What sort of world will Trump have to be President?

September 21, 2016

Q: What are the main challenges Trump would have to face when he is the President?

A: In which theater? Be more specific. Middle East. South China. Korean Peninsula. Ang moh kio in Singapore. Be specific.

Q: Let’s start with the domestic front – Trump’s election rallying cry is he wants to make America great again and by this he has focussed primarily on job creation. How workable is his plan?

A: The whole idea of job creation cannot really be discussed in a vacuum – it requires hard nosed economic, marketing and most importantly cost related underpinnings that take stock of business realities. Now I don’t want to make this too complicated – but the question you need to ask yourself is why do eight out of ten Americans shop in Walmart? The simple answer is they get more bang for their buck. And this as unassuming as it is just happens to the crux of the matter – as this can only be accomplished by global outsourcing, by firms such as Walmart pursuing a very aggressive global price competitive strategy that allows them carve a significant market slice out the US consumer market.

Now for Trump’s idea of really work. Americans must be willing to pay maybe double or triple for a bobbin of co-axial wires or a gardening set comprising of steel pressed shovels, rakes etc etc.

And that’s unlikely to happen – because as soon as you go down that road then not only will Walmart cease to have a business model. But American wages would have to go up correspondingly as well and that just creates a hubris.

Q: So what you are saying is this idea of Trump to create jobs in the US is quite unrealistic?

A: The correct word is not ‘unrealistic.’ As it can actually be accomplished, but since it requires not only a paradigm shift but possibly the creation of an artificial economy with so many controlling features on the part of regulators, firms, consumers and stake holders at so many levels of the supply chain, it’s just going to be incredibly difficult to impossible to set up.

Let me give you an example. Now if you go to NTUC and walk down the aisle that sells rice, you are likely to come across cheap rice that sells for eight or ten kg for X dollars – but for that amount of money, you can’t even buy one kilogram of Japanese farmed glutinous rice which usually comes packaged in roughly the size of salted chips.

Why?

That’s because agriculture in Japan is a protected and highly state subsidized sector. There of course exist good historical and political reasons that account for that sort of price aberration, but what’s important for your learning outcome is – it’s certainly possible to create that sort of hermetically sealed economy by having in place stiff tariffs and barriers that prevent other rice producers from selling their produce in Japan.

But what is not so easy to accomplish is the paradigm shift that the consumer needs to go thru to make this new economic order work – now if you dine in a restaurant in down town Osaka or Tokyo and order a bowl of rice. When the bill comes. You as a foreigner will probably pengsan (faint) but to a Japanese that’s quite normal.

So coming to the issue of Trump’s job creation strategy – the question you need to ask yourself is whether the average American consumer is psychologically prepared to pay double or possibly triple for a iphone or a plug extension…from where I am standing right now. I really don’t see that happening at all.

So to me this whole idea of job creation fundamentally lacks hard nosed economic underpinnings to really be workable. I for one wouldn’t be entirely surprised if Trump’s ‘make America great again’ T shirts and baseball hats that he hands out are all manufactured in some sweatshop on Shenzhen China.

Q: What about Trump’s repeated calls to revivify the US manufacturing sector by forcing US firms to make in America?

A: In principle that sounds nostalgically great that I suspect could be why Trump likes to trump that message. Especially when you’re talking to working class folk who never had the benefit of a college education or ever had to balance an excel spread sheet before. That much I will give you.

But reality suggest even US firms cannot return even if they want too as not only is the US no longer their primary market. But many of hard manufacturing skills that once existed in America has literally been eviscerated by years of neglect when firms outsourced their manufacturing competence to lower cost nations. It’s conceivable most Americans these days don’t know how to make things any longer like they used too – the first thing you need to appreciate when firms pursue globalization aggressively it’s like dropping an atomic bomb on the master and apprentice compact and when one cohort is eviscerated, it’s unlikely to ever regenerate again. It’s finished! Game over!

