It’s been a good year for self-proclaimed ‘men of the people’.
The two most notable examples, Donald Trump and Nigel Farage, posed in a golden lift to show us just how much they have in common with the man on the street.
The two seem to get on well and Trump even cheekily endorsed Farage to become UK ambassador to the US on Twitter.
Number 10, however, replied that they had ‘no vacancy’.
The Ukip leader seems to have been disappointed, though I fail to see how a foreign leader telling Britain who to appoint ties in with his rhetoric of ‘taking back control’.
Anyway, today in the Daily Reckoning Jim Rickards draws parallels between the newly elected US President and Ronald Reagan.
“Ronald Reagan was considered a buffoon, a dope, an actor unfit for the presidency,” writes Jim.
“Many feared he’d also push the nuclear button and start World War III. So many of the things you’ve heard about Trump are exactly what they said about Reagan at the time.”
It’s fair to say people are more than a bit apprehensive about Trump’s impending move to a big white building on 1600 Pennsylvania Avenue.
Although approval rates traditionally improve in the weeks after the election as people rally behind the new president, this hasn’t happened for Trump.
Jim reckons current circumstances will make it much harder for Trump to improve his popularity compared to the time Reagan assumed office:
“When Ronald Reagan was sworn in, interest rates were 20%. They were as high as they could possibly be. They had nowhere to go but down.
“Trump will be entering the White House under very different circumstances. Interest rates are close to zero. They have nowhere to go but up.”
And that’s not all. The inflation outlook is also as different as day and night.
“When Reagan entered office, inflation was running at 13%. By 1984, Volcker [The Fed’s Chairman at the time] had reduced it to around 4%. That was a massive disinflation. Stocks and bonds both went up.
“Trump could have the opposite situation. Trump could have a collapsing bond market and stocks could run out of steam.”
Trump v Obama
Where Jim’s made some interesting observations about Trump and Reagan, I’d like to focus on the contrast between Trump and the person he’ll succeed, Barack Obama.
I can’t help but feel that the mood regarding Trump moving into the White House is basically the exact opposite of when Obama came to power in 2008.
Obama campaigned with a message of hope and inspired millions, even in Europe when he spoke in Berlin for example.
It invalidated the Morrissey lyric that goes:
The land of the free, they said
And of opportunity
In a just and truthful way
But where the President
Is never, black, female or gay”
In short, it seemed to mark a new era. An era of progress.
When Obama took over after eight years of George W. Bush, expectations were therefore sky high. In a way, after the high his election created the only way was down for the former Illinois senator.
For the record, I personally think Obama did well. He made insurance more affordable, which spectacularly brought down the rate of uninsured, pushed for marriage equality and implemented more progressive environmental policies.
Obama also repaired a lot of the damage to America’s foreign relations caused by the Bush government. He even signed a nuclear deal with Iran after diplomatic ties had been frozen for decades.
So I would call Obama’s time in office a success. If people feel let down, it might be because the expectations were impossible to live up to, especially with a Republican-controlled Congress that made him water down his proposals.
Donald Trump now finds himself in the exact opposite situation.
Beating the drum for a wall with Mexico, his message was one of hostility. Now he’s calling on the nation to unite, but that will be one hell of a challenge after the divisions that he’s sown.
Paradoxical as it may sound, the extremely low expectations might actually work in his favour. The bar is set so low it’ll be virtually impossible for him to limbo under it.
If his presidency turns out to be one big cock-up, then it won’t be much different from what many people are already expecting.
Positive achievements, on the other hand, will stand out much more than under Obama simply because Trump doesn’t carry the burden of expectation.
In any case, Trump’s already surprised by promising to leave Obamacare more or less untouched and by admitting climate change may be caused by people after all.
What’s more, tackling Washington’s ‘revolving door’ culture and walking away from TPP – a trade deal between countries in the Pacific Rim that would hand more power to big business – seem like good calls.
I know better than to get my hopes up. Trump is still a most unpredictable politician. But everybody expecting he’s not up to the task means that for him pretty much the only way is up.