Backfire

Napoleon Bonaparte once said “never ascribe to malice that which is adequately explained by incompetence”. What a quote! And of the many that come to mind that could be subjected to this quote, there is none other than Donald that tops that list. At a time where global balances have become as fragile as can be, the need for a new breed of leaders who understand the world with all its contemporary complexities is more than evident. Because the members of the “old guard” do not seem to be capable of fully grasping the digital environment of today, being of an analog make, which renders it hard to keep up. And this is no longer an issue of physical stamina or reflexes, but rather the lack in intellectual and technological capacity to translate let alone regulate today’s reality.

And while Donald is surrounded by all the US tech giants, his country is lagging far behind in technological evolution compared to the Asia competition out there. How is that possible one might ask, and there is no simple answer to that. It seems that the majority of US tech giants have primarily focused on the creation of social platforms as revenue pillars, while the Asian competitors have focused heavily on useful every day technological products and applications. With Apple, NVIDIA, Amazon, Google and Tesla being the engines of technological evolution in the US market space in combination with the President’s panicky retraction from global trade, markets, let alone production capacities for these giants, seem to shrink. Having rolled their dice decades ago they all played their hand badly from today’s standpoint and now they are stuck with the heavy bill. With all western know-how transferred into Asia and the continuous vocational training of Asians over the last three decades, one does not need to be an oracle to predict the long-term outcome of these actions.  An old Greek proverb loosely translated into English says that the “cargo wakes the driver”. And to be fair to the circumstances, back in the ‘90ies this shift was not accidental. It was following a certain logic which was originating from the need of US corporations to drive profitability in their quarterly SEC reporting to keep investors happy. The production shift to Asia seemed to be the natural choice. And I suppose, it did create a new balanced landscape for global trade up to the moment when Donald decided to declare trade war on the world. I guess back in the ‘90ies no one in the US thought it possible that a Donald could ever come around to cause such damage. But as is the case with all wars- “Victoria Praeparatiomen Amat”- victory loves preparation. And this war of Donald’s does not convey the comfort of a well thought through strategy. The imposition of tariffs as the nuclear weapon in the arsenal reminds of a gunsmith who crafted a defective weapon that backfired. A poor understanding of the operation of tariffs combined with the obsessive desire to enforce them created domestically more confusion than it provided for optimism. The effects of this wrong decision are kicking-in at light speed with the discontent rising rapidly even among the President’s most devoted constituents. Unless, Donald pursues a completely different agenda, one that has nothing to do with politics but everything with personal wealth generation.  

On a relevant note, BYD is causing Elon major headaches these days, as he sees Teslas being sidelined not so much because they are bad cars per se, but because of Elon’s megalomaniac personality that transpires into the perception and acceptance of his products. It almost seems as if there is also a mental shift taking place among consumers who now no longer decide to go for product A or product B based on the product’s actual properties, but they also factor-in the personality that stands behind each product as its creator. That fact in itself is worth observing from a different sociological angle.  And while the US government under Donald’s leadership is trying heavily to destroy all elements of checks and balances to make headway for the Kingdom of Donald, the Asian competition is simply, moderately and with maturity focusing on business as usual, staying away from any unnecessary distraction or noise that might cause similar effects. Understanding the vacuum that Donald’s tariff policy has created they see opportunity where Donald sees threats to his domestic economy and like a colony of hardworking ants they conduct their warfare in silence. I believe this would have happened sooner or later anyway, as the Asian competition in an effort to please the US consumer had taken their eyes away from the rest of the global marketplace and its vast potential. It is only now, that Donald’s failed policies and poor understanding of global trade, has poked them and directed their focus to other markets which are readily available to help Asia recuperate from the losses likely to incur from the retraction of the US market.

Now the real question for the US remains a simple one, namely, how feasible is it for the US economy to recover, how feasible is it to Make Americas economy Great Again, and how likely is it for US businesses to relocate back again into the US given the following: (a) the tremendous cost to build factories in the US to achieve a reversal of the Asia production shift of the ‘90ies, (b) even if that happens, US businesses would still rely heavily on raw materials from abroad, which then defeats the very purpose, (c) even if point (b) is by-passed successfully, labor costs in the US would have to drop significantly to make the US competitive in the global marketplace as it is highly unlikely that an introverted economy can grow to new heights without a strong exporting arm, (d) in order to achieve (c) the US Dollar would have to be depreciated significantly  to entice global consumption of US products, which would work against its strengthening which is the actual objective of a strong economy to have a strong currency, and lastly (e) given that Donald is already running his second term in office and given the current reading of the US Constitution where he has no other term to run for, the question remains how willing are his even most fanatic corporate supporters to incur that massive investment in light of the possible fact that the US will be extremely lucky and their next President will be sane and will most likely restore the “status quo ante” in Global trade?