The last mile  

Rather than political analysis or a dissection of how financial markets may react to whatever happens on November 3 (hint: options demand for hedging against big equity moves is unusually high), I thought I would offer Swampians some personal reflections and a review of some past columns in advance of Tuesday’s election. 

In March 2017, I wrote my very first piece as an FT columnist, outlining to readers why Donald Trump’s trade policies wouldn’t help my hometown. It’s always nerve-racking for a journalist to re-read one’s own past work, but I’m rather pleased with how this piece has stood up. No Trump didn’t reduce the trade deficit — rather, he increased it. Yes, real economic change was sidetracked by xenophobia and hate targeted at minorities, the Chinese and immigrants. Yes, deglobalisation is happening, and China is going its own direction regardless of who is in the White House. What my friend the investor Jay Pelosky has dubbed “the tripolar world” is already a reality.

Trump carried 71.5 per cent of the vote in my home county in Indiana in 2016. As I explained to readers back then, during the course of my childhood (I was born in 1970) the rural Midwest was decimated by neoliberal economic policies that came from both sides of the aisle. Some of my high school friends — including children of family farmers who were forced to sell land because they couldn’t compete with Big Ag or people who could no longer afford the college education needed to keep pace with technological change (thanks in part to the Republican tax revolt of the past several decades) — were suckered into voting for a Wall Street conman who presented himself as some sort of outsider. As Biden has so wonderfully quipped, Trump wouldn’t “know a suburb if he took a wrong turn”. Let alone a corn field.

Hopefully, voters in rustbelt swing states won’t fall for that again, particularly in places such as Pennsylvania, which could tip the entire election. Assuming a Joe Biden victory, the next question is: how do we actually make America great again?

As I lay out in my latest column the first thing we should do is to admit that neoliberalism, as defined by laissez-faire economics, has failed — markets aren’t efficient, people aren’t as mobile as capital and localisation, rather than wholesale globalisation, may be the future. The fortunes of companies and individuals are fundamentally disconnected in a way that will require a pendulum shift in power from the private sector to the public sector. The era of wealth creation is over; the era of wealth distribution has begun.

Yes, that will mean more public spending and some private austerity. But a government seeded “productive bubble” has helped to create the last several private sector booms. Biden’s green stimulus, linked to investment in human capital (the “caring” economy), is the right path. But we don’t have all the time in the world to execute on this, because I firmly believe that external forces mean that we are headed towards a post-dollar world, in which it will no longer be as easy to service debt after the next five years or so. 

The next president needs to tell the America people frankly what we already know to be true in our gut. No matter who is in the White House, America is no longer the only game in town. We have to earn back the growth and goodwill squandered by our current administration. It’s going to take a long time. But history tells us it’s not impossible. Hopefully, within the next couple of days, we’ll have a new leader to help start us on the journey. 

Ed, you did time as a political speech writer. Not to count chickens, but if you were penning Biden’s inaugural address, what would it say? 

Recommended reading

• I was struck by this excellent New York Times graphic mapping political donors across the country, which is a stark blue and red reminder of how split the country is. 

• Anne Applebaum has a very wise take on how both sides will continue to radicalise each other, which argues for a moderate agenda for Biden. I was interested in this because I tend to think we need more aggressive structural change economically (which would actually be heterodox politically) but a less aggressive approach in terms of identity politics on the left — I particularly like the stance that Robert Zimmer has taken at University of Chicago.

• In the FT, make sure not to miss our live blog on FT.com on election day (Ed and I will be chiming in every now and again, in between the straight up political news). And when you need a break from high speed media (and anxiety) look to Simon Schama for historical perspective.

Edward Luce responds

Well I’d certainly avoid the “American carnage” address Trump gave in January 2020. “We all bleed the same red blood of patriots,” he said. As I wrote at the time, it was already clear by then that Trump had no intention of pivoting to adult supervision. I was — and remain — astonished at how many people still downplay what Trump says he is going to do because he almost always tries to do it. Bear that thought in mind as the mail-in ballots are being counted over the coming days. 

For different reasons, Biden should also avoid the tone of the hope and change inaugural address that Barack Obama gave in 2009 (just a few feet away from his vice-president). Obama’s lofty oratory certainly met the expectations of the moment — and that of the roughly 2m people who had crammed into a snow-filled scene that Steven Spielberg said would be hard to replicate in a movie. I was there for that too. No two inaugural speeches could be less alike. 

I would recommend Biden avoid too much poetry and “better angels of our nature” talk and make it a practical speech with specifics about how he plans to put America back on the rails again. If he wins, I doubt Biden will get anything like a normal honeymoon. Today’s politics, and the urgency of the pandemic, make that a luxury he cannot afford. My hunch is that Americans have had enough of both utopian and dystopian rhetoric. A simple plan of action would fit the mood and needs of our time.

More from the FT with just one day until the election . . .

• FT View: A clear US election result will calm investor nerves

• African-American turnout is key to US election result

• Colby Smith: Investors look to the ‘reflation trade’ after US election

• Florida recount haunts Supreme Court as it tackles mail ballots

• Peter Spiegel: Why America’s next housing crisis threatens Trump’s re-election

Plus, stay tuned for our special post-election edition of Swamp Notes on Wednesday November 4.

Your feedback

And now a word from our Swampians . . . 

In response to ‘How to survive Joe Biden’s ‘dark winter’’:
“Ed suggests that ‘hiring 100,000 contact tracers’ and ‘creating a national vaccine plan’ could make a real difference but not hinge on the co-operation of every American. Sadly, I disagree. To be effective, approaches like this depend on trust. Someone I know in South Africa has to provide contact details to help contact tracers every time he visits a shop. But because he doesn’t trust the shop’s staff, owners or the government he provides false details, undermining any contact tracing effort. Similarly, a national vaccine plan depends on states and people being willing to accept that the vaccine is safe and effective. California and other states want to double check the work of any vaccine launched on Trump’s watch. Why should we expect Republican states to do anything different with a vaccine launched by a Biden administration?” — Leo Vegoda, Los Angeles, California

Source: Economy - ft.com