Theresa Maybe (as The Economist tagged her) does have a plan for Brexit after all. President Trump is now in office.
For tens of millions of people in the UK and US this is a dark time with unease, bewilderment and a sense of loss dominating their emotions. However for tens of millions of others this is time of new hope with a bright future where phrases such as we’ve ‘taken back control’ and ‘make America great again’ resonate.
At moments like this it is worth remembering that if life teaches you anything, it should be that nothing is ever as black and white as it seems. Those dark prophecies of doom are probably a little overdone. Those bright predictions of a brave new world where the feel good (note, was it really that good?) of the 50s and 60s returns are, also, probably a little overdone. So what happens now? I don’t know but here are a few guesses.
The economic sugar rush might fade a little
There seems no doubt that this will be a business friendly administration. A raft of highly experienced private sector executives in President Trump’s inner circle will drive near-term policy making to support growth, employment and business. A pro-business agenda (well, US businesses anyway) will define Trump’s government. Combined with plans to ramp up infrastructure spending and we may well see a new motor of the world economy splutter into action after nine years of over dependence on monetary policy to cure all ills.
This is welcome, but equally as the Trump administration steams towards economic confrontation with its major trading partners, there are many risks on the horizon. Tax reform is likely to take longer than anticipated, infrastructure spending takes time and almost any economic theory suggests trade wars would be damaging to confidence, investment and growth, especially if they are with China.
Trump inherits a relatively benign economic environment anyway and so one might expect that momentum to carry the economy through for a while until the policy outlook becomes clearer.
There is going to be disappointment in the US
Populists offer false or easy solutions to get elected, on the basis that they can deal with the reality afterwards. It can be an effective tactic as we’ve seen with both Brexit and the US election. The real world is more complex, and the relative stagnation of middle income consumers in the Western world owes much more to technology driving change, as it does to immigration or trade. That said the reality of hundreds of millions, even billions, of workers across the world engaging in the global economy for the first time through sophisticated supply chains and the wonders of the internet, is a genie that cannot be put back in the bottle. The ‘buy American, hire American’ mantra can create some change and a feel good factor, maybe, but it isn’t likely to turn back the clock. No amount of truthiness is likely to undo the truth.
And probably in the UK too
In the UK Brexit will bring both positives and negatives. Those expecting dramatic falls in immigration, oceans of public money released to the NHS from the clutches of those dastardly bureaucrats in Brussels and a return to those glorious days of 30 or 40 years ago (yep, the nostalgia of those three day weeks, the unburied dead, the un-landfilled rubbish, the paragons of customer service that were British Telecom and British Rail) are all likely to be disappointed. That said there will be change and Theresa May has finally broken her silence. We’re coming out of the single market, immigration will be controlled by UK law and parliament will get a vote on any deal but either way, we’re leaving the EU. The speech gave about as much clarity as she could give without bowing to the pressures of the press to bare all. It feels that the UK now has a more realistic position to go into discussion with our European partners and the prime minister seems to be managing a poor set of cards reasonably well. All that said, Brexit will be a long and difficult process. The end might well justify the means but it isn’t going to be as easy as the populists claim.
But it is easy to be a miserable cynic
Yes, I know what you’re thinking, but sometimes I can be cheerful. Despite the uncertainty of change, we should remember the enormous progress in the human condition that has occurred and will continue to occur. Global average incomes have grown four-fold since the middle of the last century. The proportion of the world living in poverty has declined from 70 per cent to 10 per cent. Global life expectancy has risen from 48 to 71. More people now die from diseases affecting us in old age than they do from infection. More people die of obesity than famine. More people die from suicide and car accidents than from war. I know this doesn’t sound very cheery but these are signs of progress.
It doesn't feel as though the nature of mankind is to worry and plan for the future and the nature of modern media is to over dramatise everything for our increasingly short attention spans (not progress if you ask me). Nevertheless with any sense of perspective life has improved for the majority of people in the world and we should expect it to continue to do so.
Therefore don’t panic, don’t expect too much of our new leaders, keep calm and carry on.