Some thoughts after the Trump victory

As many people out there, I have strong and bitter feelings towards Brexit and the Trump victory. I thought it represents a major setback from the globalisation which have brought so much cultual and economical prosperity into this world. It points to a gloomy future where people are futhur devided by their race, nationality, religious belief, sexuality, economic status… and there doesn’t seem to be any immediate solution for it.

Numerous articles were written to reflect how we ended up here and speculate what it means to our future. Here is my 2 cents.

First, we need to ask ourselves what makes a productive, efficient and most importantly, innovative economy. I suppose most answers would be about how to balance the roles of the goverment and market. I don’t pretend to know the anwser for that, but here is what I observe: The most advanced and innovative economies in USA and Europe are California and Nordics, respectively. California is a deep blue state and Nordics prides itself with its socicial democracy. This seems to contradict with many people’s perception that left-wing ideologies tend to result in Soviet style disaster, after all there are so many cases in history that proved that point. However, there must be something important and intriguing missing from that picture.

Let’s take a closer look at California and Nordics, especially Sweden. As vastly different as they might seem, the two actually have a lot in common. Both are places for builders: California is the home of Silicon Valley and Hollyhood. Sweden has the most Fortune 500 companies per capita in the world. Both economies use high value-added industries to drive growth and are extremely export oriented. Since both economies benefit enormously from the globalisation, not just from the standpoint of the open market, but in California’s case, from the global talent pool as well, the idea of social diversity, immigration and welfare is much more entrenched then anywhere else.

One might start to wonder, is this left-wing politics just the consequence of a successful economy? I’d like to argue that it works in both ways. Paul Graham made an interesting point in his Hackers and Painters book that empathsizes the importance of empathy to a hacker. He said: And so hackers, like painters, must have empathy to do really great work. I think that is true for all types of builders and product oriented companies. If they can’t put themselves in other’s shoes, the chance of building a great product is 0. In the context of globalisation, that means understanding people with different backgrounds at a global scale, and the most effective way to achieve that for a society is to have a culture where people respect diversity and really take care of each other. A pure capitalist state can not provide fertile enough soil to nurture generations of builders.

Of course left-wing ideology garantees nothing, neither does any ideologies. Globalisation is by no means the music in everyone’s ears. It makes competition more fierce by inviting everybody into the game. California and Sweden are clearly playing well, but it can not be neglected that many less competitive economies are losing out. Historically, there is nothing surprising about the rise and fall of an economy. But ever since the emergence of international companies with their capital flowing across the borders, there is always a tension between them and the countries that they belong to. For many decades, the western countries as a whole is the builder and net exporter to the rest of the world, somewhat similiar to what California and Sweden is now. Back then, the interest of the international capital and the western society are more or less in line with each other. But now when the gap between different parts of a political entity is enlarged in the face of the global competition, the division seems to be inevitable, hence the Brexit and Trump victory.

Unfortunately, this doesn’t seem to be a problem with easy fixes. At a time when everyone seems to resort to xenophobia and protectionism, we really need to see a smarter and more inspirational solution.

Written on November 14, 2016