With just over a month to go, the countdown for the most important collective decision in living memory has now begun. We present the two contenders, starting with the Republican nominee Donald J. Trump, to ascertain the direct or, more likely, indirect effects of his policies on the blockchain industry, to be followed by an article on Hillary Clinton and a final position statement (if a decision is reached as the author remains undecided).
Never before have we seen a presidential candidate or, really, any candidate for high office in the western world, so severely smeared to the point where a journalist lashes out full on name calling the masses who dare hold an opinion. We have seen people fired from their positions, Silicon Valley pioneers silenced, professors scared to speak, authors witch-hunted. Long standing republican institutions have, for the first time in more than a century, we keep being told, endorsed a non-republican candidate. Trust in the mainstream media, which uniquely has recently so overtly shown to wear no clothes, is as low as it can be.
On the other hand, that remnant of what we in the 90s dreamt to be the promise of the internet, that gruesome and yet brilliant corner where man walks naked and in so doing gives rise to anonymous, lulzec, and the internet culture, ponders in amazement how they could propel to such height Trump and further boasts it couldn’t have happened without them.
There is, therefore, a compelling force to look and see who this man is and what he wishes to achieve with one quote standing out:
“I realized then and there, that if you let people treat you how they want, you’ll be made a fool. I realized then and there something I would never forget: I don’t want to be made anybody’s sucker.”
We have seen that lesson applied daily and very effectively during the primaries. He returns any attack by upping it up a notch. His attacking opponents are given names to demean them. Sometime he goes too far, but never backtracks, instead squiggling out.
The left, returning the favor, unsarcastically calls him Hitler (desensitizing the people of his atrocities) or, as Hillary puts it “racist, sexist, homophobic, xenophobic, Islamophobic — you name it.” However, it is difficult to believe almost 50% of the American people, including many African-Americans and Hispanics, who according to polls support Trump, are classic racists, sexists, homophobic, xenophobic or allergic to muslims, especially in the most diverse country on earth where people of all races, sexes, sexual preferences, religions, intermingle daily.
Therefore, a better way to describe Trump and his supporters may be as a realist with a pragmatic worldview. Someone who sees the world as is, rather than as should be and diagnoses the major problems that America and the west faces as systemic. He has no qualms, for example, in using tax loopholes – “it’s just business” – he said or “that makes me smart”. Likewise, he ruthlessly took advantage of bankruptcy laws and state grants, telling Hillary in the debate that she made the laws, she should change the laws.
From this unfiltered – or as his supporters would call it non-pc – view, we can ascertain three major intellectual positions that attract his followers and explains his rise to a hair breadth from the highest office in the world. The main one is his economic plans, the second one is political islam and the third, intertwined with both, is immigration. It is upon these three that Trump’s candidacy and appeal rests. All else appears to be a rhetorical sideshow and media circus.
Trump’s Economic Plans
Trump’s economic plan has three aspects – taxes, regulation, and trade. On taxes, he aims to lower business rates to 15%, the lowest level in the developed world, and top tax rates to 20%, making it the most competitive tax policy in the western world.
If such plan works and is paid for (by the benefits of his trade policies according to Trump), the results would be an effective immediate increase in income and profits to the tune of $4 trillion – the biggest economic stimulus in history. As everyone would feel a bit richer, we can imagine many would take more risks and invest in the blockchain space, both public and private, as well as take more chances with their entrepreneurial ideas, thus creating even more innovative activity.
Another major selling point for our industry is Trump’s stated position towards regulation which would require:
“[E]ach federal agency to prepare a list of all of the regulations they impose on American business, and rank them from most critical to health and safety to least critical. Least critical regulations will receive priority consideration for repeal.”
A Trump presidency would institute regulatory reforms on all industries with the aim of removing the “least critical regulations” which for fintech includes some financial rules that were instituted one or two centuries ago. This suggests that the regulatory environment may, finally, become far more welcoming and perhaps allow USA to catch up with some countries, such as Britain, on blockchain and fintech regulation.
It is important to emphasize that there is a general bipartisan understanding in Washington regarding the blockchain industry. We have reached out to both candidates and neither has replied, suggesting they largely agree on matters that directly affect this space, including fintech, thus it’s not a campaign issue with both candidates likely to encourage blockchain technology. However, Trump’s stance on deregulation may allow faster movement which is very much needed as the United States Fintech centers of California and New York have been ranked as the least regulatory friendly out of seven global centers, an unfortunate indictment as California is found to have the most blockchain talent while New York the most demand.
Trump’s Policies on China
Trump’s most intriguing position is on trade recently detailed in a paper titled: “Scoring the Trump Economic Plan: Trade, Regulatory, & Energy Policy Impacts” or more simply expressed: the whole chessboard. The plan details a number of ways current trade agreements are being abused through loopholes and outright manipulation to gain an economic advantage at the expense of USA.
An example given is VAT, a sales tax used in many countries such as China, Germany, Mexico, but not US. The author states:
“Under WTO rules, any foreign company that manufactures domestically and exports goods to America (or elsewhere) receives a rebate on the VAT it has paid. This turns the VAT into an implicit export subsidy.
