Still here

I had a post half-completed the other day when my computer failed –  a failure that proved terminal.  Add in an egregious decision by the Reserve Bank to leave trustees of its pension scheme potentially personally liable for some really bad past calls by the Bank (a decision that has already contributed to the resignation of our most eminent trustee) and a worsening cold, and my energies were elsewhere.  And, of course, for the last 24 hours, the US election has been much much more interesting than anything New Zealand-related that I might have written about.  Even my 10 year old came home from school yesterday telling me that her class had been following the early results intensely, even if (she reported that) some of the offspring of liberal Island Bay had apparently somehow become convinced that Donald Trump would soon be bombing New Zealand.

I wasn’t a Trump or Clinton supporter going into the election, and am pretty sure that if I’d been American I’d have voted for neither of them (although one of the interesting things in the last few weeks had been the collapse of the third party candidates’ vote share).  I laid out some of my reasons on my other blog.  So unconfident was I in either candidate that I thought a least bad outcome might be one in which one party controlled Congress and the other had the presidency, and (as I noted somewhere else a few days ago) the numbers suggested that if that was going to happen, that probably meant Clinton in the presidency.

But, of course, we now know that hasn’t happened.   Donald Trump will become President on 20 January 2017.  None of my reservations has gone away.  Character matters, temperament matters.  And Trump doesn’t have either of those in any sort of form that makes me think him fit to be President.  I suspect he will be a poor President.  Then again, with what we know now John F Kennedy and Lyndon Johnson wouldn’t pass the character test.  Nor Bill Clinton, nor Hillary Clinton.

For all the media vapours in the last 24 hours, the polls were always relatively close –  as late as yesterday morning I noticed that two new polls on the RCP presidential polls site had a slight lead for Trump –  and the popular vote (not, of course, the basis of the election) looks set to end quite close.  Towards the end of the campaign detached analysts had been saying that Trump had perhaps a 30 per cent chance of victory.  This outcome was always a serious possibility –  the more so perhaps as no one had adequately understood Trump’s surprising success since he first declared his candidacy in the middle of last year.  Perhaps in the end it was a bit like Brexit.  The polls were always close but (a) most of the media and political elites were appalled at the idea of Brexit, and (b) even supporters ( I was one) couldn’t quite believe, despite the polls, that a Brexit victory could actually happen.

Of course, as regards the US election, those sorts of sentiments were accentuated among elite observers outside the US.  According to polls New Zealanders (and Australians) overwhelmingly favoured Obama (in 2008 and 2012) and then Clinton, and that predilection will have been even more marked among our media and political and opinion leaders.  And so the subsequent coverage has been marked more by incomprehension and abuse than anything else –  although in a breath of commonsense the Prime Minister did note that New Zealand is unlikely to be one of the new President’s concerns.  Between the Dominion-Post and Morning Report (and a quick glance through the Herald),  the coverage has been so one-sided that it can only have appealed to the emotional uncomprehending side of liberal readers/listeners, offering little in the way of analysis.

I’m a free market-oriented, small government, social conservative.  There aren’t many of us in New Zealand.  Even if it weren’t for the character and temperament issues, much of Trump’s policy/rhetoric makes me deeply uneasy.  I believe in free trade –  although not preferential trade agreements of the sort of TPP –  and I’m very sceptical of the sort of infrastructure spending programmes that Trump and Clinton were falling over themselves to champion.    And if China has a hugely distorted economy, that mostly disadvantages China –  the idea of officially deeming China a “currency manipulator” isn’t appealing at all (and to extent it is an accurate description, it was truer 15 years ago than it is now).

Then again, there are some things I’m unambigiously happy about in last night’s result:

  • seeing the back, surely finally, of the Clintons (all of them).  Failings of character, a strong sense of entitlement, a strong whiff of corruption, and so on.   As someone noted, probably not many foreign governments will be donating to the Clinton Foundation today.
  • the probable death of TPP.  That agreement had very little in common with “free trade”.  ISDS provisions, which provide foreign investors access to different dispute resolution procedures than domestic investors or ordinary citizens have access to, should have no place in a democracy governed by the rule of law.  And the intrusion of international agreements into trying to set parameters for eg domestic labour market regulation should be firmly resisted.  Domestic laws should be argued over in domestic political debate.
  • the likelihood that new Supreme Court justices will be people inclined to read the Constitution as it was written, rather than as individual judges might wish it to be written.  There is an established procedure for amending the Constitution, and further politicising the Court isn’t that procedure.
  • a halt in the relentless push towards normalising abortion (the Democrats campaigned on restoring federal funding for abortions).
  • a pause –  though probably only a pause –  in the relentless push by federal authorities to compel private people and entities to accept/endorse policies that are anathema to their traditions and religious beliefs (eg same-sex marriage and transgender issues).
  • less risk of a hawkish interventionist foreign policy, and especially the serious risks that would have surrounded Clinton’s preference for a Syrian no-fly zone.

