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I just came back from a trip to South Africa and there too new American president, Mr. Trump, is being discussed widely and often. Some people have really high hopes for the new president and this looks to me like a confirmation of what I wrote before about populist choices. Your heart wants things to happen. But… logically Mr. Trump as any other president needs to follow (or observe) some rules which are beyond his control.

For example: he wants to build a wall and let us say that he does. Someone needs to pay for it, regardless of the cost. If he will pay for it from taxes, there will be nothing left for anything else. If he will print money, the country will end up in a downward inflation spiral.

I have no idea how he wants to “convince” private companies to manufacture in the US… nationalize them? This also will send a wrong signal, which may result in companies moving their offices abroad. Massively. If he does convince them to produce in the US, the prices will probably get higher. Both results are bad for the consumers.

Immigration: if he will start deporting people, he has to have agreements with other countries to take those people in. Takes time and result is very questionable. If he here pays them (with some sort of trade or debt incentives) US will lose and the result may be more national debt, less money for other projects (such as infrastructure revamp) or again, inflation. If he will just dump people at the border somewhere, this may result in unrest and riots. Not pretty prospect either.

I could go on and on, and I didn’t even mention global political issues where Mr. Trump has no training and no experience. If in terms of business acumen he may be able to use his knowledge, in area of global politics he will need to rely on advisors and those people will follow old way of doing things – at best result will be more of same old stuff.

At best, choosing Mr. Trump will not change much and result in big disappointment. At worst, he will drag the country into even bigger debt and loose global leadership position to China and/or Russia, which will take years to change.

There is one area though where he could do something: change the tax laws and simplify them. Through that, he may achieve at least economic change. But here he will need to fight establishment currently taking profits from existing situation. I personally doubt if he will manage to do that… but good luck American people. You have chosen. Live with it.

 

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