Why I envy AmericaMost believed that a victory by Donald J. Trump could bring carnage to U.S. stocks. Money was bet on a “Trump tantrum,” with the Dow Jones Industrial Average forecast to lose an average of 11 percent. The Wall Street Journal proclaimed Trump himself was bad news and would likely wreck havoc on the economy. When he did end up winning, Asian stock markets crashed led by the Nikkei index’s fall of 5.36 percent. But New York’s exchange was unfazed. The Dow gained 1.4 percent. The market liked the idea of the prospect of a rejuvenated economy through $1 trillion in infrastructure spending and corporate tax cuts of 15 to 35 percent pledged by the billionaire-turned-politician.
The U.S. stock market is now on a bull run reaching record highs.
I envy Americans for two reasons. One is famed investor and billionaire Warrant Buffet, an avid supporter of Hillary Clinton, who had ridiculed Trump throughout the campaign. Citing the disastrous collapse of Trump’s Hotels and Casinos in 2012, he claimed a monkey throwing darts at investments would have done better than any investor betting on Trump. But Trump won. If Buffet had been a Korean, he and his company would have been bombarded by tax probes and completely ruined. But instead Buffet is richer. He was able to pack away $11 billion in paper profits because his Berkshire Hathaway shares rode the Wall Street rally following Trump’s victory.
Another cause for envy is Apple. Trump and Apple chief executive Tim Cook hate one another. Cook, who is vehemently against racism and anti-immigration sentiment, raised funds for Clinton’s election campaign. But to Cook, the U.S. president-elect promised big incentives and deregulation if he would bring Apple’s manufacturing base back to the U.S. from China. If not, he threatened to levy 45 percent tariffs on iPhones and all other imports from China and boycott Apple products. After the election, the humbled Cook wrote in a memo to his “anxious” employees, “Whatever you do, you have to keep moving forward” quoting Martin Luther King.
The two had a phone conversation after the election and disclosed what they had talked about. Trump said he offered to shave 10 percent from the current 35 percent in taxes if Apple brings home $200 billion cash reserves stacked up overseas, demanding the U.S. technology company bring production facilities back home and make jobs in the U.S. Cook reportedly told him he understood what the president-elect was saying. Apple, however, may be seriously deliberating. Apple was slapped with a record $14.6 billion tax bill from the European Commission in September. What Trump offered was tempting. Apple is said to be discreetly considering shifting some of its manufacturing facilities from China to the U.S.
In the U.S, politicians and businessmen keep a civil distance when fighting. They disclose the key issues. In her secret meetings one-and-one with seven conglomerate heads, Korean President Park Geun-hye asked them to make donations to the Mi-R and K-Sports foundations. Her senior secretary for the economy kept detailed information on each conglomerate to ensure the collection went smoothly, according to the prosecution. The two foundations ended up receiving 77.4 billion won ($66.2 million).
Korean companies are humiliated wrecks in the wake of the Choi Soon-sil scandal. The Lotte Group has been under a prosecution probe for a year now and Samsung has been raided three times. Nine conglomerate heads have been summoned to a parliamentary hearing. It is not just the public that is in extreme angst. The corporate sector has also been shattered.
Trump and Park perceived companies entirely differently. Trump wants to cut a huge deal with America Inc. on reshoring, or bringing back American industries and reviving the nation through leadership in the fourth industrial revolution. President Park viewed Korea’s big companies as her personal piggy banks. The prosecution, which pressured large companies on behalf of the president, is now banging away at them for funding the two foundations.
The will to work and succeed is how entrepreneurs steer an economy. But that will is being stamped on and rooted out. What drove rallies in the U.S. stock market after Trump’s victory and the UK’s continued strength despite its decision to leave the European Union? Their governments instill hope to businesses and workers through drastic tax cuts, fiscal stimuli and reshoring.
JoongAng Ilbo, Nov. 28, Page 30