Management in an Age of Crisis: Trump, Brexit and Those Incompetent and Co-opted Experts

Donald Trump was never going to win the 2016 American Presidential election. He was not even going to throw his hat in the ring. Prior to his official announcement made in Trump Tower on 16 June 2015, he certainly gave indications that he would run. However, he was really just an overly indulged carnival-barker with a twitter account. His US-Mexico wall idea was comparable to mid-twentieth-century eccentric millionaire Howard Hughes’s H-4 Hercules concept. The showy Spruce Goose, as it was better known, was an enormous but useless seaplane that was originally trumpeted as the ultimate solution for Axis-power submarines sinking US supply ships in the Atlantic after the country entered the Second World War. Members of Roosevelt’s War Cabinet were unimpressed with the idea, but ultimately Hughes Aircraft Corporation secured a development contract with the Department of the Navy to build three prototypes (McDonald 1981). The Wall was to be Trump’s Spruce Goose, expensive and inefficient, flamboyant and headline grabbing, but in the end, more about style than substance.

Trump supporters break down a door at the U.S. Capitol Building, Washington 6 January 2021.
Photo Credit: Reuters

It was not that Trump did not have marketing skill and the sectional appeal that inevitably comes from hard-hitting rhetoric, an ostensible real-estate empire and a list of authored books with menacing titles like Think Like a Champion (2009), Time to get Tough (2011), Think Big and Kick Ass (2007), and The Art of the Deal (1987). Undeniably, his capacity to manipulate the media was impressive. It was reminiscent of actor Orson Wells who, in 1938, created mass panic in the tristate area when he read aloud on a wireless broadcast H.G. Well’s War of the Worlds; announcing that Martians had landed in a carpark at Grover’s Mill New Jersey and 7000 US servicemen had been deployed to face them down. Orson Well’s career took off following this incident. Similarly, Trump’s posturing about being President aimed merely to secure a fifteenth series of the Apprentice with NBC, to promote brand Trump, and to fire a warning shot across the bow of the real contenders who, according to him, were losers and needed to lift their game. At 68, Trump was too old, lacked discipline, knew nothing about bureaucracy, championed ridiculous and impractical ideas, and had no experience with elected office. Besides, Trump could not run because he could not allow his tax returns to be released or certain of his disreputable business dealings to be scrutinized. In declaring Chap. 5 bankruptcy, he had walked away from the Taj-Mahal Casino in Atlantic City with debt owing to ordinary people; dishwashers, painters, carpenters, plumbers, glaziers, and drapery installers (and this was not the first time). He had a class action against him by former Trump University students. Depending on one’s political sympathies, he was either a branding genius or a shameless narcissistic self-promoter. Either way, the idea of him being a candidate was Barnumesque, an off-the-wall publicity stunt but nonetheless patently absurd as a matter of practice. This was what the experts said. They were wrong.

The story of the 45th US President’s political ascendancy embodies the paradox of the last 50 years.

When Trump did announce his candidacy, it was clear he could not win the primaries. He was competing in a field of 17, which included experienced State governors, Senators, and credible business people. There had not been such a large showing on the Republican side since the Lincoln-Douglas election of 1860. Moreover, Trump had no background in the GOP, no debate experience, no SuperPac, and continued to say things that embodied simultaneously incoherence and viciousness. He made crude and offensive remarks about women and seemed to have an adolescent’s preoccupation with their weight and appearance. He ridiculed and insulted people who were unable to respond. He showed limited engagement with complex issues and an unyielding preference for the glib and superficial over the scholarly and analytic. Perhaps most offputtingly, he crossed a sacred line by casting aspersions on the bravery and patriotism of Senator John McCain. During the Vietnam War, McCain, then a Navy pilot serving on the U.S.S. Forestall was captured and horrendously tortured for 6 years by the Vietcong in circumstances where he ultimately could have secured his freedom but refused to do so unless every prisoner being held alongside him was also released. Trump said about the Senator on 18 July 2015 at a campaign event at the Family Leadership Summit in Ames, Iowa…

He’s not a hero. He’s a hero because he was captured. I like people who weren’t captured.

