What the Trump Revolution Means for the Rest of the World


“The revolution is not an apple that falls when it is ripe. You have to make it fall”

–Che Guevara

Introduction: How Trump Won

Boy, did Donald Trump make the apple of revolution fall from the tree. Despite the fact that his populist insurgency was universally discounted, the brash New York business mogul pulled off the most stunning political surprise in modern American political history, besting tired, corrupt Hillary Clinton for the presidency. The most galling point in all this for political risk analysts is that Trump hid a winning strategy in plain sight, without anyone taking him (or it) seriously. At the very least, this analytical humiliation should force all of us in the elite to think again about whether the world truly works as we think it does.

After endless internal campaign chaos, Trump settled at last on the highly capable Kellyanne Conway as his campaign manager, who provided needed ballast to the storms perpetually raging around her candidate. Conway had a simple—and in the end brilliant—strategy for victory. The future was not (at least not yet) the preserve of the shiny new Obama coalition—based on the country’s changing demographics—of the young, the urban, the well-educated, and growing minority groups, such as Hispanics and African-Americans.

Instead, at least for this election cycle, the future was the past; white, high-school educated men, the heroes of Bruce Springsteen’s music, would provide Trump with the winning edge, all polling data to the contrary. These were the voters from another time, and in terms of the East Coast Establishment assessing them, almost from another world. Yet their fears are not imaginary, even if in their search for victims, Springsteen Democrats have sometimes found the wrong culprits.

It is a too-often neglected fact that over the past two decades, half of all Americans—the most powerful country in the world—have become poorer. These Springsteen Democrats (for this group can be traced back to the earlier southern Democratic populism of George Wallace) are entirely right to fear that the world has passed them by and that the elites in both parties no longer give their plight overmuch thought. Trump’s ingenious campaign slogan, ‘Make America great again,’ was especially created for his Springsteen Democrat loyalists, catering to their sense of loss and betrayal. It was a masterful political stroke.

Trump shared several of the basic tenets of the Springsteen Democrats, seeing the uncontrollable ravages of globalisation as a primary culprit in both the decline of America (and the consequent rise of China and other Emerging Markets) in general and the Springsteen Democrats in particular (with globalisation’s emphasis on educational attainments). Flouting long-held Republican Party orthodoxy, Trump’s unfriendly takeover of the party with his Springsteen Democrat followers turned the traditional party of free trade into a protectionist one with bewildering speed.

East Coast finance, often the sponsors for Democratic Party candidates as is exemplified by Hillary Clinton beyond all—the very bankers who ran the world economy into a ditch, escaping from their greed and stupidity scot free—were the practitioners of globalisation, the unseen and unfriendly forces dooming the Springsteen Democrats to a declining lifestyle and position in American society. Again turning Republican shibboleths on their head, the party of business morphed into the party of the white working class in the blink of an eye, with its attendant (and not entirely unfounded) suspicion of the American business elite.

The third force to blame for the Springsteen Democrats’ diminution in social status in American society was the rapidly changing demographics of America itself, particularly the rise of Hispanics as the fastest growing and largest minority group in American life. In terms of rates of assimilation, Hispanics are generally joining American society at more or less the same speed as the Irish-Americans, German-Americans, and Italian-Americans who came before them.

The one very important exception to this is in terms of educational progress, as Hispanics have learned English (for whatever reason) at a slower rate than most of the other immigrant communities who have come to America. This has made Hispanics seem ‘different’ to Springsteen Americans in a way other groups, such as the recent rise of Asian-Americans, have not. Pressed from above in the American class system by globalisation and the bankers (and their political lackeys) defending it, and from below by Hispanics challenging the Springsteen Democrats for their jobs, it is unsurprising that Trump’s anti-immigrant tone fell on such fertile soil.

Most of the commentariat found Trump’s focus on the forgotten Springsteen Democrats highly amusing, as there was simply no analytical data to support such a bold throw of the political dice. But Conway convinced Trump that this demographic ought to be the basis of his populist campaign strategy for three reasons. First, given his specific pitch to them—and everyone agrees that Trump sounds like no other Republican presidential candidate ever created—Trump could connect with the Springsteen Democrats, many of whom had grown so demoralised by the ravages of globalisation (and the lack of anyone defending their interests) that many simply didn’t bother to vote.

