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economies. In my view, Mr Trump’s victory will have many social,
geopolitical, and economic consequences, but for investors I think he will
start a period of ‘Economic Olympics’, whereby the federal governments
around the world will take more responsibility and be more proactive to help
their ‘national teams’ to become more competitive in this globalised
world. (1) Free trade is in theory good for economic growth. But there are
other policies (such as well-directed R&D, efficient investment, an effective
educational system) that are also extremely important for long-term growth,
but have been ignored in the past 15 years because of the globalisation
fad. A slowdown in trade globalisation might not be bad for the global
economy, if policy makers replace this engine of growth with other
structural improvements. But while globalisation is more about ‘growth
beta’, other types of structural reforms are about ‘growth alpha’ and
federal/central governments around the world will need to make a greater
effort at leading the economies to prevent them from falling behind. This is
like a government-led program to win Olympic medals, without doping by
central banks. (2) A client kindly brought to my attention an interesting
report done by the Harvard Business School that touches on the idea
mentioned above (‘Problems Unsolved and a Nation Divided: The State of
US Competitiveness 2016’). In it, several sensible and consequential points
were made: ‘The pressing need for a national economic strategy… Given
the significant challenges facing the American economy, the U.S. needs a
national economic strategy more than at any other time in recent history. A
strategy is an integrated set of priorities that builds on strengths while
acknowledging and tackling weaknesses… The U.S. lacks an economic
strategy, especially at the federal level. The implicit strategy has been to
trust the Federal Reserve to solve our problems through monetary
policy… A national economic strategy for the U.S. will require action by
business, state and local governments, and the federal government. All
three levels have a crucial role to play in restoring competitiveness… Taking
leadership in improving U.S. competitiveness is a pressing imperative for
business leaders. Many companies have failed to invest enough in
improving the business environments in the regions in which they
operate…’ This report from the HBS also reiterates some recommendations
they made in 2012: ‘[Our] Eight-Point Plan consists of the following policy
recommendations: simplify the corporate tax code with lower statutory rates
and no loopholes; move to a territorial tax system like all other leading
nations’; ease the immigration of highly-skilled individuals; aggressively
address distortions and abuses in the international trading system; improve
logistics, communications, and energy infrastructure; simplify and
streamline regulation; create a sustainable federal budget, including reform
of entitlements; and responsibly develop America’s unconventional energy
advantage.’ Interestingly, Mr Trump has discussed many of the same
points. I personally think that, so far, identity politics has distracted from his

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