Once again, the experts said Trump would not – could not – become the Republican standard-bearer. They were wrong – for the second time.

Following Trump’s nomination on May 3, 2016, he was not going to beat Hilary Clinton in the general election. This could not happen because the whole of America participates, or at least has the right to participate, in deciding who will be their nation’s President. The influence of the lunatic fringe was now diluted. The polls were showing that there would be regression towards the mean, attenuation. The Electoral College system, while not perfect, had been conceived by the wise founding fathers and thoughtfully refined after the Civil War. It invariably produces an optimal solution. Although the Democratic nominee was not especially inspiring and came with baggage, survey data indicated that she would naturally fall into the role. It was not even necessary for her to campaign much, hold press conferences, or go to red states. All she needed to do was what she was already doing and was comfortable with; stay mostly in New York and California and appear on shows that appealed mainly to liberal-minded women such as The View and Ellen. In the second Presidential debate held on the 16 of September, during a clash about the causes of poor quality public schools and ageing infrastructure, Trump seemed to wear it as a badge of honor that he does not pay his share of tax. “That makes me smart,” he said. Expert commentators on CNN denounced this utterance as unprecedentedly injudicious (e.g., Diaz 2016 27 September). It defied logic and reason. Trump had forgotten that the bulk of people who would soon vote were taxpayers. In asking why they – the battlers – should be subsidizing a millionaire at tax time, they would join the dots about what sort of man Trump was. However, this was all prologue. Later his candidacy would fall off a cliff. On October 7, when the tawdry Access-Hollywood tape came out which revealed an exchange in which Trump shamelessly boasted that his fame gave him the green light to sexually assault women as and when he felt like it, he was undoubtedly finished. Now it was a matter of the iron-law of arithmetic. His base of voters was, from that moment forward, to be only some percentage of males, 50% of those who would be casting a ballot. Boolean logic predicted he would soon be rendered a historical footnote. He was about to become the twenty-first-century’s Gary Hart, the 1988 Democratic party frontrunner who was forced to drop out in favor of Michael Dukakis when it was revealed that he had a girlfriend, Donna Rice, while he was married. Inductive reasoning was relevant here. Hart was a former diplomat. He was an intelligent and attractive man. However, what he did or was alleged to have done, despite being comparatively trifling, finished him. Ipso facto, 28 years later the star of The Apprentice was soon to get an ignominious dose of his own medicine; he would be fired. This was, once again, the consensus of experts offering narrowly focused analyses. They were wrong – for a third time. Zero out of three for the intelligencia concerning their analysis of the rise of Trump.

The story of the 45th US President’s political ascendancy embodies the paradox of the last 50 years. Experts have let down the public – at least most of them – with their prescriptions for societal betterment. Whether well intentioned or disingenuously attempting to create a pretext which allows the wealthy to further enrich themselves at the expense of everyone else, they have often been wrong. Their remedies and proselytizing have seemingly arisen from disciplined analysis. Wallowing in the intellectual debris of post-industrialism, more experts used more theory and logic to misread who was to be the President of the United States in 2016. Despite the risk of throwing the baby out with the bathwater, the decimated middle-class and those worse-off who would never likely get to be part of it were fed-up with the experts, and not without justification. A new and dystopic era had emerged. It was post-neoliberalism – post-industrialism. For the first time since Henry Ford worked out how to combine capital with labor and the state thoughtfully responded to make sure that no one was left behind, the world was a-theoretical. Philosophy was no longer to undergird public policy. The airplane was being built as it was being flown and the way people felt was more important than ideas defended using evidence-informed application of reasoning. Action without theory may have haltingly started with the emergence of Sarah Palin but had now reached its crescendo with the election of Trump. The rise of the brazenly brash and overtly anti-intellectual American politician was a manifestation of a larger phenomenon. Theory and ideological commitment was being cast asunder everywhere. Consider the UK’s Justice Secretary, Michael Gove’s comment about Brexit, made on June 6, 2016, before the Presidential election. In refusing to name any European economist who thought Britain’s exit from the Union was a good idea, Gove said in an interview with Faisal-Islam

I think that the people of this country have had enough of experts with organizations with acronyms – saying that they know what is best and getting it consistently wrong, because these people – these people – are the same ones who got consistently wrong.

quote reproduced verbatim

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Coronavirus – Winners and Losers

The coronavirus pandemic of 2019-20 and the associated global economic collapse is not the first time that civilization has been blindsided by a set of unfolding events for which the world’s decision makers seemed ill-equipped. Such phenomena often manifest initially as shocks which then have cascading and splintering impacts. The jolts themselves are almost always surprising and often incomprehensible.

