And Now Donald Trump

The views of an expert on leadership and corporate governance

By Richard Torrenzano, edited for the Insurance Advocate

 

Let me share with you, first hand, what is happening in America…and try to explain a presidential election that I know baffles many of you.

In short: What happened?…How did it happen?…Why did it happen?…

What does it mean for America, Britain and the world?…

While preparing for these remarks today, I took care to scan my library…and found book after book that paired presidents and prime ministers…

Franklin Roosevelt and Winston Churchill…Clement Atlee and Harry Truman…Dwight Eisenhower and Winston Churchill again…

And, of course, Margaret Thatcher and Ronald Reagan…the only prime minister and US president to dance together, which was during Reagan’s second Inaugural at the White House.

Britannia and America have a truly special relationship. But first let’s review how it began.

Most would think it began with the first meeting of Churchill and Roosevelt in Newfoundland to draft the Atlantic Charter in August, 1941—before the US even entered the war.

I believe it began months earlier on a chilly and rainy evening in January, 1941, in the Station Hotel in Glasgow, Scotland.

The late, great historian Sir Martin Gilbert tells us that Churchill had dinner with Harry Hopkins, the closest confidant to President Roosevelt. At that time, Britain stood alone and looked anxiously to America and Roosevelt for a lifeline. A very tense time in our shared history.

That night at dinner Hopkins raised a glass and gave a toast, saying:

“Mr. Churchill, I suppose you wish to know what I am going to say to President Roosevelt on my return. Well, I will quote you one verse from that Book of Books, in the truth that my own Scottish mother was brought up in:

“‘Whither thou goest, I will go…and where thou lodgest…I will lodge…thy people shall be my people…and thy God my God.’”

Then he leaned over to Churchill and very quietly added: “Even to the end.”  Observers who were present saw Winston Churchill in tears. Churchill knew exactly what Hopkins meant. Even when I think about it, I get choked up a bit as well.

That is how I think the special relationship between Britain and America began.

This special relationship, which means so much to men and women of my generation, seems a bit wobbly of late.

It is not true that Barack Obama returned the bust of Sir Winston Churchill to the British Embassy in Washington. It is lodged somewhere in the White House, gathering dust.

There are now signs of renewed interest in the special relationship.

The word is that the Churchill bust will be making a spectacular return to the Oval Office within days. And Prime Minister Theresa May recently told Sky News that the relationship is “something that’s optimistic and positive for the UK.”

The question this hour is: What does the election of the most disruptive and unusual candidate who will tomorrow inhabit the White House mean for America, Britain and the world?

For all the talk of disruption, I believe Britain and America have and continue to have a long-standing tradition.

Let’s look at British and American politicians. They tend to dovetail because there is long-lasting symmetry between them.

Truman and Atlee brought a leftward movement to their economies.

Churchill and Eisenhower brought stability and growth.

Ronald Reagan wanted it to be “Morning Again in America,” while Margaret Thatcher sought to put “the Great Back into Great Britain”…

Tony Blair created “New Labour” just after Bill Clinton created the “New Democrat.”

Now you have a prime minister who is the product of the Brexit vote, which Lord Bell so ably championed…and a US president who is the product of a very similar groundswell of populist discontent about immigration, trade, the economy…the non-impact of his predecessor’s $814 billion “stimulus”… and the loss of American jobs to globalism.

In both our recent elections, the elites, pollsters, and media assured us that the establishment would win…and in both cases, on election night, elites, pollsters and media were utterly wrong and had a three-egg omelet on their faces and tongues the next morning.

In both elections, elites, pollsters and media were left in shock and tears, while those in power were left with the chore of preparing for a distinctive change in direction.

Let me point out (three) facts:

—this year in the UK, despite all the talk of doom and gloom and an expected dip…the British economy stands strong as your government prepares to exit the EU.

—on April 15, despite all this change, as an American citizen, I will still need to file my US taxes.

Neither of our countries’ history is without peaceful and not-so-peaceful revolutions. You might recall America started by staring down your redcoats.

It began in Massachusetts with the battles of Lexington and Concord with what is called the “shot heard ‘round the world.’”

