Main street vs Wall Street

No pundit had predicted it – not even by a long shot. Donald Trump has won the US presidential election on the wave of an anti-globalisation vote. The political establishment of both the Democratic and Republican parties, the pollsters and the TV talk-show hosts – all beneficiaries – had been so busy with themselves that they had not even ventured out of the media bubble to find out how millions outside the bubble had been coping with the forces of a competitive globalised economy.

The one thing that has become clear from Trump’s stunning victory is the revolt of the people against the political establishment, which had left them out in the cold for long to fend for themselves, as American jobs and businesses were being lost to other countries. That Trump – a non-professional politician – was able to feel the pulse and tap into this anger and frustration of people betrays the hubris and disconnect of the political elite with the people.

Throughout his campaign, Trump made this disconnect his rallying cry. He repeatedly talked of ‘corrupt politicians’, accusing them of letting down their voters and merely looking after ‘themselves’.

That this resonated well with the electorate has been borne out by the victory of this non-professional politician against all odds, even in the face of opposition from the establishment of his own Republican Party. The shock caused by his victory has been felt across the political establishment, the mainstream media and the Wall Street where the markets tumbled; not only in the US but across Europe and Asia as well, although they are bouncing back now. But the future remains uncertain.

The US has several strengths and these have delivered very good results to its people. Its victory in the cold war left it as the sole superpower in the world. The birth of the New World Order further strengthened it and the globalisation of the economy enriched the country beyond belief.

That raised a question in the minds of main street America: why have the benefits of these several advantages not been shared among all the people?

The ‘Occupy Wall Street’ movement of 2011 had first raised the banner of this anger and frustration against rising inequalities, greed, corruption and influence of big money in politics, where the young generation felt they could not see a good future in that system.

Many felt that important decision-making slots in the cabinet and elsewhere were often given by the political establishment of both the Democratic and Republican administrations on the recommendations of Wall Street. These men and women then steered the course of American policies to benefit their home ground- pumping billions to bail out Wall Street companies. However, there was little attention given to funding and implementing programmes for aid and assistance to disadvantaged folks in small towns and rural communities who were losing out to forces of globalisation.

Of late, several independent writers and academia have been critical of the American political system, accusing it of grandstanding, gravy trains and gridlocks which have held back its economy from delivering strong growth and new opportunities. Jobs and businesses have been moving out of the country and the benefits of successes in the cold war, the New World Order and the globalised economy were being monopolised by Wall Street businesses and their executives.

One example may suffice to show this stark reality. The relationship between the average earnings of workers and top executives in the corporate sector in most developed countries like the UK, France, Germany, Japan, the Netherlands and others varies from 1:10 to 1:20. In the US, this ratio has been skewed up astronomically to 1:250. Such astronomical inequalities have nothing to do with the rational contributions of different people to corporate successes but are ideological and irrational, leading to anger and frustration. 

That was one part of the problem that the plain folks of main street America had with big business of Wall Street. The other was the unwillingness of the political system to devise policies for fair distribution of riches, creation of sufficient new opportunities and programmes for retraining a jobless workforce to become gainfully employed elsewhere.

This anger and hunger for change made these plain folks of the main street look outside the system controlled by political establishment. The spectacular rise of Bernie Sanders, a non-establishment man from the Democratic Party, had also underlined this disconnect between people and the political establishment.

Trump’s caricaturing of opponents who were professional politicians seemed to win the day for him with the people who put their faith in a rank outsider in the hope that a non-professional politician would deliver where professional politicians had failed. 

That was the politics of winning the election.

Now comes the question of governing the country – not just any country but the most powerful country in the world. Already, the responsibilities of governance have caused Trump to review his controversial campaign positions. His successful business experience across the world would have shown him that has become a multi-polar place, and interdependence is the name of the game. In fact, he once had a close association with Pakistan – and we should work towards building a better understanding with his administration.

Trade and defence and security appear to be his priority. He has been very critical of trade agreements like Nafta (between the US, Canada and Mexico), and the Trans-Pacific (with East and South East Asia – minus China) and Trans-Atlantic (with Europe) partnership trade agreements. And he has also talked of increasing duties on Chinese and other imports. Apart from issues of interdependence, this has to be seen from point of view of the American consumer who may have to pay higher prices for the same goods.

As things stand, the immediate winner of Trump’s presidency will be Canada. As his administration tightens controls on immigration from around the world and deports even part of illegal immigrants to Mexico, where is American economy going to find workforce and vendors for its growth and creating business opportunities that Trump wants? Prime Minister Justin Trudeau has been good for Canada and is also appreciated around the world for boldly upholding values of liberal democracy and supporting humanitarian causes in these difficult times.

The Trump presidency now comes as a bonus for Canada, which is better placed than any other country to fill in the demands of American economy. No wonder, the Canadian immigration website crashed within hours of announcement of Trump winning the presidential election.

Some of the Trump administration’s priorities make avenues for closer cooperation possible for Pakistan. There seems to be no reason for dire predictions or panic. The uncertainties are there for everyone, but Pakistan would reduce the risk from uncertainties if it can activate its laidback governance to do some homework and enhance its strategic advantages. It should look forward to promising relations with the new Trump administration.

 

The writer designed the Board of
Investment and the First Women’s Bank.

Email: smshah@alum.mit.edu