In the case of the Covid-19 pandemic, the narrative of a return to “normal” has to date dominated official pronouncements as the intended goal of government action. When located in a cyclical business-informed explanation, by contrast, the tendency has been to explain circumstances via analogies derived from the share market and boom-bust business cycles. Thus, in discussing the economic effect of the Covid-19 virus, there is an almost universal tendency to speak of V-shaped or W-shaped recoveries, as if the virus and its impact could be explained in similar terms of reference to the “dot-com bubble” of 2000 or the Global Financial Crisis of 2008. In the modern world there is also a growing tendency to explain catastrophes of all sorts in millennial terms, as an existential crisis rooted in an over-reaching of nature’s resources and human-induced climate change. Thus, in the New Green Deal introduced by Alexandria Ocasio-Cortez and Ed Markey (2019: 1) into the United States Congress, it was declared that, 

… a changing climate is causing sea levels to rise and an increase in wildfires, severe storms, droughts, and other extreme weather events that threaten human life, healthy communities, and critical infrastructure.

The tendency to explain the Covid-19 phenomenon through well-established narratives is ill-advised. Unlike “conventional” economic recessions, the Covid-19 virus has not affected all sectors of business activity in equal fashion. Many sectors – hospitality, art and recreation, air transport, tourism – have experienced far worse contractions than were experienced in either the Global Financial Crisis (GFC) or in any of the post-1945 recessions (1974-75, 1981-83, 1991-93). Conversely, other sectors – notably IT and grocery retailing – have prospered. Similarly, small businesses have suffered far more severely than large ones. Attempts to shoe-horn the Covid-19 phenomenon into a climate change narrative – as evident in the call for a “Great Reset” initiated by Britain’s Prince Charles and the World Economic Forum’s Klaus Schwab that prioritizes zero carbon emissions – is also intellectually misguided. There is no evident correlation between either the origins of this virus or its effects and climate change. Unlike previous pandemics such the Black Death of the 14th century – which impacted a population suffering from crop failures and famines as the world slid towards a mini-ice age – this virus has hit a world enjoying historically high levels of nutrition and well-established supply lines.

If we look to the past to better judge our likely future prospects, we can ascertain three historical effects induced by past pandemics. First, there are those pandemics that were so devastating in their effects as to cause a total collapse of localized economies, a collapse in which survivors were forced to abandon their previous modes of existence. When in the mid-18th and early 19th centuries, for example, smallpox devasted the Native American communities who lived a predominately agricultural existence in the Mississippi and Missouri Valleys it left those who enjoyed a nomadic, horse-based lifestyle largely unscathed. In consequence, survivors from the former group (such as the Mandan) were forced to adopt the lifestyle of their nomadic foes (such as the Lakota). A second type of pandemic effect is one where the economic circumstance of the survivors is fundamentally altered for the worse. If we look to the Antonine Plague (AD 165 – AD 180) – most likely caused by smallpox – that devastated Rome’s legions and people we can discern, for example, an economic retreat into a form of proto-serfdom. With trade collapsing and labor in short supply, both the Roman state and local landowners conspired to tie producers to the land in new forms of bondage. A third type of pandemic effect is one where the survivors are left in better circumstances, removing obstacles that had previously hindered economic innovation. The classic example of this is found in the Black Death (1347-50) and its aftermath, as Europe witnessed an increase in living standards that was without parallel in human history prior to the Industrial Revolution.

