That wily old politician Donald Rumsfeld was purposely clouding the waters when declaring, “There are unknown unknowns – the ones we don’t know we don’t know.” In a way, I took his purposely obscure idea to heart.
As the Dow Jones scaled to new heights the last week of January, and as rumors of a flu virus in the industrial metropolis of Wuhan spread, the Rumsfeld quote came back to mind. I “didn’t know what I didn’t know,” but I “had a hunch” (to quote President Donald Trump).
Thus, I phoned my financial advisor, a senior vice-president at an established financial services industry player. In this case, I didn’t ask his advice. I told him to liquidate my stocks and mutual fund investments. “Take the cash,” I said, “and put it in my bank account.”
Of course, he was surprised and tried to convince me otherwise. “Everyone feels the market is strong,” he countered. “All my clients are pumping money into the market. Why are you withdrawing it?” My adviser is likable, knowledgeable, and highly capable. But like so many people at the top of his profession, he lives in the bubble occupied by all members of the financial services industry and its boosters.
Yes, of course, I agreed, America’s economy was healthy, unemployment at an all-time low, and ditto, consumer confidence. But our former defense secretary’s musings on life’s uncertainties haunted me. Rather than giving in to a back-and-forth debate with my broker about the market’s strength, I let him down gently, telling him to let me know when my accounts had been settled.
After the Dow Jones began its precipitous slide in mid-February, friends were calling me a market sage. Hardly. Simply, I was not getting answers to troubling questions I had for President Trump and those in his administration charged with safeguarding America’s economic interests.
Dow Jones and US Economy
The first of the areas that trouble me is President Trump’s singular fixation on maintaining the Dow Jones at its current – or better yet, higher – level. How can it be that he fails to comprehend that the Dow Jones is but a single indicator of an economy’s health and not the whole of it? Perhaps the answer to this question is better left to historians, forensic analysts, and psychiatrists.
As a simple businessman, let me state the obvious: nearly half of Americans have no investments in the stock market. The chief benefactors of the stock market’s post-2008 rise have been the top 10 percent.
To measure a country’s economic health based on the fortunes of its wealthiest is like a doctor declaring an overweight, diabetic, heart-challenged patient to be “healthy” because the patient’s brain cells are still intact.
Trump’s ‘America First’ Policy
Question two is the effectiveness of Trump’s “American First” policy. The American Ideal, as I have learned as an old immigrant, is an elevated one. But as an economic entity, America is a component – one of a thousand components – in a different world. Of course, one of the biggest changes in the global economy has been the outsourcing of manufacturing from the U.S., Europe, and every other developed country to China.
Trump’s nationalistic economic policies, such as the trade war with China, may boost his standing with his base, but they also produce ignorance and confusion. Those policies infect (excuse that word) the entire understanding of the world. The misguidedness of Trump’s trade war with China came into particularly stark relief in light of the uncertainties raised by the coronavirus. The “concessions” he claims to have wrung from China in January’s trade agreement inevitably are irrelevant as supply chains in America and elsewhere depend on China.
President @realDonaldTrump explains why he says "Chinese Virus"
"China tried to say…[Coronavirus] was caused by American soldiers. That can't happen. It's not going to happen as long as I'm president. It comes from China." pic.twitter.com/E1PYxtr8Rm
— Team Trump (Text TRUMP to 88022) (@TeamTrump) March 18, 2020
True, Beijing says it has tamped down on new cases of coronavirus very efficiently. However, they are still very cautious: the virus may not truly be in China’s rear window until the end of April, if that. That hardly means its economic engines will be firing up with a roar tomorrow. Beijing is cautious. So there goes the $200 billion of American soybeans, machinery, and energy products the Chinese had pledged to purchase over the next two years.
An even greater concern though, is the effect of China’s idled factories on the global economy. Trump appears constitutionally incapable of thinking of nations – let alone economies – as interconnected. Definitely, he will be flummoxed when American manufacturers are presented with a shortage of everything from iPhone parts to guitar strings.
