🔒 The Editor’s Desk: Trump, the wall, and the shutdown

DUBLIN — As the US government shutdown drags on to its 22nd day, making it the country’s longest ever, US President Donald Trump is focusing on issues at home. His decision to skip this year’s World Economic Forum meeting in Davos underscores the challenges he faces as the new Democratic-led House of Representatives flexes its muscles. Trump’s domestic problems have serious implications for the rest of the world as the impact of his trade war with China grows. With Trump focused on home, the prospects for a resolution to the trade war will diminish, hurting China and other emerging markets. In this episode, Alec Hogg and I discuss Davos, Trump, the shutdown, and the global economy. – Felicity Duncan

Welcome to this week’s episode of The Editors Desk here on BizNews Radio. I’m Felicity Duncan and with me is BizNews Editor-in-Chief, Alec Hogg. Alec, let’s kick off by talking about something quite exciting that’s coming up on your calendar which is your ‘regular pilgrimage’ to Davos. Tell us a bit about what that is and why everyone should be interested.
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Well, it’s my adventure. My pilgrimage is of course, to Omaha.

That’s fair.

But it’s an adventure, and it’s a 5-day adventure in the Alps. You don’t get to see much outside of the Davos environment itself, but it is wonderful brain food and great stimulation and this year… Well, it was shaping up to be the biggest year ever and then The Donald (who made such a hit last year) has now decided to cancel but I’m sure we’ll talk about that in a moment.

Just to go back though; what I like about it is you start…you get up close and personal with the people from your own country, so I have over the years had the privilege of engaging with the South African lawmakers and policymakers. Going back…the very first time I went to Davos in fact. was in 1993 and it was kind of a one-off. It was much, much smaller back then but what was exciting about that was it was a year before Democracy in South Africa. I was at the SABC and we were seeing the dawning or the introduction of the new players – people that you know now. Tito Mboweni, who went on to be Governor is now Finance Minister.

He’ll be back again this year in that role but in 1993, he was standing with me in the snow co-hosting a crossing back to South Africa just because I asked him to. He was just a pal really. Ebrahim Patel also, who’s now doing a very important role in government with Economic Affairs… He was also there, just as a trade unionist and it goes on and on. Trevor Manuel…a lot of these people that I got to meet in a comfortable environment/in a relaxed environment… Through the years, you’ve gotten to know these people in a relaxed environment and what excites me at the moment about South Africa is a lot of these guys…high-quality human beings who were very young when I first met them and very enthusiastic have continued to remain involved and they’ve been brought back into the environment now when the country really needs it, but they’re a whole lot more experienced.

I think that’s really the thing about Davos. It’s meeting. It’s in a relaxed environment with people that ordinarily you would only engage within their offices or in a very formalised kind of timing whereas here, you get to see the real person. That’s probably why I’m a lot more positive than most South Africans about the country’s future because I know now who’s actually in the hot seats. These are extraordinary human beings when you have a look at the reason they went into politics (unlike most parts of the world) was for all the right reasons – to serve the public. That was because of the struggle and these guys are now older They’re hardened. They’ve been out in the world – and I’m talking about Patel, Manuel, Mboweni, Pravin Gordhan and of course, Cyril Ramaphosa himself.  If you go through the list, these were always people with great potential and they fulfilled that potential now that they have the experience.

Why I can say that with a lot of confidence is because of the people I’ve seen in Davos over the years. When they weren’t in such senior positions, you get to know the human being and really, that’s going to be exciting this year – to link up with them again – but also, it’s the Informal global economic agenda that gets set there. If you consider the people who go there, they really are the movers and shakers around the world in business and in politics. They have their own worldview. Until they get to Davos and they then get engaging with people who the listen (because most A-type personalities/CEOs of companies) tend not to listen that well but when they’re with CEOs of other companies/global companies/bigger companies than theirs, they listen. By the time they leave, they have a far better understanding of what’s going on in the world and it’s almost a little bit…

I wouldn’t say a group thing, but it’s just a better-informed leadership cadre for the whole of society and then they can apply the right kind of approaches. The World Economic Forum says it. Its credo is to improve the state of the world and in fact, it does that but perhaps not in the ways that most people think so I’m excited about it again. To be listening once more, to be learning once, and to understand far better than I do before I go there on what the rest of the year is likely to hold.

What do you think the big issues are going to be? 2018 was really, a very interesting/challenging year globally. Obviously, the trade war between China and the US was a big theme. We’ve seen global growth slowing. With the upcoming Davos Summit, what do you think some of the really big themes are going to be? What are you going to be looking out for?