But Conway saw that here was a core group ripe for Trump to woo—and win—in overwhelming enough numbers that it would swing the election. In the end, national exit polls show that Trump swamped Clinton among non-college whites by an astonishing 39%, an even larger margin than Ronald Reagan managed against Walter Mondale in 1984.

Secondly, the Springsteen Democrats—echoing Trump’s gleeful political incorrectness—hate the mainstream media which they (again at least partially correctly) see as hopelessly, dogmatically left-wing and elitist. As such, if a polling company calls up a Springsteen Democrat, the likely response is the phone is slammed down. Conway brilliantly deduced Springsteen Democrats were being significantly under-counted.

A third reason to focus on the Springsteen Democrats as the key to victory was that not all these voters wanted it to get around that they were going to vote for a presidential candidate scarred by accusations of racism and bigotry, even if they were drawn to his protectionist and anti-immigration message. Conway and her team fervently believed that these ‘shy voters’ would nevertheless emerge in sufficient numbers to sway the election.

This world-class strategy worked perfectly to the shock of the rest of the world, as Trump upended the heavily favoured Hillary Clinton to stunningly claim the presidency. Sure enough, these uncounted white male voters actually existed, and in large enough numbers in the upper Midwest (Pennsylvania, Ohio, Michigan, and Wisconsin) to shatter decades of Democratic dominance there and claim the presidency for Trump.

The last projected Real Clear Politics poll of polls judged that Clinton would receive 46.8% of the overall vote, while Trump managed only 43.6%. In reality, Clinton’s numbers were even better than this as she ended up with around 47.7% of the overall vote. However, Trump’s totals were a highly surprising 47.5%, a decisive four points higher than had been posited. This winning margin entirely justified the missing voter strategy, and proved Conway’s inspired hypothesis entirely correct. As Speaker of the House, Paul Ryan (no friend of Trump’s) put it, ‘He heard a voice out in this country that no one else heard.’

Don’t expect Trump to forget that the Springsteen Democrats won him the presidency. More than any other check on his power, the nature of Trump’s populist campaign—run without the usual political commitments having to be made to the Republican Party, big donors, or any specific interest groups—means that the full-throated continuing enthusiasm of the Springsteen Democrats is what he will be worrying about as he sets about governing. As such, trade and immigration policies—which in both cases mark a giant change from the settled elite world view of both parties—will be conducted on a radically different course. Trump won’t forget the Springsteen Democrats, as they did not forget him on November 8th.

Trump’s Jacksonian Foreign Policy

Nor are Trump’s overall foreign policy views the mystery the highly-discredited commentariat make them out to be. He largely hews to what Walter Russell Mead calls the Jacksonian nationalist strain of American foreign policy thinking, long a minority (if important) view in both parties.

Espousing a form of realism, the Jacksonians believe that the US should pursue a very limited but overriding view of the American national interest, seeing that every foreign policy strategy furthers American interests to the exclusion of other competing imperatives. For example, during the campaign Trump questioned whether global warming was objectively true, wondering aloud if this was merely a Chinese plot to economically castrate the United States.

What Trump is getting at is that he is not in favour—given the perilous economic condition of his Springsteen Democrat base—of shelling out significant American funds to pay the lion’s share of a global problem, if it is indeed a problem at all. The idea that America is somehow impelled to ‘lead’ on this issue as the global ordering power strikes Jacksonians dangerous claptrap of the highest order, just another example of global elites caring about esoteric issues (global warming, pandemics, nuclear proliferation), all the while ignoring the economic plight of workers everywhere.

As such, Jacksonians are deeply distrustful of alliances, fearing the US too often allows itself to be shackled to the wishes of others, who may have quite different interests from those of America. Here Trump (rightly) notes that Europeans failure to ever meet their defence commitments in NATO is scandalous, and that Americans should not continue to be taken advantage of, footing the bill so Europeans can retire earlier while Springsteen Americans suffer at home. While Jacksonians are not against NATO or any other alliance per se, they are only for such commitments in transactional terms, if America ‘gets a good deal’ out of them.

The idea of sharing values with Europeans (which the clueless Chancellor Merkel brought up in her statement congratulating Trump on his victory) would strike a Jacksonian as the height of hypocrisy, a way to either change the subject away from obviously deficient Europe defence spending or (even worse) to use such platitudes to ensnare America in an alliance to do other’s bidding.

