Trump Presidency Needs Big Picture Industry Perspective

Jim Prevor - The Fruits of Thought

Jim Prevor - The Fruits of ThoughtOne of the most interesting facets of industry-led government relations programs is because they almost always focus on particular industry concerns‭, ‬they often fail to deal with the bigger picture‭.‬

So President-elect Trump’s big initiatives on global trade and immigration‭, ‬if enacted‭, ‬are going to cause trouble for the industry‭. ‬On the other hand‭, ‬as of the date of this column‭, ‬the stock market is up 4.5‭ ‬percent since the election‭, ‬with the Dow breaking the 19,000‭ ‬barrier for the first time‭. ‬The S&P 500‭ ‬had a market cap before the election of about‭ $‬20‭ ‬trillion‭, ‬so a 5‭ ‬percent increase means a trillion dollars in wealth was created‭ ‬‮–‬‭ ‬more if you add in broader indexes‭.

Of course‭, ‬it is never so simple‮…‬‭ ‬bonds are down on fears of more inflation‭. ‬But the point stands‭. ‬Although we may think our specific industry concerns are key‭, ‬in most cases‭, ‬it is the overall success of the country that will matter more to industry executives‭.‬

Of course‭, ‬the short-term can be very difficult‭. ‬In the UK‭, ‬the very legitimate industry concerns over Brexit are‭, ‬to a large extent‭, ‬the outgrowth of years of doing business on the assumption of a free European Market‭. ‬So British growers who invested in say‭, ‬Spanish growing operations‭, ‬are used to the idea of being able to move farm and processing equipment back and forth with ease‭ ‬as the U.S‭. ‬industry does between Salinas and Yuma‭.

Yet these things are always complicated‭. ‬If barriers are put up‭, ‬it is also possible British growers‭, ‬now unable to compete with‭ ‬new-crop Spanish items‭, ‬might actually be able to sell product‭, ‬perhaps at very high prices‭, ‬that right now have no market‭.‬

In the United States‭, ‬Trump’s announcement that the Trans-Pacific Partnership trade deal is dead will disappoint many in the industry who hoped for export opportunities to Japan and other Asian markets‭. And certainly‭, ‬textbook economics teaches us trade is mutually beneficial and creates wealth‭.‬

In his campaign‭, ‬Trump took a protectionist stance‭ ‬­‮—‬‭ ‬that he saw these types of agreements‭, ‬including NAFTA‭, ‬as leading to a hemorrhaging of good jobs from America to Mexico and other countries‭. ‬This argument‭, ‬and the general idea that Trump would stand up for workers who have not obviously benefited from‭ ‬globalization‭, ‬played no small part in Trump’s ability to break through the‭ ‬“Great Blue Wall”‭ ‬and win states that had once been the heart of American manufacturing‭ ‬‮–‬‭ ‬Pennsylvania‭, ‬Ohio‭, ‬Michigan and Wisconsin‭, ‬among them‭.‬

Although we may think our specific industry concerns are key‭, ‬in most cases‭, ‬it is the overall success of the country that will‭ ‬matter more to industry executives

Besides the issue of employing manufacturing workers‭, ‬the whole Trump phenomenon revolves around sovereignty‭. ‬Trade agreements that have loopholes allowing foreign countries to upset decisions made by Congress and avoid the U.S‭. ‬courts are‭, ‬by definition‭, ‬problematic‭. ‬Issues related to immigration‭, ‬which touch both on competitive labor markets in the United States and border security‭, ‬are equally concerning‭.‬

In an era when so much communication takes place in 140-character snippets‭, ‬there is just not much room for subtlety‭. ‬Many have‭ ‬condemned Trump as racist‭, ‬etc‭., ‬but it is also true that‭, ‬economics and security concerns aside‭, ‬in a democracy‭, ‬immigrants or‭ ‬their children ultimately become citizens‭, ‬and as citizens they become partners in voting on how the country should be run‭. ‬It is not particularly surprising that many people would be hesitant to bring in‭ ‬“partners”‭ ‬who they feel would vote for a country different from the one they would vote for themselves‭.‬

How this will all shake out is still unclear‭, ‬but there are many reasons for hope‭. ‬The key is to recognize one can’t extrapolate from the present situation to the future when things are changing‭.‬

Right now‭, ‬for example‭, ‬we have only limited ability to harvest with automated equipment‭. ‬But if‭, ‬in fact‭, ‬labor availability is‭ ‬restricted or the price of labor goes up‭, ‬then many things that are not even worth studying now suddenly become feasible‭, ‬and we can expect robotic harvesting technology to blossom in our fields‭.‬

Charles Erwin Wilson was president of General Motors and was nominated to be Secretary of Defense in the Eisenhower administration‭. ‬During his confirmation hearings‭, ‬Senators recognizing his large holdings of General Motors stock asked if Wilson could make‭ ‬a decision that would be adverse to the interests of General Motors‭. ‬He answered yes‭, ‬but he also said he could not imagine such a situation‭ ‬“because for years‭, ‬I thought what was good for our country was good for General Motors‭, ‬and‭ ‬vice versa‭.‬”‭

There are many areas that President-elect Trump is interested in‭, ‬such as reducing regulations and reducing taxes‭, ‬that the industry will probably support‭. ‬There are also areas‭, ‬such as global trade and immigration‭, ‬where the industry will prefer different‭ ‬policies‭. ‬In the end though‭, ‬one suspects that though Charles Wilson was attacked viciously for his comment‭, ‬he may have been roughly right‭. ‬If Americans becomes more prosperous‭, ‬more safe and more free under a Trump administration‭, ‬that will probably outweigh any parochial interests‭. ‬That is‭, ‬of course‭, ‬a big if‭.‬