The New York Post
December 19, 2016
One of Donald Trump’s biggest and most urgent challenges is to usher Americans out of the post-2008 slow-growth world — without ushering the economy off a cliff. His meeting last week with top Silicon Valley executives was one key part of a larger strategy, one that will also impact Wall Street.
To face perhaps the biggest domestic test of his presidency, Trump needs to rebalance our economic leadership away from the intangible, bubble-prone worlds of speculative finance and “apps for everything,” toward concrete investment, production and innovation that can make the future great again.
Trump needs a full-court economic press, unleashing fracking as well as a revolution in viable alternative energy; supplementing broad tax and regulatory reform with increased infrastructure spending and job creation.
To get the economy out of its current unbalanced state, Trump should mobilize the productive power of technology in the real world — rather than favoring the speculative business models with narrowly distributed results that have held sway over much of Wall Street, and some of Silicon Valley itself, since 2008.
Fortunately, Silicon Valley’s top moguls seem open to helping Trump pull off this pivot. Jeff Bezos, Tim Cook, Larry Page, Eric Schmidt and Sheryl Sandberg all accepted Peter Thiel’s invitation to Wednesday’s gathering at Trump Tower. “Anything we can do to help this go along,” Trump told them.
But he wisely singled out Elon Musk for both an exclusive post-meeting session and membership on Trump’s Business Advisory Council.
By integrating Tesla and SolarCity into a single energy-infrastructure firm, Musk is getting technology out of cyberspace and back into the brick-and-mortar, flesh-and-blood world where we need productive change the most.
Musk, like Thiel, knows how to fix the post-2008 economy: by breaking our economic dependence on speculative valuation. Driven by big bets in tech and finance markets, where few goods or services are actually produced, today’s economy is too unstable, inaccessible and frantic.
As Thiel warned in “Zero to One,” trying to grow the pie by making a lot of money through betting and hedging takes the focus off innovations that stay valuable into the future.
Fighting for moment-to-moment advantages makes it too hard to focus on setting and achieving the long-term goals that investors, producers and consumers all need to maintain a dynamic yet stable economy.
Thiel connects this problem to our neglectful energy policy. Instead of pushing ahead with a new generation of nuclear-power facilities (a big Thiel priority), for instance, we haggle fruitlessly over guilt-ridden, economy-killing plans to regulate carbon emissions, rather than driving for the kind of real-world innovation that can truly replace these energy sources.
In such a stifling environment, frustrated competition has turned to the virtual economy skewered on TV by “Silicon Valley” and in print by Michael Lewis’ “Flash Boys.” Wall Street’s embrace of technology, for instance, unleashed an algorithm arms race, plowing financial energy and prestige into unproductive markets.
From the mortgage-backed-securities market to the illegally manipulated derivatives market, too many Wall Streeters strove to cash in without creating or financing any tangible new goods.
No wonder populist frustration has bubbled over. As much as Silicon Valley has boosted the economy since 2008, Americans know that, alone, it can’t rescue capitalism from Wall Street’s mistakes and Washington’s meddling.
For that, presidential leadership is needed. And if Trump adopts the right priorities, he can deliver.
Given his early push on infrastructure, he ought to supplement his jobs agenda by supporting construction of next-generation nuclear power plants, and speed regulatory approval for more automated transportation.
These advancements will help ensure Americans become both energy-independent and energy-rich — crucial to more efficiency, more productivity and more jobs.
Meanwhile, given his unique credibility with Wall Street and its populist critics, he should stop banks from returning to the bad old days of gambling on subprime debt with taxpayer dollars by privatizing Fannie Mae and Freddie Mac.
And he should join billionaire investor Carl Icahn, himself a Trump supporter, in encouraging Americans to invest wisely, avoiding a new stock-market bubble.
Trump’s critics complain that he’s pretending we can restore the economy of the 1950s. In fact, he’s merely refusing to buy into an “economy of the future” that leaves most Americans behind.
And if he can push the nation’s economic center of gravity back into the real world, the United States will again have a future we can all believe in.
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