The angel of death striking a door during the plague of Rome.
Engraving by Levasseur after J. Delaunay. Iconographic Collections

The profound effect of the Black Death is arguably best indicated in the so-called Phelps Brown-Hopkins index, which traces the real wage of a skilled building worker from southern England between 1264 and 1954, measured against a basket of consumables. As is evident in Figure 1 – which summarizes the results of this index for the period 1264 to 1880 (1447 representing 100 in the index) – the Black Death heralded in a 150-year period of rapidly improving living standards during what we think of as the Renaissance. In part the jump in living standards post-1347 simply reflected the fact that food and material resources had to be shared among fewer people. But it also reflected the fact that in much of Europe, the post-plague labor shortages fatally damaged the old feudal economy, facilitating the transition to a new monetary economy. Eventually, however, these benefits would be curtailed as a steady increase in population caused Europe to hit another economic ceiling, causing a return to pre-plague circumstances. According to Phelps Brown and Hopkins (1956: 306), the real wage of the skilled English building worker reached an all-time low in 1597, the year in which Shakespeare’s Midsummer Night’s Dream was first performed. Not until 1880 did the real wage of the English building worker return to “the level enjoyed at the accession of Henry VIII” (1510). 

If we look at the 3 different effects of pandemics – destruction of the pre-existing society, a transformation for the worse and an alteration for the better – one thing is common to differing outcomes: the pandemics reinforced trends that were already apparent. In the case of the American West, the smallpox pandemic of the early 19th century reinforced a general trend away from agriculture in favor of a nomadic hunter existence as an expansion of horse-herds allowed the pursuit of buffalo across the prairie. The malevolent effects of the Antonine Plague also reinforced well-established trends as both population and trade collapsed in the second century AD.  For, with the stabilization of the frontier, and a consequent surfeit of prisoners-of-war able to fill the slave markets, Rome’s slave-based economy lost its competitive advantage. As the price of slaves became prohibitive, large landowners turned their estates over to sharecroppers tied to the land (i.e. de facto serfs). With the demise of large slave workforces, it also proved impossible for Rome to maintain the large Spanish silver mines that had underpinned monetary stability. Indicative of the Empire’s failing fortunes, the silver denarius that was the standard instrument of exchange across the Mediterranean world, comprised only four percent silver in AD270. A century and a half earlier the figure had been 97 percent (Bowden, 2020). In the case of the Black Death, its positive economic effects were associated with the reverse of the trends apparent in Rome prior to the Antonine Plague: the growth of a monetary economy, an increase in trade, greater levels of private ownership and increased innovation.

By comparison to the diseases associated with the Antonine Plague and the Black Death, the medical effects of the Covid-19 pandemic have been modest in the extreme. Unlike most pandemics, it has spared the young. Whereas the Black Death killed somewhere between one-third and two-thirds of the population, Covid-19 has caused the death of far less than one percent of the total. In terms of duration, Covid-19’s days appear to be numbered after only a year of reigning supreme as a host of vaccines emerge from the world’s medical research facilities. Despite its modest medical toll there is no doubting the economic effects of the virus and thus its capacity to reinforce – for good or evil – pre-existing trends in business and across the wider global economy.

Pre-eminent among the likely losers of the pandemic and its aftermath is the People’s Republic of China, the initial source of the virus.

With only 39% of its economy directed towards domestic consumption – compared to two-thirds in most Western nations – the Chinese business model has been built around debt-funded infrastructure projects and exports. Both these legs are now shaky. With debt totally more than 300% of GDP the capacity for further infrastructure spending is constrained. On the trade front, China was suffering from various overseas campaigns to shift production back “onshore” prior to the pandemic; campaigns led by the Trump administration but which were hardly confined to it. With the breakdown in supply chains during the pandemic, China is now witnessing an accelerating drive to diversify production and supply chains away from the Middle Kingdom, either to home markets or to supply sources with input costs comparable (or lower) to those found in the Middle Kingdom (i.e. Vietnam, Cambodia, Bangladesh, etc.). Having witnessed a steady fall in its annual economic growth rates since the early 2000s, the problems ahead for China are also now witnessed in the modest rebounds in business activity since the depth of the pandemic. Despite government stimulus programs, GDP grew by only 4.9% in the third quarter of 2020 – the lowest growth rate in decades. To add to China’s woes, it is also suffering a looming demographic crisis that leaves it vulnerable to future pandemics. A legacy of its now abandoned “one child” policy, this demography crisis is most pronounced in rural areas where 25% of the population will be aged 65 or more by 2025.

