The lotus hope in a trumpian world

The lotus hope in a trumpian world

The main characteristic of the Donald Trump presidency, inaugurated yesterday, promises to be changeability and uncertainty. The new US president has taken contrary and contradictory stands on the same issue time and again. His nominees to key posts in his administration have contradicted their chief ’s stand on a number of key subjects, not to speak of their own previous positions. All that can be said for sure is that President Trump, as leader of the world’s largest economy, the most powerful military and the traditional leader in a number of global agencies and rule-setting bodies, will change the world as we know it.
The US economy has been showing robust growth and job creation for the last few quarters. Any attempt by the Trump administration to accelerate growth is likely to create more problems than it solves. Take the case of restricting work visas for the tech industry. Unemployment rate in the US tech sector is so low that rationing visas would create a manpower scarcity that pushes up wages, makes projects and products more costly and drives startups that depend on cheap manpower out of the US. The pace at which the Fed raises interest rates could accelerate, if Trump delivers on his promise to step up spending and drives up the fiscal deficit.
That would weaken currencies in the emerging world, including in India, and give resurgent commodity prices added bite. A stronger dollar would boost imports and widen the US current account deficit, to finance the demand for additional foreign savings spawned by a Trump spending spree.
Trump has promised to be tough on China, accused of stealing American jobs with unfair trade. At the same time, Trump’s isolationist streak, downplaying Nato and calling upon South Korea and Japan to fend relatively more for themselves, would strengthen China and its ability to project power in Asia. That is good news for China’s friend to our west, not for India. Russia’s place in a Trumpian world is another mystery, as of now. But everything need not be gloomy. The lotus, after all, is born from muck, and because of muck.