And others where there is some –  perhaps small –  hope of better policy:

  • smart people on both sides of US politics recognise there are serious flaws in the US corporate tax system. This means it is one possible area of serious reform, especially with the Republicans in control of the House and the Senate.  Lower capital income taxation, and a more conventional tax treatment of the offshore earnings of US companies, would be material steps forward, lifting the prospect of stronger private business investment,
  • steps towards a rather better healthcare policy, perhaps including much greater scope for innovation in the healthcare and drugs sectors, and perhaps a step towards comprehensive catastrophic risk cover (the latter a stance favoured by many Republicans pre 2008).
  • perhaps even Trump and a Republican Congress could be the vehicle towards a viable long-term solution for the huge number of illegal immigrants in the US.  In parallels with Nixon to China, perhaps only someone like Trump has the political positioning to be able to resolve the issue. I don’t have strong view on what the “right” outcome should be, but the existing legal limbo can’t be good for the illegals, or for confidence in the US system of government.

And in the last 15 years or so –  perhaps especially under Obama –  there has been a huge increase in the discretionary use of the powers of the administrative state, rather than relying on Congress.  No doubt each side of politics dislikes many of the uses the opposite side’s presidents have made of such powers –  and there are some serious challenges around the legality of some of those interventions (including, for example, Obama’s on immigration), but  in general, the heavy use of such power isn’t really consistent with visions of a democracy in which legislatures make laws and the executive carries them out. No doubt, Trump and the Congressional Republicans will have differences –  often large ones –  on many things, and it still takes 60 votes to get major things through the Senate –  but there must be more scope for relying on legislation rather than executive orders than there was in years when the presidency and Congress were controlled by different parties.  To me, whatever the specific policies, that is an unambigously good thing –  superior process.  And as the Republicans aren’t defending many Senate seats in 2018, if anything the Senate majority could actually increase a little for the last two years of the presidential term.

Am I very optimistic? No, not really.  It was always extraordinary that a great country was reduced to such a bad set of presidential options.  And no doubt the political environment for the next few years will be at least as toxic as the last few have been.  But from a small government social conservative perspective, even a deeply flawed vessel might still end up being agent for some modest gains (even amid the substantive and rhetorical dross).

20 thoughts on “Still here

  1. Like you Mike found both of them awful candidates. I would frequently get angry at people who always only saw the ball (candidates) and not the game (the system). There are serious losers out of the last 30 years of neo-liberalism and the expunging of the social contract after the GFC to save the banks was the last straw for many. This is the 30 year end result of those originators of this system who are all now either rich or dead and for many young people unknown. I know with all the division and faultlines that are being ruptured in the US and in the World that the risks are multiplying for errors and hate but I am hopeful that just perhaps a change candidate will be the catalyst for a real un-winding of the kleptocratic US political system and unlocking of potential that has plagued the heart of the Western system. It will be seat of the pants stuff as we search through the next few years and we almost have to cleave far more to our neighbour in unity than we have ever before.

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  2. Indeed, my 7 year old came back and asked me if I thought that Trump would be jailing Hillary Clinton and why a bad man could become the president of the United States.

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      • Certainly not. I think this Principal is some shocked left-liberal herself finding it impossible to believe that anyone sane could actually have voted for Trump – and in this neighbourhood there are a lot of parents of that sort of ilk.

        I almost gave way to the temptation to simply fire back an email saying “tell your kids that it is a democracy – with all its flaws – and the people ended up choosing one of two not very popular or good candidates. That is how the system works, and it is better than all the alternatives. Tell your kids to celebrate it.” (all of which is more or less what i told my own kids)

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      • Among the various policies that the mainstream media said Trump didn’t have, was one regarding “school choice” and Federal funding “following the child”.

        Of course it is beyond the pale to even propose such a thing, or even to spread the information round at all; and unthinkable that the candidate proposing it might actually win the election.

        I suspect that Trump won votes among many people who actually looked at his policies and saw one or more unthinkable and non-discussable ones that quite appealed to them.

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  3. Some good thoughts there Michael (and I also enjoyed reading Danyl McLachlan’s take on it from the left). I am hoping for a decent bout of corporate tax reform and perhaps land use, before the inevitable foreign policy debacle.

    More generally, it seems to me that globalisation is a busted flush these days. It’s pushed too many people too far, too fast, and they just don’t like it any more (for good and bad reasons). I think governments in our part of the world are crazy not to be trying to get ahead of the curve.

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    • The trouble with globalisation is that resurgent “economic rent” in crucial parts of domestic economies – especially urban land and hence housing – sucks out any gains made by ordinary workers and households, including the cheaper consumption items that are a benefit for discretionary income.