 A marked slowing of the Chinese economy will inevitably have devasting consequences for those firms and nations whose business model have been built around supplying Chinese needs. Foremost among these are Australia, New Zealand and, to a lesser degree, Canada: nations that not only benefited from the sale of commodities (iron, coal, wheat, wine, dairy productions) but also from the vast number of Chinese who arrived on their shores as tourists, international students and permanent residents. In the case of Australia, the folly of an excessive reliance on China is also found in the raft of bans and tariffs imposed on Australian imports. Supposedly caused by Chinese annoyance at Australia’s pro-American and pro-Japanese foreign policies, it is probable that such bans – which are likely to grow in number and range – are as much about hoarding foreign currency reserves and redirecting production to domestic suppliers as international affairs. Also, among the likely losers of a China slowdown is Germany, a nation that has acted as the principal supplier of machine tools and other capital goods to the People’s Republic.

Photo: MSC

If we turn our attention to domestic economies it is evident that the pandemic has also created winners and losers. Principal among the winners are governments and state agencies. Bellying the narrative about “neo-liberalism”, governments everywhere had significantly expanded their economic footprint since the GFC with taxes typically making up around 25% of GDP across the OECD. Amidst massive stimulus packages and borrowings, this figure now hovers around the 35% mark and is likely to remain at or above this level in the immediate future. In the private sector, one suspects that big business will fare well despite the suffering in individual sectors such as transport. It is, after all, big business that is one of the prime beneficiaries of government largesse. Given the fragile business environment, few will be allowed to fail. In the case of the United States Reserve Bank, support for big business is found in the novel practice of buying other unsaleable “junk bonds”, a practice that is undoubtedly propping up otherwise insolvent firms. By contrast, small business has suffered grievously from the pandemic lockdowns and restrictions. With high levels of taxation and increased government regulation, this historic driver of innovation and economic growth is likely to fare poorly in the years ahead. Also likely to suffer is the West’s large professional class in education, finance and real estate that has benefited from the vast population movements associated with international education, tourism and migration.

Even before the Covid-19 pandemic it was evident that the post-1980 process of “globalization”, associated with the free movement of people and goods, was under strain. Brexit, the election of Donald Trump, and the rise of various national populist movements were all proof of a drive to reverse this process. As people everywhere have turned inward during the pandemic – fearing not only the person from another realm but even the neighboring suburb or town – it is inevitable that hostility to globalization in its various manifestations will become more pronounced. As globalization retreats, the question is: what will fill its place? Big government in cahoots with favored sectors of big business is the most likely answer.

References

Bowden, B. (2020), “Management in Antiquity – Part 1: The Binds of Geography”, In: Bradley Bowden, Adela McMurray, Jeffrey Muldoon and Anthony Gould (eds), Palgrave Handbook on Management History (London and Berlin: Palgrave Macmillan / Springer)

Ocasio-Cortez, A. and Markey, E. (2019), New Green Deal: Resolution to the 116th Congress of the United States House of Representatives, p. 1

Phelps Brown, E.H. and Hopkins, S.V. (1956), “Seven centuries of the prices of consumables, compared with builders’ wage rates”, Economica, Vol. 23, No. 92, pp. 296-314.