Perhaps that wasn’t in your Key Stage 4 textbooks, but it was in mine…

Well, Brexit is Great Britain’s “shot heard ‘round the world.’”

The election of Donald Trump was indeed another…and the echo effects of both these populist revolts will reverberate for many years.

And they may be heard across Europe as well.

Look to the populist wave that swept Italy, the conservative tide in Norway, rising populism in Denmark and the potential for an upset in France in April. And, Chancellor Merkel is facing populist indignation for her immigration decisions that allowed so many undocumented refugees into Germany.

Many shots are being heard around the world. But, who fired the first shots?

In our countries, it is working Brits and Americans who are sick and tired of global, corporate and political speak…of elites who speak Davos but not Derby or Dayton…who always think first of global development and treat local economic needs as a distraction from what they perceive as their global duties.

This attitude was clearly on display during the Hillary Clinton campaign.

She did not deign to spend much time in Wisconsin and Michigan and several other states critical for Trump’s election.

And she had no credible economic message for residents of states who suffered severe job losses, shrinking incomes and the sticker shock of health care premiums.

The Obama-Clinton progressive message instead centered on transgendered bathrooms…climate change…abortion on demand…and other issues of vital interests to cosmopolitan elites.

Whatever your opinions on these issues…I think you will agree that putting them front and center in an election when people are in economic pain was stunningly irrelevant and stupid.

The Clintons were once exquisitely attuned to the needs of working men and women. That is how Bill Clinton beat George HW Bush, who became distracted by global diplomacy…and lost touch with working folk.

And for Hillary, decades of paid speeches by Goldman Sachs and other corporations…the long-standing sense of entitlement that led her to flout rules regarding classified material…followed by her deletion of 30,000 emails as well as the attitude she expressed when caught…all the time spent in Davos and “Renaissance retreats”…all of this showed the Clintons had changed.

And so, it became their turn to play the role of tone-deaf globalists…even ending the last night of their campaign with a concert including Lady Gaga, Bon Jovi and Beyoncé, among other elites who have little sway in an election.

Let me tell you…nothing appeals to unemployed steelworkers in Michigan like a Lady Gaga concert…

Worse, the Clinton campaign had no credible economic message. Only a promise to extend Obama’s policies, an administration that had presided over the most sluggish economic recovery in modern American history.

Here is a quote about the Democratic Party from the late Nicholas von Hoffman, author, Washington Post writer and a devout liberal. He wrote:

“To its committed members [the Democratic Party] was still the party of heart, humanity and justice…but to those removed a few paces it looked like Captain Hook’s crew: Ambulance-chasing lawyers…rapacious public-policy grant persons…civil rights gamesmen…ditzy-brained movie stars…fat-bottomed civil-servant desk squatters…a grotesque line-up of ill-mannered, self-pitying, caterwauling freeloaders banging their tin cups on the pavement demanding handouts.”

The Democratic Party had not noticed…what was first noticed by Wisconsin Governor Scott Walker and then by Donald Trump…that many traditional Democrats were beginning to see their party the way Nicholas von Hoffman described it.

The unions who made up the backbone of the party were split…on one side were public-employee unions, made up of government office workers.

…On the other side of the Democratic Party, were members of the blue-collar unions…welders, pipe-fitters, steelworkers, truckers and others who do things with their hands.

Democrats should have been cautious as blue-collar workers had crossed over before for Reagan. So, what did the Democratic Party offer them in 2016?

Environmental and economic policies…that kill oil pipelines…policies that halt construction and mining projects…policies that reduce demand for concrete, steel, oil and gas.

The Obama-Clinton strategy of putting climate change and other non-economic issues at center-stage was just fine with the public employee unions…the Democrats had somehow failed to notice how unpopular or just irrelevant these liberal issues were with the working man and woman across the country, particularly outside the major urban areas.

Their tone-deafness was so complete that as a candidate, Hillary Clinton in Ohio bragged she would put coal miners out of work; saying this within miles of West Virginia and Pennsylvania. This was akin to promising in Edinburgh to put distillery workers out of their jobs…in Glasgow.

