trump to return as candidate, it seems that he has managed to build a personality cult that resembles more that of a religious sect than a political party, so one cannot exclude this possibility. And being charged (and possibly convicted) in several cases might actually turn him into a martyr. The biggest post-election soul searching is certainly for the Republican party, even though they seem in a pole position to maintain control of the Senate and have gained seats in the House. Which way should they go – follow the populist authoritarian personality cult of Trump or return to a somewhat more sober version of conservatism a la Mitt Romney and Paul Ryan (anyone remember the former Speaker)?

 

As shocked as many of us were on the morning of 9 November 2016, as relieved are we in the afternoon of 7 November 2020 – I will certainly remember where I was when the election was called for Joe Biden.  My expectations are not high, but as many I hope for a stop of presidential hatred, foul language, and racism and for more respect for institutions and norms (it is rather bizarre that Republican Trump enablers focus so much on an originalist interpretation of the constitution but have supported Trump in the destruction of long-standing norms and institutional arrangements). Just a return to normalcy would be welcome, both domestically within the US and on the international level. One can hope for more competence in the US government – as Trump kicked out the B-team running government during the first two years, we are now at the C-team.  This utter incompetence is most prominently illustrated by the Trump campaign’s invitation to a press conference at the Four Seasons….  Total Landscaping company in Philadelphia, located between a crematorium and a sex shop, rather than at the Four Seasons hotel as one might have expected. Finally, one can hope for less corruption and theft in the government, as soon as the crook and his henchmen have left the White House.

 

There are lots of implications of this elections beyond the U.S.  Closest to (my current) home, the EU-UK trade negotiations. For a long time, the British government has hoped for an easy and early trade deal with the US. While this was naïve from the start, the defeat for Donald Trump buries these plans definitely.  Joe Biden’s Irish roots and the importance of Ireland in US politics (to remind ourselves: the Good Friday Agreement was negotiated by former US senator George Mitchell) will make a US-UK trade agreement only possible if it does not undermine the open border between Northern Ireland and the Republic.  However, the fading dream of an easy and early US-UK trade deal makes a EU-UK trade deal politically even more important for Boris Johnson (obviously also for economic reasons, but we know how Johnson thinks about business). So, I think the odds of a last minute deal between the UK and the EU just went up.

 

But there will certainly be a reset in many relationships across the globe, starting from the pressing issue of the trade war with China (and others) and the more general competition with China to the conflict with Iran (which I have a small personal stake in, as a former PhD student is living and working there). It is naïve to think that the US-EU relationship will go back to what it used to be, but at a minimum one can expect them to be on a more rational and civilised basis; similarly, the conflict with China will continue, but maybe with less megaphone and more direct talks.