In either case, Chancellor Merkel had better learn fast about Jacksonian thinking for her tired old rhetorical song and dance—perfectly, blandly acceptable for the old American foreign policy elite—is simply not going to work anymore. Jacksonians are not isolationists; they will do things in the world that they believe suit them and their interests. To ask them to do anything beyond that—as America regularly has as the global ordering power for the past 70 years—is not going to happen anymore. At its essence this is what Trump means when he talks about ‘America First,’ a laser-like focus on American national interests to the exclusion of all else.

Jacksonians favour using force, but only when it is clear that a winning strategy is at hand, and never in the interests of esoteric goals, such as ‘upholding the international community,’ ‘humanitarian intervention,’ or to ‘nation-build’ others. Any nation building that occurs ought to be for the Springsteen Democrats, rather than (rightly in my views) wasting literally trillions of desperately-needed dollars in swamps like Iraq around the world. Again, with his focus entirely on American nationalism, Trump—weirdly echoing the very different Barack Obama—wants nation building to begin at home.

However, should America decide that the use of force is in its interests, Jacksonians are for prosecuting the war, regardless of what others—including international institutions like the UN or the smug and hopeless EU—might say. As Jacksonians believe so fervently in American nationalism, they readily accept that other countries might wish to use force, and are not over-worried by that reality, as long as American interests are not threatened.

Hence, Trump’s blithe unconcern for whatever President Putin gets up to in either eastern Ukraine or Crimea. America has no primary interests in either place so Jacksonians like Trump—to the horror of the international rules-loving Wilsonian elite—simply don’t care. To put it mildly, this Jacksonian tilt will force the rest of the world to think about America again, in a way few have bothered to do over the past several generations, as its precepts, world view and policy prescriptions are so entirely novel to European eyes.

Trump’s likely foreign policy

So in reality there is far less conjecture about Trump’s likely foreign policy trajectory than many in the media would have you believe. First, the new president will be resolutely anti-free trade, dooming the two large trade deals pending, TTIP for Europe and the TPP for the Pacific Rim. As Europeans had all but given up on TTIP anyway—with the Germans in particular having not bothered to try to sway their increasingly protectionist population—that is no real loss. However, the demise of TPP in Asia amounts to a strategic tragedy for the US, greatly improving China’s position in vital Asia.

The jewel in the crown of the Obama foreign policy, TPP was far from just a trade deal; instead, it cemented American geostrategic dominance in Asia in the new multipolar era by economically more closely linking America to its Asian partners (and pointedly excluding Beijing) all the while setting the new trading rules that would be followed for the region as a whole. Years in the making and painstakingly negotiated, TPP was finally laboriously agreed to and was awaiting congressional approval.

With the advent of Trump, this brilliant initiative will never see the light of day. Even worse, the Chinese are sure to make the rounds of America’s Asian allies, pointing out to Japan, the Philippines, and the South Koreans that American politics is now so toxic that its broader strategic word is no longer good. This is nothing less than a geostrategic disaster of the first order.

Ties with Russia are bound to improve as the Jacksonian Trump shares President Putin’s nationalist, spheres of influence view of foreign policy. America has no significant interests in Crimea or Ukraine so this is going to be removed as a major source of friction. Likewise, America has no real interests in whoever runs Syria, so the Kremlin’s blood-letting there is also not a major impediment to US-Russian relations. Given this, there is a good chance that Trump, Putin, and Assad will decide to work more closely together in eradicating ISIS from Syria specifically but also try to combat global terrorism more generally as well. For the Eastern Europeans such a stance will be shocking, after years of dealing with neocons and Wilsonians, but focusing on better ties with Great Power Russia makes a lot of sense from the Jacksonian point of view.

Third, American alliances in both Europe and Asia are in for a period of real change, where long-neglected strategic choices will have to be finally made. There will be increased Jacksonian pressure in both regions for local powers to pull their military weight, to do more and not leave the US to foot the strategic bill.

Here the strategic alternatives for America’s allies will be stark and forced upon them quickly. There will either be an acceptance of the need to do more to retain the American alliance, a new accommodation by American allies in both Europe and Asia with local regional powers Russia and China, the withering on the vine of these longstanding ties with Washington (death by neglect), or an open, angry transatlantic crisis decades in the making over burden-sharing. Whatever the future holds, the era of drift for America’s post-1945 alliance system is well and truly at an end.