Furthermore, while the coronavirus may be on the wane in China, it has spread to countries in every continent except Antarctica, the numbers grow more dire by the day. As I write, Italy, one of Europe’s most fragile economics, has quarantined its 60 million people in a desperate effort to keep the virus at bay.
Before the world became interconnected, one country’s cratering economy was unlikely to spread to its next-door neighbor, let alone leap across countries and continents. But globalization has made no country impervious to diseases – economic, political, cultural, medical, real and metaphorical. Next-door neighbors or islands a hemisphere away are as healthy or sick as the click of a computer button or the sneeze on a cruise ship.
Unable or incapable of confronting the reality of a viral pandemic, Trump blithely declared his preference that the 2,500-plus Americans confined aboard the Grand Princess Cruise not be allowed onto American soil because it would add to the number of Americans infected with the coronavirus. Incredibly, at a visit to the Centers for Disease Control in Atlanta of all places, he opined that “I like the numbers where they are.”
Thanks to our denier-in-chief, the kind of concerted, well-orchestrated effort to head off the coronavirus when it first appeared in the U.S. did not occur in ours, one of the most advanced medical systems in the world. Even for a person obsessed with numbers, isn’t it obvious that a nation cannot have a healthy economy if a pandemic weakens – or God forbid, decimates – its labor force?
Already employees at some of America’s biggest companies are being asked to work from home. In an age of telecommuting, this is not necessarily a bad thing. However, what can be done to protect the vast numbers of Americans who work in the services industry? Very little, I’m afraid, unless, of course, stringent and smart measures are taken immediately to protect this vulnerable workforce. If action is not taken to protect this, the fastest-growing sector of the American economy, the results will be disastrous.
Sacrificing Economy’s Health
Like the governments of China, and now Italy, the Trump administration has to sacrifice its economy’s health for that of its people. It needs to proactively confront the coronavirus threat because, as without a healthy population, the country’s economy will surely plummet.
President Trump needs to more aggressively ask Congress for funds to fight the virus. If still short of money, Trump should consider contributing funds from his pocket and encourage the American people to donate too.
The point is that not a single American should have to worry about their medical expenses being paid for at this critical time. The undocumented should be covered too, and that includes every man, woman, and child currently held in ICE’s network of detention centers.
Years of hardline immigration rhetoric and policy by President Donald Trump's administration will have a chilling effect on undocumented New Yorkers who might need to seek medical help for suspected COVID-19 cases, some immigrant advocates fear.https://t.co/G6iuPsLWgL pic.twitter.com/jNyrju9a8L
— Gothamist (@Gothamist) March 12, 2020
The government should also establish a program that funds the temporarily unemployed. In addition, the Trump administration should cancel or postpone all large meetings and conferences for the next 30 days. In the short term, people might be upset, but doing so forestalls and, hopefully, prevents a bigger problem. At this critical point, we people of the United States, no matter Republican or Democratic, should work together to face the problem at hand instead of point fingers at each other. We are all in the same boat.
At the end of February, when the Dow Jones was making a brief upward swing, my financial adviser called. He tried to convince me to get back into the market. But I was still worried about the unknown unknowns, so I declined his invitation.
On March 16, though, President Trump took action that addressed my uncertainties by announcing a raft of measures aimed at fighting the coronavirus. More importantly, he declared that life is more important than the stock market. Yes, the market indexes plunged again the next day when the Federal Reserve cut interest rates to zero and announced a major monetary stimulus plan, but Trump’s statement and his apparent firmness in standing addressed my concern about unknown unknowns. It gives me a confidence I had not felt before.
I believe our government is making the right moves to rescue the American economy from disaster. In fact, I’m even taking my money out of quarantine and picking up some stocks.Disclaimer: The views and opinions expressed here are those of the author and do not necessarily reflect the editorial position of The Globe Post.