Ryan Tanaka

@ryangtanaka

The Economics of Silicon Valley Under Trump’s Presidency

It’s no secret that Donald Trump’s victory in the 2016 elections was a blow to the ethos of Silicon Valley in more ways than one. Being in the middle of the Valley right now, I’m exposed to a lot of doom and gloom scenarios that is supposed to be the end of history as we know it. Socially, perhaps this may be true: nothing will ever be the same — at least, not in the way we talk about the issues to one another. If we take a calm, collected look at economic data and market trends, however, we may be able to look at the future with a little more certainty.

A quick look at the S&P Index shows it dipping as it approaches election day, but overall the market seems largely indifferent to what had transpired during election week. (It’s climbing slightly upwards, in fact.) The tech industry may be feeling very pessimistic right now, but the market as a whole seems to be fairly optimistic. Why does this disparity exist?

Given the volatility of Trump’s personality and claims, there is no guarantee that all or any of his economic policies will actually materialize into something workable or real. But there seems to be enough consistencies in his policy agenda that has Wall Street somewhat reassured, even as he insults them at every turn.

For a second, let’s forget all about the fake-article controversy, media circus, angry rants, racism, and claims of the coming apocalypse for now. (It’s Thanksgiving, so maybe it’ll be good to get away from that stuff for a little while, anyway.) Let’s just simply look at how the market is reacting to Trump’s presidency in response to his policies related to economic development. His policies are:

Pro-business: Lower taxes for corporations, including small business corps.

Anti-Regulation: Regulations across the board, including environmental ones are likely to be relaxed.

Immigration: Stronger illegal immigration penalties, maintenance of existing legal immigration policies.

Infrastructure: Increased infrastructure spending for federal and state projects. (Though this is promised by just about everyone, but never actually done.)

Foreign Trade: Protection for American jobs and interests, which may lead to increased tariffs.

Save for a few crazy proposals (like making Mexico pay for it), if you look at enough of Trump’s policy proposals, they start to look like ones from a run-of-the-mill Republican candidate. With one exception: Trump is in favor of economic protectionism of the American worker while adding heavy revisions to global trade policies like NAFTA and the TPP. This is the biggest divergence he has with the Democratic establishment, as well as the existing Republican establishment as well. (Bernie Sanders is Trump’s leftist equivalent in this regard, which also explains the hostility Sanders received during the primaries.)

From a purely economic perspective, the last point is what scares the Valley the most, because it has, for better or worse, been a major benefactor and profiteer of the forces of globalization for a while now. From manufacturing, labor, recruitment, customer-acquisitions, investment, social connections, off-shore practices — all the way to their saying of “changing the world”. The idea that the scope of their ideals will have to shift inward rather than outward poses a very real economic and existential threat.

But now, more than ever, it’s important for tech companies to prepare for the next big pivot coming in the upcoming years. Regardless if Trump stays for 4 years, 8 years, or even less than 1, the sentiment of the public has changed irreversibly and people will be looking for something very different from technology than they did before. If we are to stay relevant in the upcoming election, the upcoming world, we will need to adapt to survive. Luckily, the culture of the Valley is already primed for such a change — or at least they should be, if they truly believe in the process of creative destruction.

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