A MICRO MAN WILL SOON BE AT OUR NATION’S HELM

An expert is a person who has made all the mistakes that can be made in a narrow field. ~ Neils Bohr

Donald Trump will become the 45th President of the United States (US) in exactly 30 days, following his unexpected election victory. The Electoral College voted yesterday to make him president and Congress will certify the Electoral College’s vote on Jan. 6. Coming into the presidency, Mr. Trump’s experience is narrowly founded on commercial real estate and reality TV. Unlike Neils Bohr, he would never admit to making any mistakes. His grandiosity-seeking persona has focused on specific, narrow, micro-oriented concerns, usually announced via 140-character Twitter posts.

Political commentators have been spewing too many speculations about how Donald Trump surprisingly won the presidency. Nate Cohn of The New York Times and others have concluded that his victory came from a fortuitous, slight “red-shift” in a few battleground states – Florida, Wisconsin, Michigan and Pennsylvania.

He narrowly won each of these states by one point or less of the popular vote. But these slender victories gave him a decisive Electoral College edge. Only with effective, focused and steady effort over the next several years on the part of Democrats will this red-shift be prevented from being a long-term political prospect. This is by no means a sure thing; currently the Democrats are leaderless and far from united. For example, when was the last time you heard that the Sanders-Warren progressive movement was succeeding in the political ground work to place strong candidates on 2018 ballots that can actually win elections?

Interestingly, the red-shift phenomenon has been examined for over 150 years, but not by politicians. Astrophysicists first discussed it in the 19th century. It was a basis for Edwin Hubble’s early 20th century Law that posited other galaxies are receding from Earth, causing a red-shift (Doppler) effect. The Hubble Law supports the dynamic Big Bang model of the universe.

Even though the headline-obsessed Donald Trump likely will cause a number of “bangs” as president, with any luck they won’t compare in the slightest to the Big Bang that Hubble described. Fingers remain completely crossed on this. But let’s now depart from cosmology and take off to the here and now.

Even before he’s president, The Donald (TD) pulled off one momentary bang on Dec. 1 in getting Carrier Corp. to "save" 800 jobs at its Indianapolis air conditioner plant. Nice work. However, despite all the media hoopla that TD created in Indianapolis, the next week United Technologies Corp.’s chief executive (UTC owns Carrier) stated that some of those “saved” jobs would be ultimately lost to automation. In other words, Carrier still plans to cut its workforce, so those 800 saved jobs are a chimera. And what about the other 400 Carrier workers that TD seems to have completely forgotten about who will be soon laid off? Oh well, sorry guys.

Is The Donald ducking his responsibilities to take a comprehensive view of his job as president? So far, as president-elect, it seems so. He is all about tactical, individual, bottom-up “deals,” (micro transactions), rather than a broader, strategic (macro) vision that might unify and preserve America’s greatness. [As I’ve already shown, we are now great, and have been, despite his incessant proclamations to the contrary.] And yes, in recent times certain groups of Americans have not seen much if any economic benefit, as other groups have. This vital issue of economic inequality, that TD’s announced economic policies will not remedy at all, does need to be rectified; but it does not detract from our overall distinction as a nation. There is no nation that can claim seamless distributional equity.

The Donald’s Carrier deal required now-governor Mike Pence to offer a lush $7 million taxpayer-funded bonus to the company. What happens after January 20 when workers beyond Indiana demand TD’s help? Maybe President Trump can create a rotating vice presidency of Republican governors who can bestow multi state crony capitalism outside the Hoosier State on an as-needed basis.

Irony abounds. The US unemployment rate declined to 4.6% in November, the lowest it’s been in over 9 years. This reduction represents a significant success for hundreds of thousands of US workers that the Obama administration has helped in bestowing. In fact, during President Obama’s time in office the economy gained 15 million jobs, which works out to 36,000 jobs per week. Yet TD’s public statements clearly emphasize his disparagement of this advantageous macro situation.

He campaigned with a micro focus on preserving manufacturing jobs, which have steadily declined during the last 63 years, on fending off the purported “war on coal” that has affected the nation’s 80,000 coal-miners and stopping imports. 
Mr. Trump’s allegations about why coal miners now represent only 0.05% of our labor force are, to be generous, misplaced. Sure, environmental policies established by Republicans and Democrats have played a part (and offered important, essential health and longevity benefits to all of us), but the most important factor reducing coal mining jobs has been competitive market forces, specifically the reduction of domestic natural gas prices due to significant improvements in extracting natural gas from the ground (e.g., fracking).

Coal’s share of its key market as a fuel for electric power generation has been cut by 15% during just the past 8 years. Natural gas and non-fossil-fuel technologies (solar, wind, biomass) have gained what coal has lost. No bully-pulpit phone calls or mouth-to-mouth meetings by TD will restore coal’s former markets. Why should they? He continuously accentuates his acumen as a businessman who understands markets and technology, and applauds market forces that he has taken advantage of in commercial real estate. Market forces are present in the energy sector as well.

The improvement in the nation’s overall (macro) employment – now 124 million full-time workers – isn’t his concern; he’s purely focused on micro transactions – industry-specific situations – like Appalachian coal miners or air conditioner builders. Micro matters to him. Perhaps he believes macro is for losers.

If we didn’t know it before, most of us now know that working class wages have stagnated for more than a decade. This upward wage inertia has turned John M. Keynes' famous downward "sticky wages" insight on its head. The wages of less-educated, primarily non-urban workers, among others have been stuck from rising. White working-class people strongly voted for TD and gave him a crushing 39% margin over Clinton. With TD’s beauty-contest cabinet appointments and his suggested economic policies (e.g., not raising the $7.25/hr federal minimum wage) how can wages for working-class laborers be improved? They can’t.

Under the Trump presidency, I expect average real (inflation-adjusted) wage rates will continue to decline or at best stay steady. Inflation is likely to increase if he convinces his congressional buddies to fund his ideas for improving the nation’s infrastructure (an eminently worthwhile, if overdue measure of expansionary fiscal policy), and increase the defense department’s budget (an utterly mistaken, uncalled for scheme). Among other reasons, such sizeable spending, along with Republicans’ incessant desire to cut federal income and remove estate taxes for the richest Americans, will require large amounts of deficit spending. Increased deficit spending will raise interest rates on government bonds. Ten-year Treasury notes’ interest rates have risen 55.7% since Nov. 1.

Right after the Federal Reserve increased the Federal Funds interest rate last week by 0.25%, the US dollar appreciated as expected. The new president’s suggested increases in deficit spending will further strengthen the dollar. With the stronger dollar, US exporters will have a more difficult time selling their goods overseas and imports will become less expensive, something that can threaten a larger trade deficit and lower macroeconomic growth, neither of which is likely to please the new president. Watch for Congressional Republicans to fortify their discussions about reducing the Fed’s much-needed independence.

In his 44 days as president-elect, I’m convinced that TD thinks solely in micro terms, he’s a distinctive deal guy. He is likely to be a pervasive transactional president, unmoored by any unifying vision of meaningful macro objectives. Perhaps learning from the Kardashians (although he’d never give Kim even a milligram of credit), he banks on the broadening power of social media – especially Twitter – to provide pseudo-breadth to his micro moves.

Can micro TD convince us and the world that his narrow, transactional perspective is sufficient to lead our nation? Is this the change that his acolytes voted for? We'll be finding out on a day-by-day basis beginning in 30 days.