Brian Gaynor: No escaping Donald Trump — even at the ball game

US President Donald Trump continues to divide the nation. Photo / AP

COMMENT:

The United States is a deeply divided country at present, mainly because of its political controversies and the potential impeachment of President Donald Trump.

Political discussions are best avoided because it is difficult to anticipate the reaction; Trump supporters believe the President can do no wrong, while his critics argue he has no virtues.

However, in Manhattan the attitude towards Trump is more predictable because he received only 64,929 votes, or 9.7 per cent of the votes cast, in his hometown in the 2016 presidential election.

By comparison, Hillary Clinton received 579,013 Manhattan votes, representing 86.6 per cent of the votes cast. The remainder went to third party candidates.

Manhattanites are not great Trump supporters but this columnist met one Trump fan when the New York Yankees hosted the Minnesota Twins in the first game of the American League playoff series last weekend.

Sitting in the next seat was Natalie, a girl in her mid-20s from upstate New York, who had been treated to a Yankees ticket by her stepfather.

Natalie was a sports fanatic who could discuss American football, basketball, baseball, ice hockey and golf with great insight although she wasn't aware of the Rugby World Cup or the All Blacks.

She jumped up and down with great enthusiasm when the Yankees scored a run or when another Twins batter was dismissed.

I asked her whether she went to any Buffalo Bills games, an upstate New York football team, and she replied no, the crowd was too unruly. I then asked her about her favourite sport, she replied ice hockey because its fans were more civil.

This rang a loud bell as ice hockey is dominated by white players while most of the other North American sports have a much larger black involvement.

A Yankees fan gets ready for the big game. Photo / Getty Images

Unfortunately, she then changed the topic to politics with the comment "I am a great Donald Trump admirer". This wasn't my preferred topic of conversation, but she continued with questions about New Zealand's political system, our political leaders and whether we had any Trump-like politicians.

I explained we had a British parliamentary system which was heavily reliant on constituency elected members of parliament and where the leader of the majority party generally became Prime Minister. I said it was highly unlikely Trump would become a political leader in New Zealand because the electorate voted for political parties rather than a presidential-style individual vote.

She was troubled by this and commented that New Zealand is an unlucky country if it can't have a Trump-like leader.

The conversation quickly ended at this point as the home team was ahead 7-4 and other seats became available as Yankee supporters left early to beat the New York traffic.

Meanwhile, a research paper published last month by three academics — "Friends, relatives, sanity, and health: The costs of politics" — concluded that "a large number of Americans believe that physical health has been harmed by their exposure to politics and even more report that politics has resulted in emotional costs and lost friendships".

Among its conclusions were:

• 38 per cent of respondents said politics is a source of stress for them.
• 29.3 per cent said they had lost their temper because of politics.
• 26.5 per cent said politics had led them to hate some people.
• 26.4 per cent reported they were depressed when their preferred candidate lost.
• 20.3 per cent said political disagreements had ruined valued relationships.

It seems Trump supporters are more resilient than his critics as the research report noted: "Democrats, self-identified liberals, those who are socially and economically liberal, and people who disapprove of President Donald Trump are, across the board, more likely to report negative health impact from politics".

While many Americans are trying to come to terms with the White House mayhem, economists are attempting to predict the long-term impact of the Trump regime.

One view is that his policies, particularly trade tariffs and reduced immigration, are taking the United States down the same route as Argentina in the 1930s. This is the prediction of Kaushik Basu, a former chief economist of the World Bank.

Argentina was one of the world's fastest-growing economies in the first few decades of the 20th century. According to Basu: "It also had talent flowing in, with more immigrants per capita than virtually any other country. As a result, Argentina was among the world's 10 richest countries, ahead of Germany and France.

"That all changed in 1930, with a military coup led by Lieutenant General Jose Felix Uriburu. Over the next few years, amid rising right-wing hyper-nationalism, immigration stalled and tariff wars began. Between 1930 and 1933, the country almost doubled its average import tariff. What followed was not so much a recession as a slow-motion slowdown, the scars of which are visible even today. Argentina thus became a cautionary tale of how a wealthy country can lose its way".

Juan Peron was elected President in 1946, strongly supported by his wife Eva. She died at the age of 33 in 1952 but the Perons' populist policies live on, with the Peronist Party candidate Alberto Fernandez expected to win the country's presidential election on October 27.

There has been a massive increase in world trade in recent years, partly because of the success of the World Trade Organisation (WTO) and numerous bilateral trade agreements between individual countries and regions. Most of these remain in place but the trade policies of the Trump Administration and Brexit are threatening these agreements.

Lora Torgerson of Inver Grove Heights, Minnesota, protests outside the Target Center in Minneapolis ahead of President Donald Trump's rally there this past week. Photo / AP

Population growth has also been a big contributor to economic prosperity in many countries, with Australia being a good example of this. The Australian economy hasn't experienced a recession for nearly three decades, partly because of its high immigration rate.

The United States continues to attract about 1 million new net immigrants each year although Trump's policies could substantially reduce this figure.

At this stage there is no evidence that the United States will turn into another Argentina, particularly as the latter was an agriculture-based economy in the 1930s while the US is the home of many hugely successful international companies, particularly in the technology sector.

However, Basu has several important points to make about interest rates.

He wrote: "Initially, low interest rates boost demand because people have less incentive to save. But when low interest rates persist, people worry about having enough money for retirement. This prompts them to save more, and consumption stalls".

Low interest rates aren't a major concern at present because savers are achieving positive returns from their sharemarket investments. However, if equity markets stall and interest rates remain low, this could create the potential scenario that Basu is concerned about.

Rates should remain low because most countries are caught in what is called "the interest rate trap". This is the scenario in which any country that raises interest rates will experience a sharp appreciation in its currency, which will have a negative impact on exports.

Therefore, we always come back to Trump because he will continue to put enormous pressure on Federal Reserve Board chairman Jerome Powell to further reduce interest rates.

This is because he wants a lower US dollar to boost exports and to give American companies a competitive advantage against imports.

There are certainly no secrets as far as Trump's objectives are concerned.

There is also no shortage of opinions regarding his methods and his long-term impact on the United States and the global economy.

- Brian Gaynor is a director of Milford Asset Management.