Whether you love him, hate him or are ambivalent I think everyone can agree that the coming years under “The Donald’s” presidency are unlikely to be dull. For the first time in years the West has a leader with a résumé that does not solely consist of being a career politician.
It is not just the new President that has had a life in the real world. The top eight positions in his cabinet have, between them, 83 years outside politics, and 55 in government. In contrast President Obama’s cabinet had only 5 years’ experience outside politics and 117 in government.
Personally I do not feel this is a bad thing. Going back fifty years it used to be the norm that MPs from all political parties in the UK had experience outside politics before they went to Westminster. Bringing their experience to the role, whether it was from the shop floor, boardroom or working in one of the professions, in my mind meant they were less detached from their electorate and more aware of the impact of the legislation they passed.
Going into politics was regarded as an opportunity to give back to society whereas recently the reverse has been true with a time in politics being seen as an opportunity to future wealth (m’lord I give you exhibit 1 - Blair and exhibit 2 - Clinton).
From a financial planning point of view it is clear the UK’s legislation was created by politicians with little experience outside of Westminster.
Is there a need for the UK’s tax code to be 17,000 pages long (Hong Kong’s is under 300)? If we think of Government as a business, tax is its revenue. What business would make it so difficult for their customers to pay them that they required 1000’s of staff to check they were paying the correct amount, and have so many different rules that the customers would also have to employ their own advisers to calculate how much they should pay?
Pensions are another example. We are continually told that people are not saving enough for their retirement. Therefore does it make sense for you to require the equivalent of a degree before you can fully understand the legislation? Compare this to buying an iPad. Undoubtedly this is an extremely complex piece of kit, but the only instructions you get in the box is a diagram showing the “on” button.
Anyway, I digress. Getting back to Trump the markets appear to believe his presidency will be good for business and time will tell if this proves right or wrong. The US has seen economic growth for over seven years making this the third longest recovery in its history. Given this it is probable we will see a recession at some point during Trump’s time in office but this does not appear to be on the horizon just yet.
Now everyone’s focus will turn to Europe and the elections that will be coming thick and fast. As always investors would be well advised to ignore the noise and keep calm. Changes are inevitable in our continent but irrespective of what happens business will continue and if we begin to see more people from other walks of life get involved in politics (although with a bit less baggage preferably) then, as far as I am concerned, all the better.