And yet, even these gaping holes in the Clinton campaign were not enough to defeat her. Hillary Clinton also lost because Donald Trump had a shrewd and strategic grasp of what it takes to win the presidency…and bringing a shocking and devastating end to the ambitions of Hillary Clinton and her unhappy band.

While Clinton overreached by trying to win unwinnable Republican states like Arizona and Georgia…Donald Trump focused on swing states like Michigan and Wisconsin…Pennsylvania and Ohio…which put him over the top for an electoral college majority.

The electoral college had made the difference four times in American history…three times in the nineteenth century. And, of course, at the beginning of this century, George W. Bush had famously won without the popular vote…winning the electoral college through a few hundred votes in Florida.

Even to Americans, the electoral college is a strange institution. Many Democrats would now like to scrap it. I can imagine to British ears, it is as mysterious as the inner workings of the College of Cardinals…only without the puff of white smoke.

I would argue that the electoral college is not a vestige of antique politics…but a useful instrument that serves my country well.

In the US, each state sends several electors who are proportional to the state’s population in the nation…to vote for the candidate who won the most votes in that state.

Forty-eight states have a winner-take-all rule…the two exceptions being Nebraska and Maine.

This system has three virtues.

First, it brings clarity. Here in the UK, your first-past-the-post rule produces strong majorities…which keeps your parliament from dissolving into the coalition chaos that seems like a chronic disease in Italy and Israel.

The US electoral college produces a clear and uncontested winner when the ballot count is close.

For example, in 1912 Woodrow Wilson had won only 41 percent of the vote, but received more than 80 percent of the electoral votes…and with that mandate, he enacted a powerful agenda that gave America the Federal Reserve system and stronger anti-trust laws.

Donald Trump won the election by about 100,000 votes in several swing states, but he received a commanding majority of 306 pledged electoral votes over Clinton’s 232…which is how he legitimately claims a mandate.

Second, without our electoral college, the top ten US cities in a few states would sweep the election every time…leaving out other states, smaller cities, towns and farming country that deserve a voice in the election.

Third, the electoral college maintains the US federal system in which the states have important roles to play. We call this federalism.

American states, from little Rhode Island and Delaware…to New York, Texas and California…are distinct societies with their own versions of American culture. The electoral college respects these distinctions and protects them.

Donald Trump appreciated this role of the electoral college…and saw opportunity.

As a businessman, he reduced the challenge of winning the presidency to its essentials.

As a marketer, he micro-targeted demographics he needed to win the electoral college.

And whether you love or hate Donald Trump, you must admit that there is genius to what he achieved, especially as someone whose first experience in politics was to run for president.

Tomorrow at 5 pm London time, we enter the Trump era. So, what will this new era entail?

Let me begin with US domestic policy.

Few in elite circles expected Donald Trump to be elected. But no one—not even the Republicans—expected to keep majority in the US Senate, in which they had an unusually large number of candidates up for re-election…

Let me emphasize the depth of the Republican’s landslide.

Republicans kept their majorities in the US Senate 52-48, as well as the US House of Representatives, 241-194 out of a total of 435…and added two more governors to control 33 states…and both chambers of the state legislatures in 32 states…governing more than 60 percent of the US population locally.

This is important since governors and state legislatures draw voting maps that determine US House of Representatives districts…to ensure likely control of the House by Republicans for years to come.

In addition, the Senate will allow Republicans to control the confirmation of Supreme Court justices and federal court judges. So, this election gives Republicans control of the third branch of our system, the judiciary…with Trump appointing at least one and perhaps three US Supreme court justices, as well as hundreds of regional federal judges during his term.

In short, Trump comes to Washington with a commanding majority somewhat like what Tony Blair enjoyed at his beginning as Prime Minister.

The Democrats, however, will try to stop Republicans with a Senate procedural roadblock called the filibuster…but they themselves provided the Senate procedure to override the filibuster when they passed Obamacare with only a slender Senate majority.

What will Trump & Co. do with their powerful majority?

They will repeal Obamacare, a top-down, federal imposed healthcare system that has neither the simplicity of your national healthcare system…nor the dynamism of the old US healthcare based on competition.