That’s what the Harvard Business Review doesn’t tell you! And if you ask them why not – they would ask you to go and seek those answers from the faculty of sociology.

The irony these days is if you want original pair of US Jeans you can’t even get it any longer – as many of those machines along with skill sets were sold off when firms relocated to Sweat shops in China. So these days you have to buy it from cottage industries in Japan who will gladly sell you authentic Americana Jeans at USD$1,000 per pop.

Q: I gather you’re not a great fan of globalization.

A: Well I think it’s great to outsource stuff like plastic clothes hangars and stamped mousetraps to China et al. But it was an epic mistake in my opinion to do the same for motorcycles, leather boots and stuff that used to support whole communities in America.

The problem with globalization is despite it’s sheen it’s just a form of dumbing down that reduces everything to really only one key differentiator – price is king. That’s well and fine if it’s complimented with quality, but ask any frontier man why he’s prepared to pay premium on a pair of American made field boots…go on.

Q: So you’re saying multinationals have their own organizing theory and they are not going to be persuaded by Trump?

A: What I think you need to understand is multinationals have a global marketing footprint where the Americas is really only one of their market segment – I am not saying it’s not a significant market that still has the capacity to gobble up products and services, it still is. But hey iPhones don’t only sell in Madison Ave in New York. They sell all round the world and that’s really my point, so for firms to return back to the US and just make stuff there like little house in the prairie is really quite unrealistic.

That’s really only possible if the US is the only market worthwhile harvesting in this world. Truth is, it’s not. Last year more Rolls Royce’s were sold in China than anywhere in the world. So the world is not as Simple Simon as how Mr Trump sees it.

Why don’t you go and ask the director of international marketing of Rolls Royce cars whether he can get a creamy bonus by just selling cars in Europe?

Q: Do you expect Trump to have an impact on the gaming interest of the online gaming interest of the brotherhood?

A: You know that I am not in a position to offer a comment on that. I would appreciate it if you ask me questions that I can respond too. I don’t wish to come across as intemperate, but time is precious. Thank you.

Q: Obama comes across as some say ‘weak’ when it comes to foreign policy especially in the Middle East. How do you see Trump responding to the current opportunities and threats in the Middle East.

A: The US without a doubt has certainly lost it’s sphere of influence in more ways than I can possibly elaborate, not only in the Arab world but it’s conceivable this erosion is irreversible and in my opinion whatever remnants of their capacity to influence has decayed to such a point where it’s unlikely that they can continue to effectively modulate outcomes geopolitically. This extents to virtually every theater from the Korean Peninsula to the South China Seas.

The Chinese and especially the Russians on the other hand have not been sitting still and twiddling their thumbs in one corner. In all fairness they have stepped up to the plate. In some cases underwriting many of the risk and they have largely been very successful in not only increasing their sphere of influence beyond their borders. But they are now the people that even the Arabs believe they have more mileage dealing with.

Everyone if you notice wants to talk to the Chinese and Russians – so it’s very possible we are seeing the reinstatement of the classical balance of power doctrine that existed before the Berlin Wall came down – where the world was divided between communism and capitalism, red and blue etc etc.

In the light of these developments, we are likely to see Trump playing not only a catch up game.

But it’s a game where the US will not be as self confident as it used to be simply because so many of their levers of power such as the world bank, UN, WTO etc etc has degraded to a point where they are equal if not worse to what the Russians and Chinese have responded by way of alternatives.

My only real concern is whether Trump has the aptitude to appreciate many of the things that is happening around the world and how it may all eventually impact the interest of the US and their allies.

I for one would be very interested to know who his foreign policy and security advisors would be before commenting definitively. As it is, it’s very hard to say.

Q: How much ground has the US lost in actual terms in the Middle East and other hot spots in the world?

