Shiller, Schmiller we say. We refer, of course, to our application of Nobel Laureate Shiller’s Tale Risk concept to the Donald Trump victory. Shiller created this term in 2014 to explain how a new charismatic leader can inspire a wave of confidence that can lead to significant upside in the success of his nation. Shiller did not really get how correct he was. Not to blame him because he was talking about the rise of Prime Minister Abe of Japan. Two years later, Abe’s promise of Japan rising to its glory remains only a future risk. Had Shiller understood Donald Trump, he would have changed his term from Tale Risk to Tale Reward. Since he didn’t, we now formally unveil our term Tale Reward, a realized form of Shiller’s Tale Risk.
You want to know what Tale Reward is? Look at the momentous change Donald Trump has launched within three weeks of winning the election. Heck, he hasn’t even taken reins of power yet. No matter, the power of the Trump Tale & more importantly his dedication to his Tale is already creating rewards for American people & changing the world.
1. First Huge Win
The first change has already taken place in America, in America’s corporate boardrooms. Trump launched this change the old fashioned way, by winning big. With classic persuasion, he got United Technologies to overrule their subsidiary Carrier & keep 1,100 jobs in Indiana. What do they do with the plant Carrier had already built in Mexico? Mr. Trump was jovially dismissive – “Sell it, take it down …”. You will be fine”, he told Greg Hayes, CEO of giant United Technologies.
Then, in his speech at the Carrier plant, he used his big victory to warn all American corporations of consequences if they ship American jobs to Mexico or elsewhere. He also reaffirmed his promise to renegotiate NAFTA or terminate it and to build a wall along the border with Mexico. The win at Carrier has sent an electrifying message to American workers that they now have a friend, nay a champion, in the White House. This win is so big that even Harvardian David Gergen, the doyen of America’s political elite, admitted it on CNN.
The big difference between Trump & other Republicans is that Trump has a mass movement backing him all the way. American CEOs can buck & have bucked even sitting Presidents because they control the Lobbyists & through them the Congress. They have legions of paid talkers like AEI & TV talking heads like CNBC anchors to get their corporate message accepted & followed. But that has not & will not work with President Trump. Because at every critical juncture, President Trump can go to directly and speak to the people in massive rallies. The Congress sees these rallies, sees the emotional support of people for Mr. Trump and they have & will follow. That is classic Tale Reward.
2. Competence & Expertise
From the beginning, Candidate Trump said that America is being run by people who don’t have a clue. He promised he was going to get smart & experienced people who were “killers”, to use the New York jargon.
Man,did he deliver this past week! Wilbur Ross as Commerce Secretary! Veteran investor Kevin O’Leary said it all when he said “In Wilbur, we Trust“. And what impact did Steven Mnuchin have in his first interview – risk markets exploded & interest rates exploded as Mnuchin spoke with the calm confidence of someone who has seen it and done it.
As Mnuchin said, lending is “the engine of growth to small- and medium-sized businesses … ” and “ … so we want to strip back parts of Dodd-Frank that prevent banks from lending. And that will be the number one priority on the regulatory side“. This is credible because Mnuchin knows lending & has salvaged bad loans post-2008. This “Tale” is catching and it will deliver a big “Reward” to America. Read what big-time strategist & now fund manager Richard Bernstein said about his American Industrial Renaissance view:
- “… it seems very likely that the U.S. industrial sector will continue to gain global market share over the next decade. Increasingly competitive wages and productivity, energy costs, and political stability are among the key reasons for what we at RBA call the “American Industrial Renaissance””
We urge readers to watch the entire clip of the Mnuchin-Ross interview or at least read the transcript.
3. Disruption as a Weapon & a Message
Remember when China forced an American EP-3 spy plane to land at Lingshui air base in China and held the 24 member American crew for 11 days? Remember how China released them only after Washington said it was “very sorry” for the death of the Chinese pilot and for the spy plane’s landing on Hainan without permission? That was China sending a message in 2001 to the newly inaugurated President George W. Bush. That was China breaking out into the open about its new role as an emerging power. Now, fifteen years after that incident, China is indeed a regional superpower and the 2nd largest economy in the world.
We thought of that incident when a TV storm erupted on Friday about Donald Trump’s surprise phone call with the President of Taiwan. Of course, no one at CNN or any of the other TV networks recalled that incident from 2001. In fact, CNN’s Anderson Cooper put on his gravest face and began asking CNN’s talking heads about the big mistake Trump had made. To digress a bit, we kinda like Anderson Cooper but can’t help wondering how much he would improve if he called himself “Andy” instead of the high falutin “Anderson”. Seriously, he would understand middle America so much better if he became simple Andy Cooper. Then he could even move to Fox if Megyn Kelly moves to CNN.
