A thousand people in the street
Singing songs and carrying signs
Mostly say, hooray for our side – Buffalo Springfield, 1967
File this one under political analysis.
Not partisan as we try to keep our politics out of our analysis. Strictly positive economics.
We must confess, however, we are not big fans of President Trump’s economic policies. We find some of them attractive, but, in totality, inconsistent with a thriving job creating, low-inflationary economy and contrary to our free market inclinations. As Honest Abe was fond of saying, “a house divided cannot stand.”
Border Adjustment Tax (BAT) – A Disaster in the Waiting
Meg Whitman of Hewlett-Packard, for example, said this morning that a border adjustment tax would really hurt her thin margin company. She said HP does do manufacturing in the U.S., but most of the company’s supply chain is outside the U.S. and has taken 30 years to develop.
No doubt there are many companies similar to HP, including Boeing. See our recent post, here. Imagine the disruption in the economy of a BAT? The increase in consumer prices will almost certainly kill jobs in the retail sector, and we do live in WalMart nation, the country and world’s largest private employer.
Our analysis suggests the U.S. economy will suffer a net loss in jobs with the implementation of a BAT.
Weak Victory, But One Helluva “Hail Mary” Win
Nevertheless, that is not the point of this post. What we want to show is the “massive Trump victory” is “fake news”. Huge upset? Yes!
What worries us most is the government is misinterpreting the November victory as a big mandate, which leads to policy overreach and massive pushback by the population resulting in social instability.
We are already seeing signs of it. And this warning from Reverend Al,
First he worries about an America without Barack Obama. What will happen when “he walks out of there, and there is not even the symbol of a black family walking out of the White House every day, going to Air Force One. I worry that the despair and emotions on the ground escalate. ‘Cause not only do we feel we’re not getting justice, we’re not feeling we’re being assuaged by someone that we feel is at least sensitive to those needs. And I don’t know that America is ready or has adequately prepared to deal with that.” – Al Sharrpton, March 2016
We are not huge fans of the Reverend and never thought we would quote him, but he does have a point, that we should all, as risk takers, take heed. And he said this several months before the election.
The Circus Draws More Than The Politic
To illustrate how thin President Trump’s victory was, just take a look at the table below. President Trump broke the “Blue Wall’ by winning the 46 electoral votes of Michigan, Pennslyvania, and Wisconsin, by a total margin in the three states of 77, 744 votes. If Hillary had won these “blue states”, she takes the electoral college 278 to 260.
For some perspective, this is less than the average weekly attendance at a University of Wisconsin football game on a crisp fall afternoon! Or just 70 percent of the average attendance of a University of Michigan football game. That is, 42 percent more people show up on average every fall Saturday at a Wolverines game to see Jim Harbaugh coach than the total combined margin of votes that President Trump won in Michigan, Pennsylvania and Wisconson to take the office of POTUS. Panem et Circensus.
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His electoral college victory ranks 46th out 58 Presidental elections and only two other elections in the history of the Republic has a winning candidate lost the popular vote by a larger margin than the President’s 2.1 percent.
Massive victory? A mandate for the “deconstruction of the administrative state?” Total Bollocks!
When we held positions overnight on Wall Street, we used to go home worried about global instability and what was going on in the “Arab Street.” Now we worry about the American Street.
We are rooting for President Trump to make America greater. Uniting a very divided public is a necessary condition, which will only come by ridding the administration’s delusion and totally misplaced hubris of a “massive victory.”
Stay tuned.
Global Macro Monitor 