Steen Jakobsen, SAXO Bank CIO and chief economist emails “Dear All, Sorry for late posting, but just returned from Russia. I think he will better than Liberals think, but much worse than Wall Steet’s hope for. Nice weekend to you all,
In his email he comments on CNN, productivity, technology, the soulless machine, and “one of the most beautiful documents ever written, the US constitution.”
He also thinks a recession is baked in the cake.
Following is a guest post by Steen Jakobsen.
Steen’s Chronicle: Escaping the Soulless Machine
- Donald Trump did not truly win the US election… Clinton lost it
- Trump policies not the answer, but drastic change was needed
- Only access to learning and thus technology spurs growth
- Change does not come when it is sought, only when it is needed
- For more on the US election and its aftermath, click here.
The defeat of Hillary Clinton represented more of a call for authentic change than any great vote of confidence in Donald Trump’s policy plans. Photo: iStock
Due to what can only be termed a scheduling error, I found myself watching the outcome of the US election from the Radisson Ukraine hotel in central Moscow – one of my favourite spots in the Russian capital.
At the risk of being termed both Putin-friendly and a Trump supporter, I have decided to write my own personal post-mortem analysis of the landmark US vote. For the record, it must be said, I have been remarkably consistent in my views as we approached the November 8 ballot…
…this wasn’t Trump’s victory, but rather Clinton’s loss.
I am as close as one can get to 100% agnostic as to who wins, and what their ideologies are. My commitment is to understanding what happened. That disclaimer now safely in place, what are my simple conclusions from this US election?
It wasn’t about the issues
Like Brexit, the US vote was never about personalities or issues. Had the “issues” meant anything to US voters, neither Clinton nor Trump would have made it on to the ticket in November.
The very fact that someone like Donald Trump could lead the Republican party into a presidential election is testament to how it had nothing to do with the person, nothing to do with policy, but everything to do with Americans’ perceived need to escape what one strategist called “a soulless political machine”.
In the end, Hillary Clinton was simply unelectable. She ran a $1 billion campaign designed to cater to all manner of special interest groups, be they ethnically based, gender-specific, or concerned with very specific policy areas.
Trump’s campaign, conversely, consisted mainly of his Twitter account (and its many followers)! That’s right: his Twitter account (for the purposes of a disclaimer, I am personally long TWTR).
Conclusion number one, then, is very uplifting: spending more money does not buy you more votes, nor can it purchase integrity.
The media and the message
It seems that Trump, despite his often inflammatory persona, managed to transform himself into a candidate who believed in America as a whole rather than in specific groups. Several newspapers, including the New York Times, ran page after page of facts detailing how Trump degraded, disparaged, and broadly ignored the norms of political correctness, yet he kept rising in the polls.
If that won’t get the media and political strategists to think twice, what will?
“Try another World War Two reference…” Photo: iStock
Is the positive conclusion, then, that in future the “map to becoming president” has more to do with the desire, both spoken and implied, to be a president for all of America? A real person rather than a focus group-approved construct?
Does it require concentrating on what makes America strong, and a decreased emphasis on the needs and grievances of specific sub-groups?
If that indeed is the case, then US politics appear ready to rise from the ashes of destruction.
If this is in turn the case, then it means that Americans need to be American first and a member of whatever minority or special interest group second, but for decades it has been the other way around.
Equality of opportunity
Equal access to education, jobs and welfare will dictate the success of not only the US but of all the world’s countries.
There exists a big misunderstanding that everyone needs to “have the same things”… no we don’t! What we need is equal access. Here America clearly lags behind, in my opinion because the soulless political machine has been flipping favours more than focusing on the bigger issue: unequal access to jobs, education and a future.
I make hundreds of speeches each year on macro and politics, and there is one thing I always love to point out: economics is really very simple, despite us economists trying to make it sound overly complex.
Growth and prosperity come through two major channels: demographics (more growth than prosperity) and productivity.
Possessing the ability to improve productivity is the only real way to escape the present low-growth environment, as monetary and fiscal policy are now exhausted. The beauty of that truism lies in the fact that the only way to force productivity upwards is to make people smarter.
There is a greater than 80% correlation between IQ (read: average education level) and productivity.