Double seriously, American TV has become so dumb that they don’t even recognize real smarts when they see it. China lives on predictability and Donald Trump loves to be unpredictable. He understands how unpredictability can be a powerful weapon when used masterfully. Look how he shook up China. Those idiots actually think American democracy is pitiful and unsophisticated compared to their top-down authoritarian rule .They have bodies of smart analysts who draw up scenarios & plan China’s strategies.
Smart guys in the American West knew the value of a bull in a China shop even if Harvardian David Gergen doesn’t. In fact, they often used a stampede of bulls to disrupt entrenched defenses. Smart American presidents have understood how much turmoil a “crazy” American president can cause in predictability-based bureaucracies like the old Soviet Union or today’s China. Nixon used it effectively with Brezhnev; Reagan used it brilliantly with Gorbachev.
Viewed in this context, Trump’s impromptu call with the President of Taiwan has wonderfully plausible deniability from a diplomatic point of view. After all, it was just Trump being Trump can be the diplomatic excuse and it was merely a phone call. But China should understand that it was much much more than just a phone call. Taiwan was merely the stage but the message was pan-Asian and in fact global. A new smart, innovative American President is taking charge and his America is not the diffident or sissy America of the past eight years.
CNN may have forgotten what Donald Trump said a few months ago – that it was stupid to drive Russia & China together. Heck, Putin himself doesn’t want to be locked into a Chinese embrace. Donald Trump wants, we believe, to do a reverse-Nixon – pry Russia out from its alliance with China. We think China is as vulnerable today as the old Soviet Union was when Ronald Reagan took over as President. Donald Trump, we believe, gets it and he will, we expect, slowly squeeze China into giving up its bellicosity one way or another. And the crazy impromptu phone call with the President of Taiwan was the first & easily deniable signal.
And, by the way, we love that utterly vacuous phone call with Nawaz Sharif of NonPakistan. How stupid are the NaPakis to broadcast that? That is how you talk the first time you speak with someone you detest. Not one word in that published callscript is remotely serious. Words like fantastic people, fantastic country are used when you want to lull somebody into complacency about you. If Nawaz Sharif has any brains, he would be worried. Because Donald Trump told him sweetly what a good boy he is, meaning he better behave. Or?
4. “Mad Dog” Mattis
The “Or” is why President Elect Trump so publicly announced General Mattis as his Secretary of Defense. Mr. Trump loves to use his “Mad Dog” nickname. Because that is a message to the bad guys in the world. Of course, General Mattis is an exceptionally studious & brilliant strategist who has also been described as “the finest combat leader since Korea“. His selection has already transformed morale at the Pentagon. Read what General Mattis reportedly said to Iraqi tribal leaders:
- “I come in peace. I didn’t bring artillery. But I’m pleading with you, with tears in my eyes: If you f*** with me, I’ll kill you all.”
The selection of General “Mad Dog” Mattis gives President Donald Trump a viable & credible two-pronged approach to foreign policy – first a discussion-based win-win sales pitch and second the “or else” option of trade restrictions to the biggest market on earth & the fear of the strongest & only global-reach military on earth.
We get this because this was India’s approach in the 2,000 years when they were the richest & strongest country on earth. As the great poet Kaali-Daas wrote of Emperor Dileep* of the Sun Dynasty:
- “He had two means of accomplishing his objectives – first his intelligent analysis & articulation and second his [unbeatable] army that was like a part of him” – Raghu-Vamsha, I.19
Indian society turned inward & became soft around 900 CE. Within a relatively short period of time, they lost their hard edge. That led to a 1,000 year steady & relentless decline into successive defeats & subjugation from which they are just beginning to emerge under Prime Minister Modi.
We did wonder eight years ago whether America was beginning its own path into apologistic denial of America’s hard edge & spirit. That is why we wondered in July 2009 – Is Barack Obama America’s Jawaharlal Nehru?
The election of Donald Trump is a resounding message from the American heartland that America is back. The path to America’s former greatness is going to be long, winding & not very easy. But, as this week showed, President Elect Trump has the smarts, the guts & the deep will to get the country there. And that will be the final reward of the Trump tale for the American people.
Note: By the way, the tax policy Emperor Dileep is also attractive from a modern point of view. As Kaali-Daas describes it – He ONLY took the taxes necessary to deliver services to his people and his benefit multiplier-standard was 1,000 times the tax-receipts – Raghu-Vamsha I. 18. If you think the benefit-multiplier of 1,000 is too high, ask yourselves – what has been the multiplier of Eisenhower’s use of tax receipts to fund the Interstate Highway system?
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