President Trump, the monster entrepreneur with a single-minded approach to presidential power, gets his biggest test on November 6th 2018…
Midterm elections on November 6th
Every two years, U.S. voters elect a new House of Representatives and a third of the 100-seat Senate. Many see November 6 as a referendum for Trump. This midterm election determines whether the Republicans keep control in the House and Senate or whether Democrats gain ‘critical’ ground. Ultimately, this midterm election probably signals whether Trump is a 1-term or 2-term president.
Whatever your take on the monster entrepreneur, all of us will be affected by the result. Therefore as a global citizen, I feel it’s important to have a better understanding of the underpinning forces at play, the likely election outcome and ultimately the future of President Trump.
Unfortunately, unscrambling the inter-related and complex issues is beyond my abilities. So, to help shed an insightful light on the subject I’ve sought the support from an avid researcher and up-and-coming writer of American politics, Thomas McWilliam.
Monster Entrepreneur: But is Trump Passing Wind?
By Thomas McWilliam
On the 6th November, voters across the US will participate in the US midterm elections. Up for election are, among them, all 435 seats in the house of Representatives and 35 seats in the Senate, as well as a host of governor-ships.
While there has been much speculation over how these elections will turn out, the results will undoubtedly have significant effects on the next (and possibly final) two years of the Donald Trump presidency and for wider American society, business as well as its economy.
Historically, midterm elections haven’t favoured the party of the incumbent president and, without any major policy successes to rally voters to his cause, it is probable Trump will suffer some setbacks. Despite the President’s own claims of an upcoming “red wave,” most experts are in agreement that the Democrats will gain seats in the House of Representatives.
The senate is a little more complex as their a fewer seats and they are divided, with two in each state. Yet the Senate is still heavily contested with major political heavyweights such as Ted Cruz, a former challenger for the Republican presidential nomination, in danger of being ousted from their seats.
Trump winds of favour
Trump does have some circumstances working in his favour. Primarily, the current strength of the US economy and the resulting almost record low unemployment, although it remains to be seen how long this growth can continue.
Furthermore, given the spectacular number of USD’s in circulation and its historical position as the global reserve currency, it is unlikely that investment capital flows will dry up any time soon. This is because many international purchases such as that of oil are usually denominated in dollars and these dollars can be reinvested in the US with ease. Yet these promising signs do mask some troubling problems facing the US.
In the first half of 2018 Chinese FDI in the US dropped 92% and many other investors from China, the EU and elsewhere are seriously re-appraising their investment strategies, largely due to Trump’s clear protectionist policies. The impact of this declining investment is not however distributed fairly, with some areas more heavily effected than others, surprisingly, the areas hit hardest tend to be largely Democrat regions and this will likely reduce the impact of these tariffs on the election results.
In the Senate, most of the defending seats are Democrat seats which limits the number of seats the Republicans have to hold and consequently they should be able to concentrate their resources on those seats whereas the democrats will be spread thinly as over half their total Senate seats are up for re-election this year.
Lowest approval ratings
Trump is hardly a popular president, yet his approval ratings don’t vary widely which speaks to his strong voter base. This, however, cannot save him from setting the record for lowest approval rating at this stage of his presidency of any president since Truman (1945-53). It is unlikely that the core voter base will defect to the democrats so it seems that the outcome of these midterms will largely depend on how many Democrat voters turn out on the day.
A strong Democrat performance would enable them to take control of the house of representatives and maybe weaken the Republican’s meagre majority in the Senate (51-49). This would in turn force a halt to some of the Trump administration’s most controversial policies.
Republicans V Trump
A successful election for the Democrats would likely persuade some more moderate Republicans to take a greater stand against Trump which would further undermine Trump’s mercantile agenda – which may in turn restore some lost investor confidence.
It should be noted that the US is, and will probably remain, a major recipient of FDI for the future regardless of Trump’s policies, however, our monster entrepreneur has certainly accelerated the US’ decline on the world stage which will in the long-term reduce investment as emerging markets recover from their current economic crisis
Additionally, a poor performance for the Republicans would help signal the fact Trump is just a “fluke exception” to the US’ stated policy of ‘free trade’. Conversely, whist it is unlikely that the Republicans will gain seats, continued control of Congress is still a possibility. This would indicate that the new US protectionism is not just the result of a disenfranchised and frustrated populous lashing out, but instead represents a shift in the attitudes of a large section of US society.
Implications for entrepreneurs
Such protectionism could lead to a further decrease in investor confidence and thus a decline in available capital. As a consequence start-ups and entrepreneurs would be hit the hardest, especially in industries heavily dependent on foreign capital and exports. The effects of the monster entrepreneur and his war on trade can be seen already with his allocation of additional farming subsidies and the decision of many major companies to relocate factories outside of the US.
These actions are unlikely to be reversed by a Democrat controlled congress. Yet a Congress not dominated by Republicans would weaken Trump, although it is likely he will still be able to conduct his war on trade (though at a lower intensity) through executive orders. This means that for the duration of the Trump presidency, investors from other nations may seek to invest their capital or expand their business into markets with a less volatile economic climate and a less impulsive leader. This would inevitably benefit those in other nations seeking investment capital yet hurt those who want to conduct business in the US.
Predicting the outcome
Summarising, Trump’s fate in the midterm elections remains far from certain, however if current predictions turn out to be accurate (unlike the 2016 election) then his congressional control will be undermined and this will likely result in a drift closer to traditional US policy. Conversely, a weak Democrat performance might give Trump a greater mandate and quell dissent in the Republican party, further increasing US isolationism and decimating what little credibility the US has left on the world stage.
For me, it looks unlikely that the midterm elections will favour Trump. This is mainly because his radical policies have deterred some floating voters and incentivized many Democrats to turn out and vote. When it comes to the 2020 elections, this may be enough to evict an already unpopular president and bury the Republican party for at least two years.
Have your say?
- Is Trump a monster entrepreneur, a monstrous entrepreneur or neither?
- Should more entrepreneurs go into politics?
- What can politicians learn from entrepreneurs (and vice versa)?