I think there are really three things and it’s not necessarily on the official programme but the first the first thing would be the trade war and this has massive implications for the world as we have seen and we have to see some breakthrough there. It looks like sanity is prevailing – that they’re starting to be grown-ups – both the Americans and the Chinese, but that will be the first thing that I’ll be looking for. Unfortunately, Donald Trump’s not coming but I do think Leithheiser and some of the other key players will be there just took to put forward America’s view, particularly after the latest discussions. The Deputy Premier of China will be there and will be giving a keynote. So, that’s point 1. Point 2 is the antibodies fighting back against populism and we’re seeing this all over the place. In the past few years, there has been a… almost them prior to that, there was an overcorrection towards globalisation. People took the liberal democracies…economic thinking was almost taken for granted.

Then the antibodies kicked back and populism came in. Now, the antibodies are kicking back into populism if you know what I mean. It’s like this pendulum that mankind has, that goes one way or the other and last year, there was quite a lot of concern in Davos about how populism was taking over. We’d had Brexit. We’d had Trump. We’d had Italy and we’ve seen what’s consequent to that. In France, there was quite a big scare with Le Pen and so. We have Brazil with a knock-on effect there as well but it’s not entirely populism there. It’s something a little more akin to just economic realism. But I’m expecting to see more of that – more common sense being brought to the party. It reminds me. A great man from South Africa that I met many, many years ago – Anton Rupert (before he passed on) – it was just before the 1994 election and I asked him.

We were in a private conversation and I asked him what he thought about the likelihood for South African peace after 1994 because in the run-up to the election there were lots of hands on the team. He said, “When a foot soldier becomes a horseman, he no longer thinks like a foot soldier.” That was something that stuck with me throughout the years. It’s almost like people rise to the position that they’re put into sometimes – not always. Mogoeng Mogoeng in South Africa as Chief Justice is a great example of this – appointed by Zuma and he went beyond the man who had appointed him. There was no loyalty towards the man who’d appointed him in that case. I’m seeing that happening. I’m seeing more of the foot soldiers having become horsemen around the world starting to act more like the horsemen. The 3rd issue in all of this is something that started last year but has been gathering momentum and that is the kickback against Big Tech.

I’m expecting that there will be quite a lot more discussion on this front. We last year and the trend hasn’t really gone the way or as strongly as I thought but there is definitely momentum and it’s growing and that’s the great thing about the World Economic Forum, particularly if you’re privileged enough to go back there every year, is that you pick up the trends. That particular trend on those fit back against big tech is something that I’m expecting will be rejuvenated in Davos in a couple of weeks’ time.

Well, that’s great. That’s a lot to look out for. One thing I think, that’s going to present a major challenge of course, when it comes to discussions around the trade war and around resolving that and getting the global economic order back on track is that of course, Donald Trump is not going to be attending as you mentioned. This is of course, as you had mentioned; at home, he is facing quite a bit of chaos, right? The government shutdown has now entered it’s 22nd or 23rd day, making this the longest government shutdown in the US in history – a very intractable situation. President Trump is refusing to sign any bill that doesn’t provide $5bn in funding for his border wall that he wants to build along the Mexican/US border and the Democratic House of Representatives is also refusing to pass a bill that does include that sort of funding.

There’s a serious impasse there. The House has passed a number of bills but the Senate has refused to hear them because they know that President Trump is not going to sign them without this border wall funding. So, a new tone in Washington because the House has gone Democratic, some new playing points, and what looks like a very difficult situation that is fairly far away I think, from resolution at this point.

It’s so interesting and as South Africans, we don’t quite appreciate that this affects 800,000 employees. Roughly 400,000 Americans who are working for the state today who are not being paid, so they are not getting their salaries at the end of the month and there are another 400.000 who work for the state who’ve been sent home on unpaid leave because there isn’t money to pay them. This is not just some political issue that’s happening up there. It’s really affecting bread and butter of state and federal employees. You have the clash as you’ve explained, continuing and Trump saying ‘well, he might declare a state of emergency so that he can get his money for the wall but it is where politics starts going wrong. The other thing that Trump’s got to worry about is that Mike Cohen, his long-time personal lawyer and confidant has turned state witness in a criminal action where he paid hush money to the two women who had accused Trump of having affairs with them while he was married.

They were going to come out with their disclosures just before the 2016 Presidential Election which would clearly have made an impact and that is a criminal offence because you cannot withhold any information during an election period in the US, which would actually impact peoples’ thinking. So, he’s going to Congress. He’s going to the House of Representatives to give his testimony in public next month. If you’re Donald Trump, you’ve got to start feeling that the walls are closing in on you quite strongly. So, to go off to Davos where last year, he was such a hit that he was treated like the leader of the free world ( which, I guess he is, given the position that he holds) and it would affect his ego no doubt, to the degree that he wanted to come back again this year and had announced that he was going there with a huge entourage of all the top people in his cabinet. Now, he’s not going anymore, which gives you an indication of how serious things are in the US at the moment.