Well, if you, like me, did not stay up last night to watch the election, you may have woken up to a stunning new reality this morning.
Donald J Trump is the president elect of the United States of America.
“If and when Trump implements his tax policy, it would not likely see a flight of corporations from Ireland, but it may slow the rate of them arriving here”
Without getting into the politics of it, this is something of an upset.
First of all, it further deepens the worry about the polling industry and its technologies — they have failed spectacularly to predict this result.
The analytics firms, such as Nate Silver’s 538 were still showing anything up to a 4% lead for Clinton at midnight Irish time last night, with no indication of the so-called Blue Firewall states turning.
This is not necessarily a criticism of 538 as such, but rather that so many such analysts, even having tried to expand their data sources beyond the traditional, seem to have been unable to gather enough data from which to deduce the overall direction, if not the specific detail, of the election.
This is a fairly damning indictment of the industry of sentiment analysis, predictive analytics and data gathering in this context.
However, we must now deal with the consequences.
Tech outlook
For the technology industry in Ireland, what are the consequences?
Well, one of the first is the potential impact on foreign direct investment (FDI). Trump has a stated policy of reducing corporate tax from 35 to 15%, which is a scant 2.5% above our own hallowed rate.
Now, we would still have an advantage in so far as we have a low rate in the context of the European markets. Therefore, we are still likely to attract the European bases of multi-nationals who wish to take advantage of our tax rules, as well as our tax rates, that allow the likes of Apple, Google and others to pay such low tax rates on profits earned in Europe.
If and when Trump implements this policy, it would not likely see a flight of corporations from Ireland, but it may slow the rate of them arriving here, as most will only do so for the specific purpose of the tax rules and structures.
There is also likely to be a relaxing of regulation, as Trump being famously pro-business in the American sense, is very much for light regulation.
One thing that does seem incongruous, or more incompatible, is the fact that in his victory speech, Trump specifically mentioned rebuilding America’s infrastructure, admittedly after years of underinvestment.
With lower corporate tax, and a likely light touch regime of regulation, one wonders where Trump is going to find the money for such investment. Sounding like FDR’s New Deal strategy, Trump’s investment plan could well see jobs being created as roads, bridges, dams and power grids are built, but at what cost?
Reagan ‘on steroids’
Our own David McWilliams has already said he expects Trump’s presidency to be like Reagan’s “on steroids”, by which he means the growth achieved in the economy was based on debt and at the expense of future generations. And as we all know from recent experience, a debt-fuelled balloon of growth can have serious, long-term effects.
Back to technology, Trump had also stated a desire to have companies such as Apple return high-tech manufacturing to the United States, though this is something of an irony. Trumps own campaign hats, though not high-tech, bearing his slogan of making America great again, were made in China.
It remains to be seen how he would achieve this. Would it be through punitive taxes or other instruments that penalise companies for doing so? That seems unlikely. More likely it would be through concessions and tax breaks for establishing factories and assembly plants on US soil, employing US citizens. Again, this could have a knock-on effect for economies like Ireland, but is less likely to impact as much as the FDI issue, as much of the electronics work once done here has already gone to lower costs economies. It may impact in the medical and pharmaceutical sector more.
One area that will likely affect us is Trump’s policies around visas for highly skilled workers. Trump has promised to clamp down on the H-1B visa scheme that sees graduates and masters-holders given work visas for the US.
Tech talent
Speaking to TechPro (though ComputerScope back then) on the occasion of its 20th anniversary in Ireland, Steve Balmer as CEO of Microsoft, said that one of Ireland’s advantages to multi-nationals was its welcoming culture. Even within the culture of a multinational, Balmer said that Microsoft had been far more successful in acclimatising graduates from the likes of China and India by placing them in Ireland for a year or two first, than it had when bringing them direct to Redmond.
It may well be that with a clamp down on visas for top tech talent, multinationals may hedge their best by bringing more talent here first, before taking the risk of a looking for a H1-B under a more heavily restricted regime. This would benefit us by further promoting Ireland as a centre for developing talent and innovation.
The state of the markets, the price of gold and the cautious response of other world leaders has served to illustrate that the world at large does not know quite what to make of Donald J Trump as president of the United States of America.
I must confess, I don’t either.
From both a tech and a political perspective, we truly live in interesting times.
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