Trump and the Failure of Academic Analysis

In his introduction to the Section, Management in an Age of Crisis in the just-released Palgrave Handbook of Management History, the Tacitus Forum’s Anthony Gould observes how,

The story of the 45th U.S President’s political ascendancy embodies the paradox of the last 50 years. Experts have let down the public… they have often been wrong … Wallowing in the intellectual debris of post-industrialism, more experts used more theory and logic to misread who was to be the President of the United States in 2016 … the decimated middle-class and those worse-off … were fed-up with the experts, and not without justification. A new and dystopic era had emerged. It was post-neoliberalism – post-industrialism

Anthony M. Gould

            Once more – as with the 2016 US election – the failure of polls and mainstream analysis has been laid bare. Despite predictions of a Democratic landslide, Biden’s margin in the key battleground states – Pennsylvania, Michigan, Wisconsin, Nevada – is less than the vote won by the conservative Libertarian candidate. In other words, more people voted for Trump or the Libertarian Party than voted for Biden and the Democrats. In the House of Representatives the Democrats lost seats. Pending the outcome of run-off elections in Georgia the Democrats remain several seats short of a Senate majority. More broadly, Trump and the Republican Party have begun to prise the all-important Hispanic vote away from its long-term allegiance to the Democrats. Overall, a third of Hispanics voted for Trump in 2020, a far higher percentage than was obtained by the Republicans in 2008 and 2012. In the Hispanic-dominated Rio Grande Valley the Hispanic support for Trump was in the 41% to 52% range. In Florida, 45% of Hispanics voted for Trump. Even among African-Americans support for Trump doubled between 2016 and 2020, albeit to a still low 12%.

            Why is it that Western pollsters and academics continue to be blind-sided by political and social trends: be it Brexit, the support for the Conservative Party in northern England, or the continuing mass appeal of Trumpism?

            In large part this failure is attributable to the tendency to prioritize political and social activism over reason and the cold-eyed scrutiny of evidence. As the Tacitus Forum’s Bradley Bowden noted in his recent article, The Historic (Wrong) Turn in Management and Organizational Studies, among critical theorists we also witness a belief that a postmodernist / anti-realist perspective is a precondition for the enactment of “a leftist ideology”. Attractive as this is for many, this approach to scholarship constantly causes one to confuse what one wishes to occur with what is actually transpiring. From this Manichean perspective there is also a tendency to divide the world into two categories, those who fall into the progressive camp and those whom Hillary Clinton described as the “deplorables”.

            What does a cold-eyed use of reason – the guiding principle for the Tacitus Forum – allow us to conclude from an analysis of Trumpism and US politics? First and foremost we can detect a fundamental realignment of politics in ways akin to the transformation that occurred in the mid-to-late 1960s. Whereas prior to the 1960s the Democratic Party represented an uneasy coalition to Southern segregationists and Northern Catholics and organized labor, after the 1960s it was the Democratic Party that proved most attractive to both racial minorities and the growing number of university-educated professionals. Achieving an historic high-point under the Obama presidency, this coalition emphasized matters relating to racial and gender diversity and climate change over more prosaic issues relating to jobs, economic growth and private-sector viability.

            Even the most cursory scrutiny of the US election results indicate a profoundly different alignment of forces to that which underpinned the Obama victories of 2008 and 2012. In the large metropolitan centers oriented towards finance, education, IT and the public-sector (New York, Philadelphia, San Francisco) and / or those with large African / American populations (Detroit, Atlanta) the Republican voter is an endangered species. Also firmly in the Democratic Party camp are the university-educated and broad swathes of big business, most notably Big Tech. The enthusiasm of big business for the Democratic Party is indicated by the scale of business donations during the election campaign, an outcome that allowed the Democrats to far outspend their Republican rivals. Behind the Republican Party, however, we can in addition to the remnants of its historic constituency – church-goers, farmers, small businesspeople – the enthusiastic mass support of the old regional working class that had voted Democratic for generations: the steelworkers of Gary, Indiana, the coal mines of West Virginia and the chemical workers of Ohio. Also rallying behind the Republican Party are large swatches of the Hispanic population for whom work, family and faith are the decisive touchstones. We can thus conclude that Trumpism is not a passing phenomenon. Indeed, it is a much a symbol of a new pattern of social and political alignment as a cause.

            At the Tacitus Forum we are intent on applying reason – rather than wish and ideology – to the problems of our time. Accordingly, in addition to providing a forum for transformative academic research, we will also continue to provide reasoned analysis on the key issues of our time.