Jack Worthington's Social & Investment Commentaries

2016: Trump v. Clinton? NO. Trump v. Globalism

Posted in Investment & Social Commentaries by Jack Worthington on October 11, 2016

A few quick thoughts on fundamentals driving the US 2016 POTUS election…Trump v. Globalism.

  1. Most people would think I’m a caricature of an American globalist…and I have been for almost my entire adult life. Not many American or European investment bankers / private equity pros that I know have a more globalist professional background and academic training.  Since 1987, shortly after undergrad, almost my entire professional career has been dependent on the growth of globalism.  Since 1987 I’ve lived in 7 countries outside the US…4 continents…the majority of my adult life…as an investment banker/private equity/strategic planning pro…feeding directly off the teat of globalism…hardline globalism.  I returned to the US recently, but still focus IB/PE on international work.  If globalism dies, so do my career and niche expertise…vaporized.  Aside from a clear conscience and concern for ordinary people behind the 8 ball in the US and Europe, I can see little personal gain whatsoever from publishing this…quite the opposite.
  2. People voting for Trump need to understand that they are voting to destroy people like me…all the global business, institutional, and academic interests vested in globalism…it is an enormous and powerful group of people globally. You are almost literally backing David in a fight against Goliath.  But yes, I’m supporting Trump…the globalism we’ve implemented is not sustainable.
  3. The academic acropolis, if not Mecca, of globalism is probably Columbia University in NY. In my experience there, Columbia is a nurtured ecosystem where Nobel prize-winning economists, Fortune 500 companies, leaders of global investment banking, and leaders of global investment management interact to form their opinions about how the world should be, and how to move society.  From day 1 through graduation, MBA students were inculcated daily in the theology and practical application of globalism…every single course believe-it-or-not had a “mandatory” globalist angle to it…shoved in somehow/some way.
  4. I can assure you that many of these “luminaries” are more fallibly human than you can imagine. e. they are not the founts of unassailable wisdom and knowledge on this planet.  I.e. the Eurozone, 2007-8 Financial Crisis, et al…et al…  IMO, generally speaking, they are silver-tongued and academically brilliant…but often lack wisdom/judgment/etc…etc…they are human and often wrong…except their errors can be cataclysmic for our world due to the power we’ve vested in them.
  5. Globalist theory in a highly condensed nutshell for the purposes of this rambling:  All boats rise in a system of expanding global trade…where the Competitive Advantage of Nations (Porter: Harvard Business Review https://hbr.org/1990/03/the-competitive-advantage-of-nations ) are developed and nurtured.  e. if manufacturing can be done more cheaply, at same quality in country X, all other things equal, move there…the developed nations have an advantage in high value added services and should focus on developing/nurturing those national core competencies…the bulk of the value chain remains in the developed country, and grows as we focus on things we do better than others.  “Lesser developed” countries benefit in the same way…by focusing on what they do best.  We all benefit…all boats rise.
  6. Yes, and no. Yes…poverty in emerging markets has been drastically reduced…I’ve seen it first hand.  No…albeit very foreseeable to people of common/non-academic sense, the mass transition into service industries expected for American and European workers has been far more difficult than imagined…variables that academics can’t fit into their multifactor models supporting globalist theory.  The US labor force participation rate remained stagnated in the 66-67% range from the late 80’s through 2008…during the unfettered reign of globalist theory…no apparently equal benefit to Western employment opportunities. That rate took a nose dive in 2009 and now stands at 63%, a 38 year low (the data: http://www.tradingeconomics.com/united-states/labor-force-participation-rate ).  Globalist theory has been dismally ineffective in the aftermath of the 2008 financial crisis…the US/European work forces have not been fully transitioned and are in a period of “dangerous” limbo (very predictable), and politicians (most are trained attorneys) seem to have no idea how to move the needle on LFPR…while the entire Western world needs to be focused like a laser on this stat.
