Divide and rule: My way…or the highway. Source: DrewAngerer/GettyImages
There’s been a commonly held view that Donald Trump might not last the course of his first term as president of the US. Easily bored, given to flights of fancy and highly protective of his time on the golf course, it was an assumption that, to be fair, had some credibility.
But, roll forward 12 months or so, that consensus has largely broken down. The economy is firing on all cylinders, inflation is under control and, despite the numerous scandals enveloping the president, those that voted for Trump in 2016 remain as fiercely partisan behind the maverick as they were then. And that it seems might be all he needs.
“Trump is a very effective, very skilful communicator,” says Pensiondanmark’s Steffen Mielke. “Usually in the rhetoric, there is a lot of talk about bringing the country together, but that’s not happening in the US. It’s about speaking to your tribe. It’s all that matters.”
“Trump has demonstrated a remarkable ability to get out of corners,” the head of fixed income adds. “He’s a political disruptor and he is changing the landscape. He’s pretty much conquered the Republican Party and the big personalities seem to be falling into line.”
Does Mielke’s view matter? Definitely. He’s just spent a week on Nordea’s whistle-stop tour through the US taking in Atlanta and Washington DC giving him access to a glut of local business leaders and political influencers. And joining him among the band of Danish institutional bigwigs was Formuepleje’s Søren Astrup. He too was able to witness close-at-hand the dramatic shifts in the political landscape. What he saw unnerved him.
Chaos is good
“Trump is gaining popularity not so much as a person but as someone proven he can get things done,” says the director and partner at Formuepleje. “You really can’t find anyone who will say he’s a good guy, but they will still back his politics. He’s delivering and he’s doing it through this chaos-is-good mantra. He is disrupting the traditional way of doing politics in Washington through creating chaos and then striking deals amid that chaos.”
It sounds like a recipe for disaster, but a benign economy has proven the ideal incubator for Trump’s experiment in disruption.
“The US economy really is in a sweet spot right now,” says Astrup. “It’s supercharged, but also manageable. There is no real wages pressure and there is still capacity in the economy to grow. We have this cocktail of a booming economy which allows Trump to do what he wants to do. And it should never be forgotten that in his own reality, he is a success. I’m not so sure it would be possible to manage the US in this way during a recession.”
It’s left the Democrats in some disarray. Mielke points out that their reaction to him is “too emotional” and they haven’t managed to work out an effective way of managing, or indeed, opposing him. “They’ve got a big decision coming up,” says Mielke. “They really ought to go for a moderate candidate who can appeal not just to the Democrat constituency but also to the people who voted for him.
“They need to do a much better job of understanding why they are not able to connect with them,” he says. “For some Americans, too much has happened too fast in the US. The impact of globalisation, cultural issues, and people’s way of life, for example.”
It’s an important point and one that seemingly, the Democrats have not yet grasped. And for the Trump critics, it is vital to recognise that he is, at least as far as his own constituency is concerned, delivering what he promised and in a way that might have been beyond the previous administration, be it a revamped NAFTA agreement, an aggressive stance against China or the fledgling rapprochement with North Korea. It left a profound mark on Nordea Research’s Niels From too from the tour.
“They won’t admit it, but the Democrats probably recognise the need for that bit of chaos,” says From. “There’s a recognition among both Democrats and Republicans that this is needed.”
Atlanta’s burgeoning economy underpins the argument that Washington is the dysfunctional cog in the wheel. “If anything, the US economy seems to be firing in spite of Washington rather than because of it,” says Copenhagen-based From. “There was a real sense of distance between Atlanta and Washington.”
It is also something Astrup noted. “I came away with the sense that, away from Washington, there are good things happening. Corporate America is planning carefully for the future, there is more cohesion on the local level if our experience in Atlanta is anything to go by, and the Federal Reserve is doing its best to keep a steady hand on the economy. That kind of certainty is important from an investor perspective.”
There are of course economic red flags looming. The US deficit is set to top $1 trillion soon and it is now well advanced in the current economic cycle with problems likely to mount by the time 2020 comes into view. The deregulation push watering down the Dodds Frank Wall Street reforms and the Volcker Rule in particular has also raised eyebrows, rolling back on some of the efforts to make banks more accountable in the wake of the Great Financial Crisis and help avoid some of the practices that led to the crisis in the first place.
But, it seems, it is the red flags beyond the purely economic that really raise concerns.
Trump’s break-an-egg-or-two approach towards the promised land of a bright, new, fluffy omelette has left a lot of splintered shells. And the damage at a societal and political level could be much more difficult to repair.
“Western Europe used to look to the US for guidance,” says Astrup. “This has disappeared with Trump because the population is so divided.”
It’s a trend also mirrored in the media. “The media has lost all sense of objectivity,” says From. “Switch from one channel to another and you will get a completely different narrative. It’s a loss of values.”
Lines in the sand
More insidiously, there has been the absolute drawing of lines in the sand over issues of gender and race, the former most obviously symbolised in the polarisation of positions over the appointment of Brett Kavanaugh to the role of Supreme Court Justice this weekend. If anyone was in doubt as to where Trump stood on this, his personal and brutal attack on Kavanaugh-accuser Blasey Ford at a rally in Mississippi last week was underlined by an apology on October 8 for “the terrible pain and suffering” delivered to Kavanaugh in the White House.
Talk about adding insult to injury. The chaos is good theory may have its proponents stateside, but the schisms in US society show little sign of healing. If anything, the stratification is only widening.
Of course, for a society like Denmark that has prided itself on harmony and can justifiably claim to have made significant strides towards achieving that goal, this may be one of the most difficult things to stomach. “It leaves me baffled,” says Astrup. “We’ve grown up in a cohesive world.”
Divide and rule then looks like it could deliver Trump a second term. But, as they say, a week is a long time in politics and two years is a chasm. There’s plenty that can still happen. The Mueller investigation into Trump’s Russia links is ongoing and the president’s Teflon-like qualities might not always be able to deflect the criticism if the economy turns. But for now, he looks set fair. One can only imagine what findings the Nordea tour comes back with in 2024, after another six years of a Trump presidency.
The Nordea US study tour took place on October 1-5, taking in Atlanta
and Washington DC. Plans for next year’s tour are already underway.
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