Obamacare, which promised to reduce premiums, has proven a disaster…raising rates to astronomical levels for many Americans.

They will debate and enact a replacement that will be market-driven, while retaining popular features of the program…such as preventing people from being denied insurance for pre-existing conditions.

Trump and the Republicans will also strip out much of the complexity of a tax code whose rules run 76,000 pages long…They will flatten rates and reduce the politics of deductions.

They will lower the US corporate tax rate, now at 35 percent, for years the highest in the developed world.

They will eliminate the unique provision that double taxes US corporations on what is earned abroad. This will encourage American companies to repatriate an estimated $2-to-$3 trillion now held abroad, at a far lower tax rate. After repatriation, this will ignite spending and hiring in America.

They will reverse Barack Obama’s executive orders—which he used to get around Congress to mandate policy.

Trump and the Republicans will strip down a regulatory code that has grown by more than 20,000 rules during the Obama administration…the top 200 costing the economy more than $100 billion a year.

They will strip out much of the Dodd-Frank legislation that uses 850 pages to regulate every aspect of the banking system.

They may keep some of the requirements for banks to maintain capital levels…but, they will eliminate all the cost-imposing rules that keep smaller competitors from competing.

If President Trump and the Republicans do these things…what can go right?

You will see a bull market like you’ve never seen before…with growth in profits…growth in employment. Barring an unexpected and tragic event…2017 will be a spectacular year for the US economy…with strong ripple effects in the UK.

President-elects are supposed to be like brides just before the ceremony, unseen until the music starts. Trump has arguably done more for jobs in America as president-elect…than Barack Obama organized in eight years as president.

Trump persuaded United Technologies to keep more than 1,000 Carrier company jobs in America…and Boeing and Lockheed to lower prices on defense contracts.

Also, Sprint is bringing back 5,000 jobs to America…and after a Trump tweet, Ford canceled its proposed $1.6 billion plant in Mexico…adding $700 million in investments and 700 new jobs in America. It said it was doing so because of the new Trump pro-business environment.

Then Fiat-Chrysler and Toyota announced multi-billion investments in US jobs. Jack Ma of Alibaba came out of Trump Tower promising one million American jobs…exaggeration perhaps, but still encouraging.

…With a good cycle of infrastructure spending…

…Millions more Americans having money to spend after getting back to work…

…Irrational regulations being taken off the backs of business…

Americans are feeling something is building…from the C-Suites to the union halls…the US economy will roar in 2017.

That’s the upside, and it is huge.

What could go wrong? In one word, inflation.

Under Obama, US debt rose from 76 percent of US GDP to more than 100 percent of our annual GDP. We haven’t been this much in debt since the end of World War Two…and have no victory to show for all this spending.

President-elect Trump promises to lavish spending on infrastructure and refuses to consider changes to the Social Security and Medicare entitlement programs that make up more than half the budget. With this posture, it will be very difficult to slice the budget deficit.

On the social side, I believe Donald Trump will be much more of a healer than people realize.

Americans believed that the election of an African-American president would be racially healing. But Obama’s poor economy and polarizing approach brought back a term—“race relations”—that I never expected to hear again.

Racial tension is a sign of a shrinking pie, and I predict that President Trump will bring growth and jobs to all Americans—including Hispanics and Black Americans—and the growing pie will put us back on track.

In foreign policy, Obama had speeches instead of policies…platitudes instead of alliances…appeals instead of allies…reducing Secretary of State John Kerry to wander the earth like a mendicant scarecrow…begging the Russians, the Chinese and the Iranians to please…please…play nice.

The George W. Bush presidency had the opposite vice. He aspired to do far too much…to bring democracy to Mesopotamia…to contain Putin and push him toward democracy…to contain China…to deter Iran…to fix the whole Middle East.

Trump may sometimes ask naïve questions…but he brings fresh thinking.

He realizes that we must follow a middle-path between disengagement…and supremacy. We in the West cannot oppose Russia, China, Iran, North Korea and Islamic extremists all at the same time…and expect to succeed.