The richest countries in the world simply consist of better-educated populations being more productive.
CERN’s location is no accident. Photo: iStock
The conclusion, then, is simply to invest in education, research and people! Think about this for a second… it’s the exact opposite of what our soulless political landscape currently does.
The second part of all this is even more interesting. As PayPal co-founder Peter Thiel said in his classic book, “Zero To One”:
“At the macro level, the single word for horizontal progress is globalisation—taking things that work somewhere and making them work everywhere. China is the paradigmatic example of globalisation; its 20-year plan is to become like the United States is today. The Chinese have been straightforwardly copying everything that has worked in the developed world: 19th-century railroads, 20th-century air conditioning, and even entire cities. They might skip a few steps along the way – going straight to wireless without installing landlines, for instance – but they’re copying all the same.
The single word for vertical, zero to one progress is technology. The rapid progress of information technology in recent decades has made Silicon Valley the capital of ‘technology’ in general. But there is no reason why technology should be limited to computers. Properly understood, any new and better way of doing things is technology’
This is the next level. The Brexit vote and the election of Donald Trump election marked the twin antitheses of globalisation and trade, and marked a protest from the 1989 “Berlin Wall” generation who opposed the unending extension of “horizontal” progress because it lacked the vertical dimension of technology.
Without the technological axis, of course, education, intelligence, and finally growth suffered.
Today’s wrongly directed macro policies focus on globalisation as an end in and of itself, ignoring technology or, to return to my formulation, productivity. The way forward in a macro sense is simple – we need to create equal access for everyone as a constitutional right, focus on average education levels, and marry the good parts of globalisation to the key vertical axis of technology.
Only in this way will more people gain access to growth, and at lower prices and with more productivity to boot.
Today, Chinese productivity is less than 20% of that of the US. This means that the only way for Beijing to avoid a debt spiral is to unleash productivity. Hence the recent opening of China’s external account, its entry into the SDR currency basket, and its allowing foreign access to what were once “Red Chinese” financial instruments.
Similarly, the lost economies of Africa can come online via education, which itself can come through the extant mobile phone network; these are more widespread than even bank accounts in sub-Saharan Africa!
The skyline of Kigali, Rwanda: quite a change in a few short decades. Photo: iStock
Innovation and technology will solve the issues of electricity storage, improve our collective understanding of the universe, and lead to other fundamentally needed changes of both the pragmatic and the theoretical sort.
This will not simply come because we design it, nor because we want it… it will come because we needit. Change only comes when it is truly needed.
A spanner in the works
Tuesday’s US vote marked a first step away from a broken and soulless political machine, but the productivity focus and the concurrent investment in people will only come through a crisis.
Trump and his allies think that his way, the businessman’s way, can change the direction of US growth. It will not, but the scrapping of the old, soulless model was the peculiar gift of this election, not any of Trump’s own policy ideas.
A US recession is still likely despite expectations of a fiscal bonanza. The higher yields (which were the real result of Trump being voted into office) will kill whatever is left of US growth because not only is the political system running on empty, so are many US companies.
As for my post-game analysis, let me note that a fair reading of this vote and its cultural and political epiphenomena should and must humble the whole of the mainstream media.
I watched the election coverage on CNN – or as it should be called in future, the “Clinton News Network” – and it was truly embarrassing! It made the Moscow-based propaganda station Russia Today look like a balanced news organization, which is a truly unflattering comparison for the US’ ostensible journals and networks of record.
The US liberal elite are now calling for a recount using allegations of a corrupt voting process as an excuse – a deeply ironic turn of events given their oft-stated revulsion to the idea of a defeated Trump campaign doing the same.
Maybe it’s time to for everyone to turn away from the headlines and the news anchors and instead hail one of the most beautiful documents ever written, the US constitution.
Maybe it is time for Americans to heed the words of Francis Scott Key, who penned the country’s stirring national anthem, and truly make the US “the land of the free and the home of the brave.”
Despite years of high-level cynicism, the human potential of the US remains near-limitless. Photo: iStock
Edited by Michael McKenna
Steen Jakobsen is chief economist and CIO at Saxo Bank
Steen’s number one election conclusion is indeed very uplifting. “Spending more money does not buy you more votes”.
Mike “Mish” Shedlock