How Donald Trump Got Away With His Vague Populist Discourse

The straws in the wind pointing to a troubled economy are cumulating into a small haystack. Car dealerships continue to struggle with inventories of 80 days and more. Bloomberg reported earlier this week that 18 companies on the Nifty 50 missed their revenue estimates for the September quarter. Those missing the target exceeded those overachieving the targets, numbering 15. Analysts have started speculating that the urban consumption squeeze would crimp corporate investment plans. State Bank of India economists estimate India’s Q2 growth rate to be 6.5%. Shaktikanta Das, the governor of the central bank the Reserve Bank of India (RBI) sees an upside risk for inflation. Crisil’s vegetarian platter costs 20% more than a year ago.

That corporate performance can affect stock prices seems to strike hordes of investors as a surprise. This connection between how a company performs and how it is valued seems to have been lost in the surge of liquidity flooding the markets, both domestic and foreign. Now that the froth is subsiding, some of these hard truths that had lain submerged are coming to the surface. Some investors continue to hope that developments such as a Fed rate cut in the US, joining US stocks in a sympathetic celebration of Donald Trump’s return as the president of the US, and the MSCI adding five more Indian stocks to its global index would keep lifting the tide. They would be well-advised to not raise their hopes too high.

What To Expect From Trump?

Trump’s promise to cut taxes and encourage cryptocurrency has boosted investor sentiment, at least in the short run. When the combined effect of his poll promises — to levy steep tariffs on imports, jack up labour costs by clamping down on immigration, and increase the fiscal deficit sharply (not an explicit promise, but a corollary to the promise to slash taxes ) — materialises, it would boost inflation. That would, in turn, force the Fed to raise rates again. Unless, of course, Trump chooses to dispose, as Gods are wont to, when mere men propose what Trump had proposed.

The promise to make America great again is inherently backward-looking. But technology and market evolution keep things moving forward. The metal-bashing kind of industry exemplified by the steel plants and downstream industries in Pittsburgh and Bethlehem, both in Pennsylvania, a swing state that decisively favoured Trump, cannot return to the US, except at a huge cost to the US consumer and US industry. However, advances in artificial intelligence (AI) could convert formerly labour-intensive product lines into technology- and capital-intensive ones, which could be perfectly viable in the US.

But that would not return the glory of towns that once specialised in metal bashing. The new rendition of formerly manual jobs would involve robots and sophisticated algorithms to guide the robots, including artificial intelligence that would allow a robot to make a judgement call as to, for example, whether a diamond has been polished to the optimal level of brilliance. The workforce needed in this case would not exactly be the blue-collar variety.

The Medium Of Trump’s Political Discourse

While broad discussion of the economic and geopolitical consequences of a second Trump term have been widely discussed in the media, certain other facets of Trump’s victory have not received the attention they deserve.

One is the change in the political discourse, its content and its medium. America’s first televised presidential debate, between candidates John F Kennedy and Richard Nixon, illustrates the point. Those who heard it on the radio thought Nixon had done better than Kennedy. Those who watched the debate on TV saw a Nixon with a scowl, a five-o’-clock shadow on his jowls and sweat shining on his forehead, and contrasted him with a handsome, smiling, smooth-shaven Kennedy, and judged Kennedy the clear winner. The medium matters, even if it is not entirely the message.

Trump did not do much of TV or newspaper interviews. He preferred, instead, to appear on a number of popular podcasts. These podcast hosts, wildly popular with certain audience segments, include former wrestlers, National Football League stars, comedians, a gamer who had been kicked off a Twitch for offensive comments, and Joe Rogan, a comedic entertainer who interviews celebrities on subjects ranging from hobbies to aliens.

Newspaper and TV journalists are used to asking serious questions (at least in the US), but these podcasts that Trump chose to appear on focus on entertaining the audience, not asking their guests hard, probing questions. The podcasts helped Trump connect with millions of Americans who would normally not come across a politician in their consumption of media. A significant reason why young men preponderantly voted for Trump, rather than Kamala Harris, is said to be Trump’s podcast strategy. “He gets us” is a refrain reported frequently from Trump supporters. Apparently, other politicians do not understand what troubles the average voter. Clearly, voter connect is key, and politicians have to go beyond mainstream media to establish that connection.

Problem Of A Populist Discourse

Trump’s solutions to people’s problems are vague — ‘if I had been president, I would never have allowed this to happen’ — and illogical — tariffs on imports to lower prices. People just do not make the connection between endured hardship and their causal problem: extreme weather events and climate change, for example. Trump denies the reality of climate change but blames Joe Biden for the damage wreaked by hurricanes because. Trump claims that the incumbent president diverts funds meant for hurricane relief to shower care on illegal immigrants.

The American economy is the envy of the rich world, growing at close to 3%. Yet most voters think their economy is down in the dumps. “Immigrants are stealing your jobs,” thunders Trump. But unemployment is barely above 4%, at historic lows. Biden has damaged the glorious economy Trump had left behind when he demitted office, claims Trump. In reality, the Biden administration inherited a fiscal deficit of 25% of GDP, feeble industrial capacity in electric mobility, renewable energy, climate mitigation including via carbon dioxide removal, and advanced semiconductors. The Biden administration has funded all these sectors in which the US lagged China or other countries, and a chipmaking foundry went on stream in Arizona last fortnight. Neither side made any mention of such developments during the campaign.

A political discourse that shuns the complexity that attends on life in the globalised world is guaranteed to be exploited by populists who offer simplistic solutions that anyone can grasp, and garner support on that basis. This is a lesson that applies to us in India, too.