With the counsel of Henry Kissinger and other wise men by his side, Trump will try to reach an accommodation with Russia…a partner who is also interested in killing ISIS…and who should realize that a nuclear Iran or North Korea is not in Russia’s interest.

Trump is cutting our losses so he can focus on maintaining the free-flow of goods in the South China Sea…and perhaps balancing China’s aggressiveness by encouraging a nuclear Japan.

What could go right with such a strategy?

It would stabilize Europe while allowing us to attend to the crisis in the Middle East and counter China’s provocations.

Yes, Donald Trump will continue to pressure NATO countries to meet the two percent GDP commitment to NATO, that Britain, Poland and the United States exceed.

But if you look at his appointments…of so many generals to high office…there should be no doubt of Trump’s baseline commitment to NATO.

What could go wrong with a Trump foreign policy?

One thing that can go wrong—regardless of who is president—is North Korea.

The United States will not allow North Korea to develop nuclear-tipped ICBMs, which it is currently preparing to do.

And because North Korea is a nuclear power with a long history of reckless behavior…if conflict breaks out… we could see a pre-emptive strike by the United States.

The outreach to Russia will go seriously wrong if President Trump bases his new relationship with Putin on personality rather than hard-nosed transactions.

The list of those who tried to charm Putin is long…George W. Bush and his father had Putin to a BBQ in Maine, that did not work…Hillary had her ridiculous “reset” button, that did not work…Merkel tried to make Putin a friend, and that did not work.

Putin’s Russia will never be a true friend…But Trump might be able to forge a working relationship that serves both powers well.

Seen in this light, Trump’s flattery of Putin is part of a strategy to begin that process of engagement of the Russian dictator.

This may be difficult for some to understand because they don’t realize Trump is always staking out a negotiating position. He overdoes it by flattering Putin. He overdoes it in his denunciations of China. And along the way, he moves the center of the deal toward himself.

In trade, we will see a correction from the globalist viewpoint…putting the interests of America first.

US participation in the Trans-Pacific Partnership is as dead as Britain’s future in the EU. We will see a long pause in further efforts to expand trade on a vast global basis.

But I do predict we will see room in Trump’s agenda for smaller, more targeted efforts, one of which might be a US-UK free trade agreement.

Let me finally turn to how Trump will communicate…which will be the most disruptive change in American presidential history.

Consider how Donald Trump neutralized efforts by a sketchy, partisan opposition research group—highlighted by some media—to portray him as the victim of Russian blackmail…of an unsubstantiated lurid moment in a Moscow hotel room.

…Speaking in this great hall today…I can only wonder what the ghost of Prime Minister William Ewart Gladstone would make of some of these topics.

Another president-elect might never have recovered. Not Trump.

Over the course of a two-hour news conference, according to Michael Goodwin of The New York Post, Trump “had managed to turn the spotlight away from himself and on to the lack of integrity in both the media and government agencies.”

Little comments Trump dropped in the news conference had powerful consequences. When he suggested that US pharmaceutical companies were “getting away with murder” regarding their US prices, the top pharmaceutical companies saw $25 billion in share value temporarily vanish.

Trump also deftly suggested that while Putin was no angel, they would get along because “Russia will have much greater respect for our country when I am leading it.”

Trump’s tweets have also proven to be powerful. No president-elect has ever had an enacted agenda like Trump.

He used Twitter to pressure thousands of new jobs out of Carrier, Fiat-Chrysler, and Toyota.

Most notably, Trump is using Twitter to communicate with Russian President Putin and Israeli Prime Minister Netanyahu in front of the world, a contrast with the lackluster diplomacy of his predecessor.

Donald Trump has more than 46 million followers in social media…that is more than three times as many who watch the evening news shows each night in America.

With Trump, Twitter will remain a powerful tool he will use to work outside the formal political system to pressure politicians and business leaders.

To be fair, many of Trump’s tweets are poorly composed…and hard to decipher.

So, why does he do this?

Donald Trump is the first world leader to publicly think aloud…You cannot transform his tweets into policy…but you can use them to see the direction he is thinking about and moving towards…

When he tweets that North Korean ICBMs “won’t happen”…you can be sure it won’t happen.

