Courtesy of Mish.
I just received an interesting email from Steen Jakobsen, chief economist and CIO of Saxo Bank. Steen wonders if Trump changed anything. More accurately, Steen commented, “Back to the past – when change is not a change”.
This is a guest post by Steen Jakobsen, with minor formatting edits by me.
Steen’s Chronicle: Back to the Past – When Change is not a Change
I have spent the last month on the road around Europe meeting with clients and investors. It has led to some interesting discussions and conclusions for me.
President Trump remains an enigma even for people who have met him. His personality is at best erratic and at worst compulsive. Having said that his ability to “keep the ball rolling” impresses me. In the process, he has been able to convince many of the investors I respect the most to buy the concept of ‘an animal spirit’, the very concept instilled in us economist’ from Adam Smith and his laissez-faire economy concept.
One problem, if you haven’t noticed, “laissez-faire” is the exactly opposite of what Trump believes in! His idea of animal spirit is forcing companies (and that’s put diplomatically) to keep jobs in the US despite it’s hurting earnings, productivity, and long-term growth.
It’s also interesting how Trump wants to “create jobs” in an economy where the Fed and others are concerned about the heated labor market. The US today has an unemployment below its historic average. Here’s just a bit of advice to Trump: It’s not jobs you need more of per se, but rather a more productive US. Higher productivity will force wages up and increase jobs quality.
There is an almost perfect correlation between GDP growth and productivity and Trump’s policy is countering the “preferred” solution which should be massive investment in basic research, more competition and most importantly a big upgrade of the educational system.
