Promises, promises and the future of Trump

The gulf between the promises a presidential candidate makes and the reality of them being upheld is wide. Obama made something like 400 campaign promises while only seeing 20 or so come to life. This isn’t a slight on Obama, or any presidential candidate, its the sad state of affairs that has come to characterize presidential elections in the U.S.

That’s why we have to wonder just how Trump will keep his many campaign promises. In particular, his claim to double the growth rate of the U.S. economy is dubious. History tells us that in order to do that he will need two things, a period of stunning innovation and an immigrant workforce. Which means he will need the Silicon Valley, who relies on both and largely ignored him during the election.

Since the great recession of 2008 the US gross domestic product (GDP) or the total output of goods and services, has limped along at 2.5% despite the American economy performing much better than the rest of the world. However, it's far behind the growth of past decades and the GDP of other countries. Not necessarily a bad thing if the U.S. economy continues to steadily grow, which it has under Obama’s governance. Trump, however, thinks he can grow the GDP by 4%, numbers we have not seen since the Clinton era. 

During this time we experienced incredible innovation in the Silicon Valley with the explosion of the internet which created new industries and economies around the world. Clinton and Gore recognized this and supported it. The result was economic growth we have not seen since post-WWII. It also kick-started the instant millionaire, a techie who became wealthy through a company IPO. Some can argue this was the beginning of the deep chasm between the wealthy and poor.

The period of uber economic growth during the post-WWII period was driven by returning vets, post-war immigrants and military fueled technologies which transformed into domestic industries, i.e. the airline industry, construction, industrial plastics and more.

Trump has neither of these cards to play.

If he does double the GDP as promised, he will need some luck, timing and the backing of Silicon Valley. There are several technology sectors that have the potential to kick-start a massive innovation that can change markets. AI (artificial intelligence) is the main player being touted to revolutionized our lives. However, to do this Silicon Valley, which makes up 6% of our GDP, requires a strong immigrant workforce and the ability to ship jobs overseas where highly skilled labor is cheaper.

You see, Wall Street demands quarterly profits while technology demands time and money to innovate. The math very rarely lets you have both at once. Shipping jobs overseas allows them to chase profits while developing new technologies which will feed the next big innovation explosion. So does low-cost, highly skilled labor here.

To emphasize this point the Internet Association, a body that represents Google, Facebook, Amazon and others have begun lobbying Trump. This week they sent a letter to Trump laying out its policy requirements, not surprisingly was the need to maintain the HB1 visa status and extend the Green Card program, including the creation of a STEM Green Card system.

So for all the fear-mongering on immigration and promises to stop sending jobs overseas Trump made during the election will most likely fail if he tries to keep them all. In order to achieve a 4% GDP, he will need to compromise on immigration and overseas jobs. We will also need global trade partners to sell our technology too.

The reality is few of Trump's promises, as expressed in his campaign, on immigration, trade, and overseas jobs will come true without compromise. And he certainly cannot do it without the Silicon Valley.

#Trump, #Silicon Valley, #business, #economy