For the biggest and most important takeaway of Donald Trump’s improbable Jacksonian triumph is the world will now structurally move to a full multipolar system, without having the benefit of an ordering power to mitigate crises and keep the global show on the road. Due to his professed Jacksonian bent and strict focus on American nationalism, Trump’s revolution means the US is exiting its long-held role as the world’s ordering power, the leader of the global international order constructed after 1945. For better or worse, countries will be largely on their own again. The West as a concept is dead and buried; the post-World War II era is finally over.

As a codicil of this fundamental geostrategic change, the US alliance system is likely to come to an end as we know it, replaced by a more transactional world where countries work together only when it obviously suits them to do so. The idea of sharing values or fighting wars to bolster the international community will soon seem a quaint anachronism of another age, as the Wilsonian global elite passes into history, destroyed by its very otherworldliness, which forget that nations and nationalism remain the basis of action in the international order.

While some of this is to be welcomed by realists everywhere, and much of the rest is manageable, the economic illiteracy at the heart of the Trump phenomenon is easily the greatest cause for concern. For the world economy remains globalised, whether Trump and the Springsteen Democrats (or many Europeans for that matter) like it or not. Threatening China with massive tariffs is like throwing gasoline onto an open fire, reviving the prospects for the Global Depression that was just barely avoided following on from the Lehman crisis. Living in a more nationalistic, interests based world is just fine for realists, as it actually corresponds to reality as we find it. Living in such a world in the midst of a self-induced Global Depression would be ruinous.

But his unlikely fellow revolutionary Che Guevara I think would grudgingly acknowledge that Donald Trump has shaken the apple tree. For good and bad, the world that we have known is about to recede from view. It is time for political risk analysts to be the mariners of these new, unfamiliar seas, expertly charting a course to success in these perilous times. That is the challenge for all of us as there is no going back from this revolution.

Published in Limes, December 2016

It’s time to face facts: Pandora’s Box is open and Europe is finished


“Therefore, send not to know/For whom the bell tolls, /It tolls for thee.”

–John Donne, 1624

Let me begin with a truism. My analytical career has not suffered from betting against Europe.

For much as I love the lifestyle and all that comes with it, the continent’s complete, pathetic inability to solve any of its many existential problems–the endless euro crisis, non-existent rates of overall growth, Depression-era levels of youth unemployment in the south, and no common policy on refugees–unsurprisingly has toxic political ramifications.

It almost does not matter which political crisis next knobbles Europe. There are plenty to choose from. But instead the key analytical reality is that one of them will soon further grievously wound the dying power in the coming year.

Lurking beneath the sturm und drang of Trumpism, the most recent growth figures for the continent were released. They make for the usual dismal reading.

In the third quarter of 2016, Euro-zone growth overall was an anaemic .3% of GDP; in France .2%, Italy .3%, and Germany .2%. Given that in a modern industrialised country .5% is the bottom end of what is acceptable, this damning economic reality—try as apologists may—can no longer be ignored. Indeed, the economic poison has now seeped into the European body politic.

In Spain, after two elections and almost a year of deadlock, centre-right Prime Minister Mariano Rajoy was returned to form a weak minority government. While the Spanish economy is picking up again from a catastrophically low base (it grew at .7% in the third quarter), Madrid must find five billion euros in tax increases or further spending cuts if it is to meet its deficit target mandated by the European Commission. It is hard to see either the far left Podemos Party or the electorally chastened Socialists going along with this. Rajoy is in for a very bumpy ride.

Given that French President Francois Hollande’s recent approval rating is just four percent (that’s not a typo) and that far right Front National (FN) leader Marine Le Pen remains (at least for now) un-electable, the establishment candidate of the centre-right Les Republicains, Francois Fillon, will be the next leader of the country.

If France keeps to its current lengthy trajectory of almost no growth, this, coupled with the fears of further terrorist attacks, could propel Le Pen to the presidency the next time out. It is possible that in the final round of this year’s elections she will double her father’s earlier vote tally of more than 18%. Le Pen’s political wager against the French establishment looks more than plausible.

In Italy, reformist Prime Minister Matteo Renzi is running about five points behind in his pivotal December 4th referendum on electoral reform. Renzi has reiterated that, if loses the vote, he will resign. This would lead to new elections early in the new year, where the populist, anti-euro Five Star movement of Beppe Grillo is running neck-and-neck with Renzi’s centre-left Democratic Party. A Five Star victory would lead to Italy having a referendum on euro membership, with the outcome up for grabs.

