To anyone who has ever said there is nothing new under the sun — the example of Tuesday the 9th of November 2016 will stand as an often cited counterexample. Whether the election of Donald Trump makes you feel inclined to dance in the streets or protest in them, for a brief a moment on Tuesday night, all of America was united by one single word.
Most viewers were surprised by the results Tuesday night — and those who say they weren’t are either Nate Silver, The Amazing Kreskin or lying.
And we wanted to find out what people are saying and thinking about “what’s next.”
It wasn’t easy to get people to open up. One who did was Paul Purcell, a partner with Continental Investors – who says there’s a big and bright silver lining that some have failed to see.
“When people went behind the curtain — and got by themselves — they voted what they really wanted – regardless of what they might have told their spouse on the way to the polling station. That’s the great thing about America.” In a post-election debrief, Purcell told Karen Webster that he’s one who sees a very positive message about what the voters chose when they were behind the curtain.
In a word: growth.
“This election is about reducing friction and unleashing pent-up energy that is ready to be put to work for the American people. The people that sent Donald Trump to Washington want less friction, they want less government and more than anything else, they want more businesses freed from the shackles of regulation,” Purcell remarked.
And this, he notes, is not an unreasonable demand on the part of voters, given how anemic growth has really been for Americans — especially the American entrepreneurs that Purcell sees day in and day out and who are eager for their opportunity to build their own American dream.
In the year 2000, businesses in their first year of life created a little over 4 million jobs per year, he told Webster. As of 2016 — or seven years out of the Great Recession, when one might expect the economy would be raring to go — he said new businesses are creating only 3 million a jobs a year.
That, Purcell noted, needs to change.
His view is that Trump’s victory points to a working population and a generation of literally a million missing entrepreneurs that aren’t in business that perhaps should be.
And while Purcell noted that he is not an expert on international trade, the fact that there are $2.7 trillion in funds from American companies parked offshore — because repatriating those funds under the current tax system is “impossible” — strongly indicates that something needs to change about those policies.
“I’m not afraid of Donald Trump blowing up international trade — mostly because the President can’t do that,” Purcell toldWebster.
“I am worried about friction and brokenness that we can’t sustain. Having two-plus trillion dollars offshore — that doesn’t make sense to the average person. And it really doesn’t make sense to tell them that you really can’t bring it home and put it to work for them.”
So, Webster asked, can a President Trump fix the “brokenness?”
Not singlehandedly, Purcell said. But Purcell said that Trump can and should work with Congress to put in place the policies that stimulate the kind of business growth that Purcell believes the majority of Trump voters were seeking when they voted.
What does that look like, Webster asked?
Unshackle financial services, for one, Purcell replied.
“I don’t know how anyone in the emerging financial services sector can be anything but really excited right now,” Purcell noted, citing Trump’s biggest Silicon Valley booster, PayPal luminary Peter Thiel.
Purcell’s view is that there is one very good reason that one of the sharpest minds in emerging FinTech was on the Trump train early — because the aggressive regulatory environment of the last several years made it tough for innovators to try new things.
Get it wrong and one could face a massive fine and the public relations debacle that we’ve all observed happens when one gets on the wrong side of the CFPB.
And while Webster raised some concerns over how someone who ran as a populist can then turn around and reign in the Bureau that bills itself as the “consumer champion,” Purcell noted that he thinks that Trump ran more as a Republican that a populist.
Ultimately, he thinks Trump will come down on the side of smaller, more streamlined government — which is to the benefit of the heavily regulated business now.
“This is the great thing about America, the folks like non-bank lenders who are State-licensed are regulated at the Federal level and have been forever. [Race car driver] Scott Tucker took a massive FTC fine and was indicted because non-bank lenders are subject to Federal oversight, it’s a fallacy that they weren’t. They are also very close to their state regulators,” Purcell noted. “If I am someone who has operated within the law, I am very happy today.”
And so are a lot of investors. Purcell noted that once the votes were counted and Trump was declared the winner, the markets didn’t implode, but rather rallied higher, led by the financial sector. His view is that business is now giving every indication it’s ready to give the Trump Administration a try — especially if it can kick off growth.
Webster asked Purcell to offer some advice to Trump in his first 100 days on the job.
First, he said, respect the office he was elected to — be extremely deferential to constitutional restraints and nullify executive actions.
Then, get to work with Congress for broad tax reform, since what is in place today is so friction-filled as to be incomprehensible.
“Taxes are a mess. It should be a number and a percent rather than the complicated mess that has people spending endless amounts of time pouring over what constitutes a legal deduction,” Purcell emphasized.
Lowering the corporate tax rate to 20 percent — as Trump has proposed — would have a massive and immediately observable gain in the markets, Purcell also observes. And, regularizing capital gains taxation might create the right incentives toward capital creation to actually get growth out of neutral.
But, perhaps most important, he’s hopeful that Trump will assemble a government – and a governing ethos – that governs our country with three separate branches of government that have to work together, compromise and get things accomplished.
“The legislative branch will actually have to initiate legislation,” Purcell noted, “which might actually make it more durable when it gets to the finish line.”