When he attacked China in his tweets, it was the first time in our post-Mao relationship that a US leader has put China on the defensive, and he did it in 140 characters!

Trump loves to disrupt his opponents…to get under their skin…to uproot them in ways they don’t expect.

A Trump tweet is also a first, rough draft…an impulse…toward a given direction.

For many, this is very uncomfortable.

Twitter gives us direct access to the unconscious mind of Donald Trump.

In the past, presidential statements were drafted by speechwriters who craft every word for a precise impact…in Washington…in London…in Moscow and throughout the world.

The British and American press have driven themselves crazy over-analyzing each of Trump’s tweets—and every character. Politicians, business, foreign governments, as well as media must now make a mental adjustment.

If you want to understand Trump and where he is moving…a Trump tweet or remark, unless it is specifically directed at a target…should be taken only as a tea leaf…not as a statement of policy.

A Trump tweet…or public aside…is not policy…it is a thought…a direction.

If you want to understand Trump, it is better to follow what he does, more than what he says or tweets…

As an example, he lashed out at the intelligence community in a tweet…but the next day appointed Dan Coats, former senator and well respected in the intelligence community, as the new head of Department of National Intelligence.

Trump is assembling a master class of business and military leaders…who live and die by results in the form of profits and losses or battles won or lost.

This is in far contrast to appointing lifelong politicians who are only comfortable explaining failure.

Rex Tillerson is a masterful choice for Secretary of State…he has more negotiating experience than almost any conceivable candidate. And far more successful with the Russians than the very ineffective John Kerry.

General James Mattis will bring the discipline of a soldier-scholar as Secretary of Defense.

Wilbur Ross, a genius of restructuring businesses, will head Commerce, with a focus of bringing jobs back to America.

In all these ways, expect a Trump Administration to do things differently, quickly and more directly than we were used to.

There is a new sheriff in town…the American people elected Donald Trump because they realized we couldn’t continue down the path we were on.

What are our takeaways?

First, a new lens is needed to watch and understand the Trump Administration. We will need to keep our attention on what he does over the surface drama of what he says.

If you become upset reading Trump’s tweets and remarks, you are in for years of discomfort and agita.

If you stay focused on executive orders, legislation and appointments, you will have your eye on what matters.

Great presidencies are not built on besting one’s detractors, though Trump cannot resist trying to do that. I believe Trump will get beyond the drama to enact legislation that transforms a broken government.

If he can do that this year…Donald Trump will match or exceed the energetic start of the Franklin Roosevelt administration.

I predict he will not let his eyes off the main events. Already, Trump is prepared to transform the judiciary by naming a new Supreme Court justice within his first two weeks.

A second observation, Donald Trump represents the triumph of social media. He will continue to use digital media as a cudgel to move people, companies and other leaders.

Whether or not you do business in the United States, these practices are sure to reshape governmental and business communications in London and throughout the world.

The old forms of communication—through trade or governmental associations—through white papers or opinion-editorials…are giving way to a digital media that is…instantaneous…global…and eternal.

Leaders of business and public concerns will need to be skilled in the use of social media…develop armies of followers. And, as automobile manufacturers have learned—to be ready to respond almost instantly.

This requires companies and governments to think through in advance areas where they might be attacked. It will require a total inventory of issues and responses. I doubt Boeing realized it would be attacked by the President-elect on its contract costs for the new Air Force One.

And it will require your organization or government to develop responses in advance…teams to engage in scenario role-playing…so you will have the muscle memory to respond to a disruptive tweet.

…Whether from an activist group making an outlandish charge

…Or a competitor making false comparisons

…Or even the President of the United States

…You must be prepared, drilled and skilled for this advanced new digital global environment.

Thank you for this honor of speaking to you today.

* * * * * *

Richard Torrenzano is chief executive of The Torrenzano Group, a reputation and high-stakes issues management firm specializing in building and protecting corporate reputations, helping clients grow their business and enhance brand and shareholder value.

The Torrenzano Group helps organizations take control of how they are perceived™.

Richard is a sought-after expert and leading commentator on crisis, brands, reputation and social media.