A: Foreign policy is guided by 19th-century realpolitik. It boils down to only a few set pieces – there are no eternal allies — only eternal interests. And this is where the Russians have excelled in the game. As they are prepared to underwrite the risk. Now if you take the case of Syria. Putin has really taken a huge risk by committing Russia to a limited air war which many defense analyst previously summarized quite incorrectly, Russia simply did not have either the hardware or organizational skills to put together. They have not only been proven wrong. But most importantly the Russians have proven that a sustained air campaign can indeed alter the outcome favorably without having to commit boots to the ground – bear in mind, Obama had the same option on the table maybe as far back as July 2014. But he vacillated and instead opted for a compromised proxy led war that eventually became such a mess that not even the Turks or Saudi’s or for that matter even NATO knows whose really in charge.

Now if you go to Youtube and type in ‘Tow missile’ – you will see a lot of funny people blowing tanks and heavy armor using US ordnance. The question is who are these people? And whose supplying them these high tech weaponry and most importantly how much influence does the US have when it comes to disarming these militia?

I think the US has a terrible history when it comes to engaging proxies. They used them in the form of the Mujahiddeens in Afghanistan only to end up getting bitten in the ass when they morphed into Al Qaeda. Now they are doing the same in Libya and Syria and now we have ISIL.

I think all this stems from an almost incomprehensible morbid fear on the part of Obama to leverage on the military option that has finally come back to bite him the US very hard. From what I am able to make out from the fog in the Middle East, Obama looks very much like a new age Neville Chamberlain who doesn’t seem to realize there are real limits to classical diplomacy. That at some point true to the Clausewitz adage – war is simply a continuation of politics by other means. The Russians and the even lately the Chinese with their ‘no budge one inch’ policy in the South China Seas do seem to have any hang up’s. Obama & Co do and that is a big problem that Trump have to address.

Q: Why are the Russians and Chinese so keen on extending their sphere of influence?

A: This is not a question of geopolitics, but it’s an on going cat and mouse game that has been going on since the Berlin Wall. Now many people may be under the misconception – communism is dead and we are now really only one happy family living under one roof. But this misleads. Kremlin leaders are still a paranoid lot and they have good cause to be anxious given how serious NATO and the US is about their missile defense plans in the Eastern European corridor. To exacerbate matters the US seems to be waging a debilitating economic war on Russia by deliberately curbing their oil exports to the EU. Bear in mind there is still an on going effort to destabilize the ruble by creating a central clearing house that specifically boycotts Russian credit – so in effect the Russians have no money! You’re really pushing them to the wall – I mean even if you’re just a lowly intelligence analyst sitting in the Kremlin and watching how for the last fifteen years. The Americans executed regime change in Iraq and Libya. Now they want the same in Syria just so the Saudi’s and Turks can construct a new gas line that does away with having to transport their oil thru the Gulf of Homurtz and all this would in effect constrict the flow of oil that Russia desperately needs to drive her economy — even you would consider war as the only realistic respond!

Q: So what you are saying is the US pushed their luck and they lost?

A: I wouldn’t quite say they have lost the game yet. They’re still in the game, but they have certainly lost a few chess pieces that they could do with.

Q: Is that why the TPP is so important to the US?

A: I have no doubt. None whatsoever. Neither do I completely believe it’s all together simply a benign trade pact. Anyone who tells you otherwise is either very naive or disingenous. The obvious aspect of the TPP on the surface at least, is of course trade and commerce. But it’s also a highly effective form of warfare albeit with an economic dimension since it’s intent is specifically designed with containment in mind – in this case China.

Q: I get the feeling you are receiving regular updates and reports concerning these developments. Can you perhaps share your personal reasons for taking such an avid interest in these developments.

A: I think whenever the sands shift, it always creates opportunities and threats. In the past one could be ambivalent to non chalant about the machinations of governments, but in this day and age where the aperture for opportunities seem to be getting narrower, it certainly pays out handsomely to be at least informed concerning what is happening around you. As whether you like it or not – what happens in America will eventually affect us all.

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