Reflection on the first presidential debate 2020

I am one of the many who watched some of the first presidential debate in the US between Joe Biden and Donald Trump. I have read media suggesting it was the worst debate ever, that the moderator was deficient and that concern for the US generally increases day by day.

I sometimes have a different way of viewing the world so thought I'd jot down what I made of it. There are elements that are pretty straightforward in my opinion. As a narcissist, Donald Trump is relatively unaffected by interruption as he is only listening to himself and sees himself as the ultimate authority on matters in his daily life. He came with a plan to dominate and to belittle and only became agitated when the moderator sought to give equal time. Joe Biden came with a plan to speak to the electorate, to position himself as having empathy for people and to come across as trustworthy. I heard media suggest Biden became just a bit more like Trump during the debate. I don't agree with that. I think he showed some intolerance, but no more than any "normal" person whatever normal means these days.

What stood out to me wasn't any of this, it was further confirmation of the movement to the extreme and the genuine deep seated dislike each candidate has for each other and personifying the genuine and deep seated dislike each side and their followers have for each other. The logical conclusion of unrest and the very high potential for insurrection immediately prior, during or post the election leads me to conclude that civil war is not outlandish. I have had creeping suspicion over a few years now and suggest it is a matter of when not if in the current environment.

If one was to conclude civil war is a real possibility, it is then encumbent to muse what civil war would mean, to our clients, our country here in Australia and for the world generally. One of the commonly held beliefs is that war is actually good for the economy. I am deliberately staying silent on human life as that is a whole other story. I have read up on the economic consequences of war focussing in on the last five periods with a superficial view that history tends to repeat albeit not exactly. The five periods are World War II, Korean War, Vietnam War, Cold War and Iraq/Afghanistan War. Why these five - essentially because I could find them easiest and bet conclusions can be extrapolated.

What I found is increased military spending creating employment and economic activity, development of new technologies which inevitably end up in other industries and higher GDP growth.

What I am not so sure of is income inequality. It is chicken and the egg. Does income inequality drive the war, or does war help reduce income inequality. I have no firm opinion on that.

What does tend to happen is increased sovereign debt, decreased consumption of households, decreased investment due to uncertainty, increased inflation after the conflict. These all stand to reason. We have been saying we are in for increased inflation once we get out of the doldrums for a while, conflict or no conflict. Again, the tricky bit is when. My view is that we will see increasing interest rates for the working lifetime of my children combined with increasing taxation. Whilst in the short term there will be stimulus and tax breaks, that will all be recouped and more once things start to recover.

Taxation policy will play as big a role if not more than conflict driven stimulus. I struggle to see how the conflict itself makes much difference. Without conflict, consumption, confidence would be higher in relative terms, and inflation/interest rates lower. Investment in research and development as suggested by the Turnbull Government sought some of the likely war driven outcomes in technology in particular just skipping the conflict. It just might be that the human psyche needs conflict to hit the reset button and channel minds to the task. The reset button being the critical thing, not the conflict itself which just provides a trigger.

The impending budget will be telling in short term thinking but not instructive at all in longer term strategic planning. Our clients would be well advised to turn their minds to risk management. Uncertainty should drive caution in investment rather than chasing yield. Opportunities will emerge and a new normal will eventually be attained. I just don't think we should be in a rush and definitely shouldn't be making decisions on a day by day basis.

My conclusion is this. The US is going to turn even further inwards to their detriment. The world generally will view the US increasingly as a bygone superpower unable to present a united front. There will be a continued but increasingly overt struggle between other players to take the US position of authority. China, Russia, Germany/Europe will fill in the gaps. Aspiring regimes will rise up in the absence of a definitive leader and spot fires will continue for some time to come.

For Australia, a delicate dance will continue with a resource hungry Asia in contradiction to the policy intentions of the Chinese Communist Party in particular. Sourcing other markets will be challenging to reduce exposure given the sheer discrepancy in quantum's involved and pain will be experienced as markets are manipulated further to seek political favour.

If you think that is too much to draw from an adversarial presidential debate - fair enough - if you think the presidential debate merely confirmed a lot of what is written above, then you think like me!