  7. IMO, a key corollary economic development/management theory that also gained ground during the rise of globalism that few in middle America are tuned into has played a major role in the labor force participation stagnation/decline: Economic Value Added (EVA) / Value Based Management (VBM) / Shareholder Value Added (SVA) are all quantitative approaches to management that rest on the foundation of trickle down economic theory in its most raw form.  In a condensed nutshell: cash flow is king…cash flow accumulates to capital owners, who distribute to various constituencies including employees, creditors, et al.  The organization should be managed to maximize EVA / cash flow above all else, including any subjective issues that aren’t easily quantifiable…applied EVA is a quantitative economic model that requires outstanding senior management judgment to apply effectively, and everyone thinks they have superior mgmt. judgment…a bad combo.  Minimally useful employees are fired / not hired.  Most key business decisions are modeled on their EVA impact, including lawsuits, environmental compliance, hiring, etc…etc…  I’d guess most global companies use some variant of EVA as a key management process…linked directly to the value of public share price or private equity.  e. humans are highly and unemotionally dispensable…all activities are geared towards increasing value for owners…cold, unemotional trickle down.  This is a massive cultural change in American history…where many people used to work for one company for life, and the company could be trusted to take care of its people through thick and thin, first and foremost.  Hard quantitative approaches to management have generally won the day.  RIP “Company Man”.
  8. It is extraordinary/brilliant/evil? that the globalists, whose theory is underpinned by an extremely Darwinian trickle down economic system…where the owners of capital monopolize power over human prosperity to such an extent, at their whim…and subject to their moral failures…have been able to convince poor voters to support them politically, while at the same time railing against trickle down economics publicly! It is lunacy how any black, Hispanic, or low income voter in the US could ever align themselves with the globalists.  When vulnerable people are taken advantage of in this way it crosses the line between brilliance and evil in my book.  Pure deception.
  9. Unfettered, unemotional globalism + poor political leadership + misused EVA + high volume low skill immigration = significantly declining LFPR = social disaster. In this scenario, a “Trump” was inevitable.  If Trump loses the election, no fundamentals change…his movement is only going to grow until something gives.  The globalists may rue the day they didn’t accept Trump and his relatively mild prescriptions.  The inevitable next “Trump” may be a Marxism-infused Bernie Sanders/Trump nationalist combo…the worst nightmare of a globalist.   The LFPR needle must be moved positively, somehow, some way, and quickly by experienced people who know what they’re doing and have the skill of real world implementation in a distressed organization environment…will probably require sacrifices / significant adjustments in at least each of the 4 factors above…plus a few major initiatives at Fed gov’t level…I can think of one that could move that needle explosively and help with the theoretical transition…there are things we can do…most of it requiring extraordinary leadership though…and here we are…just humans.  And accept-it-or-not, there aren’t many people with the temperament and skill set needed to get us out of this mess…in a distressed company or distressed gov’t…traditional politicians / corporate hacks are the opposite of the type needed for the challenges we face.  There aren’t many turnaround leaders I’ve had experience with that people actually like…and at this point we don’t have that luxury frankly.  I remember a guy who was shot at…had snakes put in his home mailbox, etc…etc…generally loathed…but highly effective in a distressed situation when an immediate, experienced, steady hand was needed at the helm to keep the ship afloat and move it to safety…and quickly ushered out the door when his time was up.  And we’re worrying about locker room language??…from pols who probably surf porn, sleep with their secretaries, etc…etc…??  Check this out:  Wikipedia: List of American Federal Politicians Convicted of Crimes:  https://en.wikipedia.org/wiki/List_of_American_federal_politicians_convicted_of_crimes .
  10. There’s a lot more I could write about the topic, but frankly just don’t have the time.
  11. Actually, there is significant personal gain from me writing this…by the slimmest of hopes we somehow avert disaster, and my children live in peace and prosperity in a close-knit, united country…like the one I grew up in.

So, on Nov 8 vote your conscience, but just remember who Hillary Clinton is and represents (a puppet of unhinged, unrestrained, unadjusted globalism)…and the potential, unquantifiable outcome(s) of the unsustainable path it’s on…and where the anti-Trump attacks are actually coming from…  How globalist are you?

JW

11 Oct 2016

NY, NY

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