It's Trump Time

It is proving to be something of a bumper year for subscribers to Foreign Affairs. In January, we had a special edition on the future of the international order. In March we had a special edition on what 'Trump Time' might look like. In July, we are to have a special edition on what Trump might do in practice. In many respects, this is a reflection of the degree to which President Trump has surprised the Washington elite. In a state of shock, it is, in effect, an exercise in catch up.

The March edition contains a series of articles looking at the meaning of the Trump victory and how it may impact a number of areas of concern. The first article - The Jacksonian Revolt by Walter Russell Mead - places the Trump victory in historical context. He argues that Trump could be viewed as an American populist of the Jacksonian variety. I wonder if it is considered bad form to point out that President Jackson inhabited a very different world to President Trump? President Jackson didn't sit astride the most dominant nation on earth. There was room for American Exceptionalism then, there is less so now. Current conditions require a greater degree of responsibility from the US, which has, to date, been lacking.

This is followed by an article on 'Trump and the Economy' by John Paulson. The aim is to jump start economic growth. The method is by reducing the US corporate tax rate, adopting a territorial tax system, reducing red tape, boosting energy production, and attaining better trade policies. Mr Paulson claims that this will double the growth of US GDP. I doubt it very much. The US is suffering from a deficiency in aggregate demand, and there is very little in this plan to boost that. The argument rests on a belief that, by increasing corporate profitability, corporate investment will take off. This is unlikely unless there is a way to put more money into the pockets of those with a high propensity to spend (economist-speak for poor people). I was unconvinced by this short article and still retain the view that Trump will do more harm than good to the American economy.

There then followed a pair of articles on 'Trump and Russia' (by Messrs Rumer, Sokolsky, and Weiss) followed by one on 'Trump and China' (by Susan Shirk). I see these as the two key relationships of Trump's presidency. We started the presidency with Trump accommodating Russia and confronting China. I still see this as a default position, but I do believe that the story has become more nuanced as time has worn on. Obviously, the role of Russia in the presidential election, if any, will have an impact on how things play out. Both articles set out a programme for better relations between the US, Russia, and China. I remain to be convinced of this.

There then followed three articles (Trump and Terrorism, Trump and the Holy Land, and Trump and North Korea) which we may safely discount. The set of articles finishes with 'Trump and the World Order' by Stewart Patrick. This really does have my attention. It starts to flesh out the process by which a policy of offshore balancing could be achieved. It hints at which nations could be left to look after themselves and speculates upon how a power vacuum might be filled. The irony that America is walking away from a world order that was created in it's own image seems to be lost on the author. If it does happen, then the world will become a more dangerous place.

Not part of the collection on Trump, but well worth mentioning, are two more articles. There is 'How America Lost Faith in Expertise' by Tom Nichols, which charts the disconnect between many ordinary Americans and the governing elites. Also, there is 'The Dignity Deficit' by Arthur Brooks, which considers how the governing elites could reconnect with ordinary Americans. In the context of the rise of a Trump styled Jacksonian populism, I wouldn't hold too much hope for this re-acquaintance.

Looking at the body as a whole, it does provide a great deal to think about. I have to admit that I see Trump's economic plans as having very little chance of success. If he pursues them aggressively, then he risks confronting both Russia and China at the same time. This has the potential not to end well for us all. Of course, there is the possibility that President Trump is an undiscovered genius and that he will herald a renaissance in American fortunes. Time will tell.

A far more interesting exercise would be to consider what would happen if Trump fails. Could the US head towards a more extreme populism? Could it become a failed state? Or could the nation pull together to present a more unified front to the world? For my part, I can fully understand the panic now being experienced by the Washington elite because, if Trump fails, I see things becoming more extreme rather than less. All I can say is that the American elite has brought it upon themselves.

Stephen Aguilar-Millan

© The European Futures Observatory 2017

A Note On Automation

The integration of the future tax system.

"We all started somewhere else." Whenever someone asks how we became futurists, this is normally how the explanation starts. There is almost a sequence of events. We start out fairly junior in our chosen profession. Through a combination of exam success, hard work, and, often, just luck, we become more senior at what we chose to do. As we become more senior, the numbers become larger and the time horizon of our projects becomes more distant into the future. Eventually, the techniques we learned when training don't quite adequately serve us in our roles and we find ourselves using futures techniques. Before you know it, you have become a futurist.

In my case, I entered the world of banking in 1976, starting out with Midland Bank, now part of HSBC. I wasn't temperamentally suited to branch banking so we parted company after a few years. By that time, the die had been cast. I stumbled along my way through economics, the law, and back to finance again. During this time, I had accumulated a number of professions, one of which was as an accountant.

If you are to be an accountant, you need to stay on top of developments in the world of accounts preparation and taxation. This is achieved through a compulsory programme of CPD (Continuing Professional Development). I found myself at a CPD study day last week, which was looking at 'Making Tax Digital', the latest idea from HMRC to bring the world of tax into the modern age.

Some of the presentations were a bit slow, but that allowed my mind to wander, and I found it wandering over how the technology of the finance function had changed over the course of my working life. When I first started in 1976, accounts ledgers were being transferred from paper to digital format. Small accounts were run on a mainframe computer the size of a large bedroom. By the time we reached the 1980s, we were working on PCs where the size of the storage media was 20Mb (I think that I might still have some of those floppy disks).

The next big evolution was in the software we used - dedicated accounting packages and spreadsheets. I can remember this first spreadsheet we bought in 1984 - Lotus 123. We were working on a trajectory where the computing power was becoming smaller, faster, and cheaper. With the advent of laptops first, and later the internet, by the 1990s we were mobile as well. By that time, I had struck out on my own, but we were still operating with a staff.

The next wave of change was institutional. The Inland Revenue (HMRC as it is now) first introduced self assessment. In those days we had to complete the tax returns on paper and deliver them to HMRC for input onto the mainframe of the tax authority. Eventually the penny dropped. We were drafting the tax returns on computer programs, printing them, and HMRC were then re-typing them into the mainframe. On-line filing followed next.

In a progression that has a clear path, the next step is Making Tax Digital. This is where all of the computers in the system (client computers, our computers, and HMRC computers) are all linked up using the cloud, over the web. There are many fearful about this next step, but they are mainly expressing a fear of change more than anything else. The automation and mechanisation that has occurred to date has allowed me to dispense with a staff, and I see the concern of others that we might be the next to be dispensed with.

I don't share that fear because I ask my clients one simple question: Do you want to give HMRC a blank cheque over the tax you are liable to pay? If they say not, then there is a demand for me, or someone like me. Someone who can make the numbers sing in a way that is pleasing to them whilst satisfying the requirements of HMRC. Our work has a functional aspect, but it also has a creative side as well. My clients are hiring this creativity.

Frey and Osborne reckon that we have a high probability of technological redundancy through automation (98%), although I can't find a time horizon for this. That might be true. Ours is a profession where some resist computerisation. Some prefer to retire rather than embrace change. Some may be just unlucky. Myself, I have no fear because there will always be a demand for someone who can make numbers sing.

Stephen Aguilar-Millan

© The European Futures Observatory 2017