Donald Trump’s victory adds to the sense that we live in “interesting times.”
With the election of Donald Trump as president of the United States of America, I am reminded of the phenomenon known as a “black swan event.” This phenomenon is something that is such a surprise that the occurrence would not have been reasonably contemplated. However, once the event has occurred, there is usually a frenzied attempt to explain or rationalize it.
The notion of “black swan events,” which is something that has been around for centuries to mean, quite literally, the belief of a bird that did not exist, gained widespread popularity as a result of a book published in 2007 by Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable, which, using his knowledge of mathematics and philosophy as well as business, was a sole vice in predicting the Global Financial Crisis of 2008. As Taleb asserted, there are some events that occur with such speed and are of such an unpredictable nature that previous experience provides no clues.
The election of Donald Trump is, in reality, not a “black swan event.” After all, in a two-horse race, which is effectively what the American presidential election is, the fact that one of the horses actually wins should come as no surprise. However, Trump’s election is a surprise as we were told by pollsters that his rival, Hilary Clinton, was likely to win.
It’s the Economy, Stupid
What is sending shockwaves around the globe is the fact that the man who will become the most powerful person in the world, assuming that Russian President Vladimir Putin is second, has no experience of being involved in public service or holding any government office whatsoever. There are the issues of his statements and outbursts during the election campaign too, some of which border on racist.
However, as the expression goes, “it’s the economy, stupid,” which was coined by James Carville, the campaign strategist of Bill Clinton’s 1992 presidential campaign. It was meant to send a powerful message that change was required to make people feel better. Ironically, it is Trump who has made the argument that he can bring change to those who feel impoverished as a consequence of losing jobs in America’s “rust belt” due to international competition. Hillary Clinton argued that what was needed was continuity rather than radical change.
Trump has said: “We’re going to rebuild our infrastructure, which will become second to none. We will put millions of our people to work as we rebuild it.” He claimed that huge investment was needed and that he would double the amount Clinton proposed to spend. This would mean over $500 billion.
However, given that he has claimed he would cut the federal tax rate from 35% to 15% as well as reduce income taxes for individuals, it is questionable how he can raise this money. Significantly, Trump has never explained the basis of his economic policies in detail.
International Trade Under Donald Trump
Voters in the US have voted for change to be carried out by a man who has promised to make them feel better off. The question is what this will mean in practice, and what it will mean for the rest of the world, including the United Kingdom?
Trump’s pledge to “tear up” international free trade agreements—if it comes to pass—will severely disturb relationships that have existed for decades and, many argue, will be negative for global economic growth. The idea of protectionism, something Trump is an advocate of, was believed to be outdated in a world in which barriers and borders were less important. If America under Trump does this, there will be others who will respond in kind and retaliate.
Early signs show that markets are taking time to consider what the realities of Trump’s victory will really mean. Because of his distinct lack of pedigree or experience—this is a man who has been criticized for poor judgment in running his own businesses and has been widely disowned by many significant figures in the Republican Party, including George W. Bush—there is uncertainty.
As we continue to experience the vicissitudes resulting from Brexit, and there are still concerns about the Chinese economy, Trump’s election as president of the United States really does add to the sense that we live in “interesting times.”
*[This article was updated on November 11, 2016.]
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
Photo Credit: Dan Brandenburg