      This will ultimately destroy the temporarily positive gains from the Roger and Ruth era in NZ. Blaming the reforms is wrong. It is other changes in the wrong direction, that are responsible.

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  4. So all sucked in by the MSM lefties and their rubbish. Had you been listening quietly you would have known Trump was going to be the President.
    In the hinterlands Hillary didn’t have signage and trump did. People shrink away when attacked and they did.The democrats attacked everyone they could. The result is fully justified.
    And Trump ain’t no fool. Lets wait and see. There is a lot to do.
    And thank goodness the tpp is off the agenda. It was not good for anyone except American Corporations.

    If Trump does for America what Key has done for NZ wow .
    And he will because even the Republicans have been stunned by the result and they know that they owe their win to Trump.

    America is going to change.

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    • Not sure if he’d beat Jill Stein to that title.

      But then what does “left wing” mean in this context? On trade perhaps, and perhaps infrastructure spending. Immigration issues are quite idiosyncratic in the US – lots of illegals – and views no longer really seem to fall along a traditional left/right spectrum. But on corporate tax, on Obamacare (whatever his policy actually is) and regulation (likewise) it would be hard to present him as to the “left” of Clinton

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      • If you look at Paul Ryan’s Better Way website, a good place to start, the overarching theme is deregulation, with a particular focus on finance and energy. Pushing things back to the states is another strong theme.

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  5. I think Yoko Ono coming out and declaring her lesbian relationship with Hillary unknowing made a huge difference in Christian conservative voting. The thought of a woman with lesbian leanings as a US president was just going to hit a brick wall. Too bad Yoko came out right in the midst of the voting and she is thoroughly believable.

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  6. Looks like the bond market is predicting a bout of Keynesian stimulus. With the US economy already near full employment, this should make the zero lower bound a non issue and may help to reset inflation expectations worldwide. Thoughts?

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  7. I guess that is the optimistic take on it…. Of course,there will be private sector crowding out (thru a variety of channels), the Fed still seems to champing at the bit to raise policy rates (presumably more so if they expect more fiscal demand stimulus), and who knows quite how much additional stimulus will happen when. It didn’t really work (enough) in Japan in the 1990s.

    And the next recession can’t be that many years away – whether thru accident, exhaustion, or an intended global protectionist trade war. Rates need to move quite a long way up before one could really be comfortable ZLB was no longer a problem, even in the US.

    I’d probably be more optimistic if I thought serious corporate tax reform was likely, which might lift business investment demand sustainably and perhaps lift productivity growth.

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  8. “Dear New Zealand, you are a deeply civilized small nation, with a low population in a pair of beautiful, spacious islands,” he wrote.

    “You care about climate change, the future of the planet and other scientifically important issues.”

    He suggested the New Zealand should write to all American and British Nobel Prize winners, Fields medalists, Kyoto and Crafoord Prize and International Cosmos Prize winners, the Fellows of the Royal Society, the elite scientists in the National Academy of Sciences, the Fellows of the British Academy and similar bodies in America.

    “Offer them citizenship,” Dawkins wrote.

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11746387

    Unfortunately, the government has cut the skilled migrant category by 5k. Since those that arrive from overseas is usually only 15k a year. That arrival number will now reduce drastically to only 10k a year.

    Chef’s will remain the top skilled migrant as New Zealand positions for tourism to hit $25 billion in GDP from 7 million visitors in 7 years. Forget about any skilled migrant places for scientists. Maybe perhaps our newest space port in Gisborne on a temporary work Visa but don’t expect applying as a migrant. The english test is so difficult only non english speakers that have to study for it can pass.

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    • Is that true? What an indictment on the way this country is being run. Chefs???? Tourism????

      Has nothing been learned about how the global wealth rankings by nation has been changed in the last few decades? It is all about “value added”. Primary products and tourism merely create an increased number of low-paid jobs.

      The late Sir Paul Callaghan claimed that if NZ’s high-tech manufacturing export sector could be multiplied by 4, it would make NZ the wealthiest OECD nation. And this sector is unnoticed and unsung – it takes up a few modest buildings here and there in suburban locations, with a few trucks coming and going now and then, generally taking export pallets to the airport. In contrast, how much space and resource impact is involved in primary products, for what return?

      I just finished reading “The New Geography of Jobs” by Enrico Moretti. The “multiplier effect” of high-tech jobs is large – like 4 to 7 times as many additional jobs in services etc – and higher pay in those jobs. There is no effect like this in new tourism jobs.

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  9. First of all Michael welcome back. To go from two posts a day to nothing does seem odd in my universe.

    While I wouldn’t agree with lower capital taxation I would welcome a cleaning up of US corporate tax. The current world where there is an above average corporate tax rate but compensatory practices where foreign income doesn’t get repatriated is a mess. A clean up would start to add some clarity to the whole ‘multinationals – bad’ tax debate.

    But yeah I would have voted for Hillary.

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