At the same time, the VAT is imposed on all goods that are imported and consumed domestically so that a product exported by the US to a VAT country is subject to the VAT. This turns the VAT into an implicit tariff on US exporters over and above the US corporate income taxes they must pay.”
Because of the abuse of such loopholes (which Trump argues the negotiators should have seen at the time of negotiation), the textbook benefits of free trade have not been seen, with some gaining at the expense of others and numerous lobby groups securing special interests.
The report persuasively argues we are currently in a trade war with the global economy resembling a zero-sum game and nations outright cheating by intentionally devaluing their currency, making exports cheaper at the expense of others. The economic plan aims to implement a non-zero sum system where trade benefits all with skills efficiently used where there is a real, rather than artificial, competitive advantage.
This is of relevance to our industry, especially regarding China, which has shown great interest in blockchain technology. Trump argues the Chinese market is protectionist, erects barriers for foreign companies, favors domestic companies, fails to enforce intellectual property rights and manipulates its currency.
China is currently undergoing a debate on whether it should deepen its free market reforms to transition from an export dependent economy to a consumer market which requires more economic freedoms to allow greater invention to meet local market demands. It may well be, therefore, that Trump succeeds in his aims, but it cannot be doubted that such negotiations would be very difficult.
If he succeeds, our industry is likely to benefit from greater collaboration and integration with Chinese counterparts whose entrepreneurial spirit and ingenuity has allowed them to be more advanced than in the west in some aspects, especially regarding fintech payments, while the west of course has technology and talent.
Trump’s Positions on Immigration
Although Trump makes his points on immigration in a controversial way (presumably dumping down for the message to get across to everyone), his position has intellectual basis for which there can be reasonable and public debate.
Trump argues that Mexico is not sending us the best, which translates to current immigration is mostly low to fully unskilled illegal immigrants who do not easily adjust to economic opportunities or the adopted society. On the other end, as Silicon Valley has been complaining for years, gaining a work visa to the United States is very much a nightmare.
He wants to shift this balance or dis-balance (depending on your views), strictly enforce immigration laws on the one end and, presumably, relax them on the other end to allow easier travel and legal immigration for individuals who have necessary skills.
The rest is probably just rhetoric to get his point across in the five second ten o’clock news slot.
Trump’s Policies on ISIS
Since 1979, a new confrontational force has risen in the world, political islam, a religiously supremacist belief that dreams of a time when Arabia came all the way to Spain. It was spectacularly, and very tragically, brought to our attention 15 years ago, and now finds embodiment in ISIS territories.
It is highly doubtful their leaders, who often order the undertaking of most awful medieval crimes, really believe in the religious dictats themselves, so being mostly highly educated, some of them in the west, and ISIS having many former Iraqi army personnel who served under the secular regime of Sadam Husain. However, the willingness of some to go as far as killing themselves to cause mass carnage suggests religion, as they are being taught, is being used as an incredibly powerful tool and weapon.
We ourselves long ago had to deal with elites’ abuse of religion, giving rise to enlightenment and a long road to today’s religiously tolerant society, but some argue the far-left has formed an unholy alliance with islamists, creating a current climate where we cannot criticize, despite everything the enlightenment taught us.
Besides the economy, there is little more concerning to voters, especially millennials who worry where this is going, than how we address this very pressing matter, which, through periodic acts of mass murder in our streets, provokes social upheaval.
Trump says he has a plan. We do not know what it is because he argues he does not wish enemies to be alerted. We can discern from his supporter’s rhetorics, however, that part of his plan may be to align with Russia (which has suffered its own religiously motivated acts of mass murder) and perhaps to put more political pressure on Saudi Arabia, Qatar, Kuwait.
This, of course, is a hugely complex problem. We’ve been fighting in Iraq for more than a decade. The war has extended to Syria, Yemen, Libya. So there is no silver bullet, but 88 retired U.S. generals and admirals, who presumably care much about the lives of their soldiers, have endorsed Trump.
If he can achieve this monumental task, returning us to the peace of the 90s, he would probably be hailed as one of the greatest president to have ever lived, securing a place in history. The peace dividend would also return, increasing productivity levels and overall happiness, which, although very indirectly, can only benefit the blockchain industry and fintech more generally.
Whether he can remains to be seen (if he is given the opportunity), but his supporters think so, primarily because he is not a politician and does not take funding from lobbyists.
Trump, The Presidential Candidate
There has been no more difficult presidential candidate to judge or asses than Donald John Trump. A highly successful businessman who exploits any loophole, negotiates the best deals and can see what others cannot. Equally, a man who is quick to verbal rhetoric, transgresses constitutional boundaries with no experience of high office.
It may well be this lack of experience explains his constitutional faux pas, but will this translate to nothing being done while in office as happened with Obama whose promise of change has been held, but for the worse? Can he bring law and order in the cities of America? Can he negotiate new trade deals? Can he defeat ISIS? We just don’t know. We have no record to judge past achievements in office so left only with his business record.
As far as our industry is concerned, lower taxes, less regulation, more open markets and maybe even a return of peace, can only be of benefit, but the candidate is a judgment gamble and sometime it’s not just about money. The author therefore remains undecided until Hillary’s positions are analyzed in the next series.
Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.
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