THE FIRST DEGREE VIEW



A property developer's approach to policy

Stephen Fisher - Sunday, November 13, 2016

There is an old joke about the guy who dies and has a choice between heaven and hell. He first visits heaven and sees a bunch of bored people being good. Hell, on the other hand, is a party atmosphere - bars, dancing, action.  So he chooses hell.  But when he turns up, its all fire and brimstone - no party.  So he asks the Devil what happened? "That was the sales process, this is reality"

 

And so it will be with President Trump, the former property developer and real estate salesmen.  Getting elected is the sales job, governing is reality.  Trump spent the entire campaign telling the swinging voter what he/she wanted to hear.  No elitest, normative rhetoric from him - just jobs, taxes, security and patriotism.  "America was the greatest until they (the Dems) sent all the jobs to Mexico and China.  I will stop that and make America great again".  A simple message that didn't need explaining.  [After all, as the sitcom Veep once joked, the moment you need to explain your policy you've lost the argument.....]

 

How does a property developer formulate policy?  Here is a quick primer...

 

1. Drain the swamp.  Reclaiming land is a property developer's joy since you get something for nothing.  Draining the swamp means making the US government efficient, accountable and running it like a business.  This would be micro-economic reform at the government level which would be an enormous contribution to society.

 

2. Build a wall. Every property developer knows that building is expensive, and there are so many ways to give the same effect without actually pouring expensive concrete.  Plant a hedge, use a cheaper material like a fence, or better still, buy the land next door and extend the development.  This latter option might well apply to Mexico - the cause of illegal immigration is that wages are higher on the Northern side of the river and there is little incentive to enforce the border rule on the South.  Changing the incentives can be more a powerful repellant than another physical Great Wall

 

3.  Re-Zone the development.  Ever wondered why your neighbour's land is worth 100 times more than yours?  His is zoned for casino development while your's is single dwelling residential.  Likewise deciding between manufacturing in China versus the US.  Why pay US taxes when China rewards foreign capital?  Trump's most powerful policy tool is taxation, and if he uses this wisely then the US could well be zoned as an investment destination.

 

These are just a few developers tricks that President Trump will pursue.  The important point is that thinking like a developer brings micro-economic logic to government policy.  Politicians are macro-economists who chase grandiose cure-alls from initiatives that never quite work (QE, pump priming) because they forget about the basics of running a business or feeding a family.  The true macro-economy is just a bunch of little guys doing micro-stuff which then add up to a bigger whole.

 

Comments
Post has no comments.
Post a Comment




Captcha Image

Trackback Link
http://www.firstdegree.asia/BlogRetrieve.aspx?BlogID=17690&PostID=932174&A=Trackback
Trackbacks
Post has no trackbacks.

We all use our spare time differently - some of us sail, some of us read and some of us spend just a little too much time working out whether that South Australian Shiraz really did deserve a gold medal

 

And then there are those of us who spend their spare time thinking about the better application of monetary policy, about Central Bank intervention risk and, of course, about Greece

 

Meet Fish, our CIO, who is almost solely responsible for keeping First Degree's lawyers constantly on standby, with his alternative (and just the right side of libelous, according to those lawyers) view of what those in power are mucking up

 

If you like what he writes, we are happy to take you on as a Client, because those lawyers are pretty expensive!

 © FIRST DEGREE GLOBAL ASSET MANAGEMENT PTE. LTD.

+65 6681 6632