Even in Germany, while Angela Merkel is on course to win a dispiriting re-election (proving the adage that the tallest pygmy in the village is considered a giant), the far right, xenophobic AfD is on course to rocket up from nothing to anywhere from 15-18% of the vote in the autumn 2017 parliamentary elections. This means a further joyless grand coalition between Merkel’s CDU and the leftist SPD is on the cards.

As is true with France, while the establishment parties will hang on this time, another term of Merkel’s do-nothingism will only help the populists, putting even this most stable of European polities at risk of major political disruption.

It is true that not all these apocalypses will come to pass. In fact, it is quite possible that most will not. But given the already weakened state of Europe, if one ghoul here from Pandora’s box does escape, surely the writing is on the wall for the prospects of the continent as a whole. It is time to face facts; Europe is over.

Published in City AM Money, December 2016

America’s psychological divisions foretell a toxic era of partisan gridlock

By Dr. John C. Hulsman and Lara Palay

The political blow to the the Democratic Party following its surprise loss to Donald Trump has been cataclysmic.

Rather than holding the presidency and retaking the Senate as was expected, America’s ruling party finds itself shut out of power in every branch of the federal government and at the state and local levels, too. By this yardstick the party has not been in this bad a shape since 1930.

Even more than the political reality, however, the psychological shock to Democrats’ view of the world and view of themselves is perhaps the greatest casualty of this very surprising result. For given the shifting changes in the demography of the country, Democrats were just getting used to the idea that they were likely to be the majority party for much of the next generation, as Democratic-leaning Hispanics make up increasingly more of the overall American population.

Coupled with this ‘demography is destiny’ view, before the election, Clinton voters drew a clear divide between their modern, tolerant, coolly rational candidate and the antediluvian antics of Trump, who seemed to be an extreme caricature of what Democrats (over a drink) think of most Republicans: emotional, irrational, tribal, primitive. In losing to such a man, it is not just that Democrats have to revisit their lazily sanguine view of how American politics works, they must revisit their basic view of how America works itself.

There is no one monolithic Trump voter, and many foreign newspapers have made cruel, wrongheaded, and unfair caricatures of them, as though this thunderous event can be simply laughed away.

While it is true there are “deplorables”–racists, sexists and nationalists gleeful at having a wider audience–that is not the primary aspect of what is going on here. Springsteen Democrats—particularly white, high-school educated men—have seen their world erode before their eyes for the past generation and have also not found a political vehicle until Trump to address their concerns.

Real income has not risen for the American middle class in decades. Globalization is a concern all over the world, and free trade, with all its benefits, does hurt some people catastrophically when jobs move. This is easy to brush off unless you a) lack an education, and thus the ability to adapt b) have strong ties to where you live and c) are somewhere dependent on only one or two industries.

It’s hard to overstate how devastating that collapse is. Drugs become rampant and then blight coming generations before they even reach the labour pool. In many parts of the country, distrust of the government has roots in centuries of cultural insularity. Then add the echo chamber of social media and the commercialization of news. You can choose whom to listen to, and there’s a perfect circle of certainty for your views–any argument to the contrary is biased. The single-issue voters want a conservative or liberal shift in the Supreme Court, for example, and don’t care much about any other policies.

Trump often clamed that the system is “rigged”, and many of his voters echoed this in the campaign with unwavering conviction. This was laughed off by Democrats. The scoffers were technically right, because voter fraud is incredibly rare, but they missed the point; “rigging” is shorthand, perhaps subconsciously, for something that is much harder to articulate.

What were understandable social and economic tiers, hard but not impossible to break into, now seem incomprehensible, and impossibly far away for many average Americans. The Clintons–Washingtonians for decades–seemed to flout every rule they, the Trump voter, has to obey. As far as they were concerned, the system really was closed against Trump voters, and their candidate was the way in.

So, more than has been the case for generations, the archetypical Trump and Clinton voters live on almost entirely different psychological planets, having nothing whatever to do with one another. In terms of political risk this is extremely dangerous, as without any commonalities to cling to, it is easy for these two groups’ stereotypes of each other to harden. Increasingly it is not that Republicans and Democrats disagree with each other. It is that they see the other as being morally lesser people for doing so.

This is a toxic witches brew in a democratic system, as both parties cease to attack each other over policy, and more and more over who they seem to be as people. In such a polarizing atmosphere, little enduring can be done over the long term. The greatest single political risk in the world is the United States staring at itself in the mirror.

Published in City AM London, November 28, 2016.