TLDR: From the point of view of businesses, the macro trends will dominate the next four years, making the US 2020 outcome far less consequential than the conventional wisdom suggests
What we’re talking about: let’s get this straight – elections have consequences. US elections have global consequences. This time is no different. The 2020 election is of enormous importance to the character of the country, the culture and society. Gone are the times when voters complained that their options were all the same. The differences between Donald Trump and Joe Biden are as stark as the divisions in the country.
But looking at the possible outcomes from a business lens shows far less divergence in outcomes between a Trump and Biden Administration than the contrast in prior elections – because everything is dominated by a few major issues, and those issues are dominated by the macro trends rather than ideology.
It’s not that momentous decisions won’t be made –the actual upcoming policies will be larger in magnitude than normal. But the degrees of freedom for the next president are much smaller than normal, both on what they will have to focus their time and attention on and the direction they can really take it.
What will be the main thrust of policy for a Trump second term? Recovering from the COVID recession and battling China. What will be the main thrust of a Biden first term? Recovering from the COVID recession and battling China. And while either candidate’s ways of achieving executing will be different, will they really be that different in outcome?
How to stimulate an economy from a pandemic induced downturn does not have precedent. And while you might say no precedent is needed as the ideology is clear, the $3T stimulus package passed by a Republican Senate and President should make you second guess your thoughts on the ideology of the recovery package. Perhaps a Biden Presidency will be more aggressive and more ambitious in its fiscal stimulus efforts. But both men will very likely pursue historically large economic boosts, and both will be supported by an active Fed that has so far led the US response in any case. Both will also be constrained by a rapidly ballooning national debt.
On the international stage, a President Biden would very likely look to reinstate more traditional US leadership in global institutions. However much of the damage is done – allies and adversaries alike have seen how quickly American commitments can change. On China, the stage is already set. China isn’t yet ready for global leadership, but has made enormous gains during the Trump Administration. The desire to re-shore US manufacturing and diversify supply chains out of China is largely bipartisan. Same with a roll back of tariffs; with the progressive left providing the policy thrust in the Democratic Party these days, an expectation of a new free trade agenda under Biden doesn’t seem a good bet.
To be sure, personality and temperament matter, especially when confronted by an unexpected crisis. Would a different president than James Buchanan have averted the American Civil War that cost almost a million lives? Could Herbert Hoover have lessened the impact of the 1929 stock market crash and avoided the prolonged Great Depression? Conversely, could there have been a nuclear exchange between the US and Soviet Union had a hot tempered president been in office during the Cuban Missile Crisis instead of John Kennedy? And of course, our present will be carefully examined by historians to understand how the decisions by the Trump administration changed the outcome of the pandemic.
In the post-corona world we expect there to be much space taken up by crisis management – and decisions of the one individual at the top will be hugely important. But when it comes to ideology and long term policy platforms, expect the president to be hostage of forces too large to bend to his will.
Lessons to learn: FOCUS ON THE MACRO TRENDS NOT THE HORSE RACE.
For the country and for business, historically large policy changes are coming. However the “most important election of our lifetimes” line should be shelved this time around. The macro trends – the need to respond to the pandemic downturn, weakened global institutions, and the inexorable decline of the US-China economic symbiotic relationship – are swamping the policy programs. Either president will have far less degrees of freedom to drive outcomes in different directions.
Because of that, focusing on macro trends and strategies for the coming future is a better use of time than analyzing the latest North Carolina matchup. So whatever resources were dedicated to planning for prior elections – spend less time on that and more on the macro trends that are both more certain, and more important, than the Presidential horserace.