Nov 092016

PhD. Boyd Cohen: “Investors are certainly nervous about Trump’s presidency because he is so unpredictable”

PhD. Boyd Cohen is Deputy Director of Research at EADA Business School.

PhD. Boyd Cohen is Deputy Director of Research at EADA Business School.

Did that really happen? Is it possible that nearly 60 million people voted for an unqualified, racist, sexist, xenophobe to the next President of the United States? Apparently it is true. While I am glad to be living in Barcelona and not in the US. I feel for my compatriots who remain living in such a divided country.

Books will be written (not by me) about how this happened. I will no go into detail here but it appears there are three general groups of people who voted for Trump. First of all, middle class whites who have seen growing inequality arise from neoliberal capitalism, factory automation and globalization. Secondly, low income and uneducated whites who share Trump´s extremely racist viewpoints against blacks, latinos, muslims, etc. Thirdly, educated whites who always vote Republicans, despite Hillary Clinton and, to some extent share some of Trump´s views but rarely express them inpublic.

What will happen next?

No one really knows what will happen next. Obviously in the immediate aftermath, the markets and the world are still in shock. Global stock markets are tumbling, as is the dollar, and Canada´s immigration website crashed from too many hits to their server. The good thing for the medium and long term is that the US has enough checks and balances that no one man, no matter how ugly, can not do to the US, what say Chavez did to Venezuela because the Constitution generally functions in the US. Having said that, Republicans control congress, so Trump will have a chance to do major damage in his four years as President (help us all if he makes it four years and gets reelected for another four).

Global stock markets are tumbling and Canada´s immigration website crashed from too many hits to their server

While Wall Street normally supports Republican candidates who tend to be more favorable to the banking and corporate sectors, they are certainly nervous about Trump´s presidency because he is so unpredictable. What investors want more than anything is predictability, and that is not what Trump offers.

Entrepreneurship and innovation

Cohen reflects on the new period facing the country from now on.

Cohen reflects on the new period facing the country from now on.

Personally, I believe the US before Trump had already lost its lead in innovation, and the data suggests this. The most comprehensive annual ranking of innovation capacity and achievement, the Global Innovation Index, ranks the US fourth in the world, behind Switzerland, Sweden and the UK. The US infrastructure is trailing behind European and global counterparts.

While the US still leads in the creation and financing of disruptive technology, trends in urbanization, democratization and collaboration -as I wrote about in my latest book Emergence of the Urban Entrepreneur-, are also diminishing the US strength in entrepreneurship. Furthermore immigration policies, likely to only get much worse under Trump, favor other countries.

Despite leading the creation and financing disruptive technology, the US is increasingly dismishing its strength in entrepreneurship

Immigration, in the US and the globe, has been demonstrated over decades of entrepreneurship research, to be a driver of innovation and entrepreneurship in society. If you are an immigrant in the U.S. right now, you are likely feeling very uncomfortable, just like those in post-Brexit UK. I was in London recently for a speech at London School of Economics where I met a successful renewable energy entrepreneur originally from Sweden who is planning to move her startup out of the UK for this reason. If you are an entrepreneur who was thinking of immigrating to the US, you must be having second thoughts right now.

After 9/11 the US implemented more rigorous immigration policies to the detriment of the entrepreneurial community. I believe this is going to get worse, and perhaps regions like the EU could capitalize on this moment to reach out to EU entrepreneurs, even US immigrant entrepreneurs, where they can find a more welcome reception. Of course, there are countries in the EU right now that are experiencing similar levels of anti-immigration discourse so we´ll see.

The US commitment to climate change

According to Cohen, Republicans have resisted climate legislation.

According to Cohen, Republicans have resisted climate legislation.

And what about the Paris Climate Change agreements? I think the US commitment to climate change was already in jeopardy given that the Republicans control congress and have long argued that climate change is a hoax. There is a misperception amongst US Republicans that acting on climate change is detrimental to the economy and, with the support of the oil lobby, Republicans have resisted climate legislation.

Despite the overwhelming scientific consensus that climate change is real and ominous, and strong evidence that moving towards a low carbon economy can actually create competitive advantages and profits (as my colleague L. Hunter Lovins and I demonstrated in our 2011 book, Climate Capitalism), a Trump presidency, backed by a Republican congress will likely return the US to its pro fossil fuel, anti climate change stance which prevailed prior to Obama´s presidency.

In the end I believe that the world will eventually find a new equilibrium, but it will be one where the US has a diminished role. While Obama had his flaws, he was a leader the global community could rally behind and respect. Trump has already lost the respect of world leaders and much of the global population and has no moral authority. We are living in a new world where Brexit happens, where Colombians vote down a referendum on a peace accord with the FARC, and nearly 60 million Americans voted for a morally corrupt, racist xenophobe. Who knows what will come next?

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