January, 2018

Fruits of Thought

Straight Talk And Trump

In the New Year, I find myself thinking of my time on the platform at Hunts Point. It was one of the most important experiences in my life. Among other things, the memories of my experiences there help me to understand the Trump phenomenon, because he expresses things bluntly, in an unadorned way, exactly the way most of the guys I worked with on the loading dock and sales platform of the market expressed things.

The most insightful commentary on the President and his role in our culture has been expressed by Salena Zito, a Pittsburgh-based writer who often writes for The Weekly Standard, but it was in a piece for The Atlantic, written during the campaign in which she explained the divergence between the media and Trump’s supporters.

Trump had said at a rally that 58 percent of black youth could not get a job. But the Bureau of Labor Statistics put the number at 20.6 percent. However, that unemployment rate does not include young blacks who were too discouraged to even look for work or who had decided to do something else –go to school, say, but would have rather had a job. So, Donald Trump elected to use the employment population ratio, which reports that only 41.5 percent of blacks in that population cohort –ages 16 to 24 –are working –so 58 percent are not. But that number includes people in school and is thus problematic.

As Zito explained: “It’s a familiar split. When he makes claims like this, the press takes him literally but not seriously; his supporters take him seriously but not literally.”

There are moments when he seems wild, impulsive and unhinged —tweeting about his finger on the nuclear button and so forth. But, then again, a bi-partisan conventional diplomatic approach followed for decades through many Presidents just led to North Korea gaining nuclear weapons and ICBMs. Is he impulsive or shrewd?

It was said that only Nixon could go to China –only he had the anti-communist credentials to make that move and avoid the political blowback that would have been directed against, say, a liberal Democrat who tried the same thing. Could it be the Korean leadership always knew that Presidents Obama, Bush or Clinton were not going to drop a nuclear bomb on them? Perhaps President Trump likes to look impulsive, and perhaps the thought that his behavior can’t be predicted might lead Kim Jong-un to fear for his own life, for those close to him, and for his regime. Perhaps, that fear might lead him to negotiate.

A lot of the revulsion that many in the media and sophisticated circles have for Trump is aesthetic. He likes steak well done and eats it with ketchup. Even his famous tape with Billy Bush was not about forcing himself on women; it was about his delight at what women allowed him to do since he was a star. But it was crass and ungentlemanly to speak that way.

Evidence that the media is detached from much of America is the recent spate of truly bizarre articles, news stories and books that treat Trump voters –remember Trump carried more than 80 percent of all  counties in America –like some hitherto unknown aboriginal tribe.

Although there are many Trump policies that many in the industry may question —immigration and free trade, most notably —the recent tax cut will benefit many in the industry. If it also boosts the economy, it will be a big win for even more people and the country as a whole.

What is more, the tax cut is not just a rate cut; it is a structural reform of the type that will make Trump a consequential President. In lowering the corporate tax rate, it will lead to competitive reaction by other countries. China already has announced an exemption for foreign companies that reinvest in preferred industries. Although comparisons can be complicated, and many small economies have lower corporate rates, Germany, France, India and Australia are all now about 50 percent higher than the U.S. corporate rate. They will start to lose appeal as locations for investment, so these countries will respond. That changes the world.

The capping of the deductibility of state and local taxes at $10,000 will create tremendous pressure domestically to restrain tax increases at the state and local level. And this restriction, combined with a cap of $750,000 on the principle amount of mortgages on which interest can be deducted, will lead to less willingness to buy more expensive homes —all part of a plan to lead to more investment in production rather than spending.

As the protesters march in Iran, they are shouting, “Leave Palestine alone, do something for us!”Or “No Gaza, No Lebanon. I will give my life for Iran.”Don’t these slogans sound an awful lot like an Iranian version of “America First,”and in rejecting both major political parties, weren’t British voters saying the same in supporting Brexit? All of these protests express a distrust that the political elite actually cares about them.

One doesn’t have to agree with Donald Trump or support his policies, but one should not be blinded to understanding. In business, one of the most important things to do is not get caught in your own feedback loop. You will miss opportunities and misjudge situations. There are few places better to learn that lesson than going to work every day with the truckers, shippers, competitors, workers and customers that make up a terminal market.