Look to Coolidge and the ‘Roaring 20s’ to see where Trump is headed. 

Brendan Lenihan, Navigo Consulting. (This article appeared in The Sunday Independent Business Section on Sunday 19th February 2017).

Abraham Lincoln once remarked that the best thing about the future is that it comes only one day at a time.

An entirely new order is dawning – or is it? Putting America first, and last. Commentators have been looking back into the patterns of history for clues to the future, with the 1930s as the most frequent destination with 1984 right behind.  As recently observed, even George Orwell failed to predict was that we’d buy the cameras ourselves… and that our biggest fear would be that nobody was watching.

One of Trump’s tremendous heroes (apart from, clearly, Trump himself) is Ronald Reagan.  Bigly.  By his own admission, Reagan’s political template as President came from Calvin Coolidge, 30th President of the United States for the bulk of the 1920s.  The parallels to today are striking and deserve closer scrutiny.

I see a consensus in Irish business circles that Trump, apart from all else that is disputed, will be “good for American business”.  The markets, a not infallible concentration of people deputized to manage wealth, apparently share this view, pushing indexes to record highs.  Sounds familiar?  Welcome to America of the roaring 1920s where the Stock Market rose by two and a half times during Coolidge’s presidency.

Coolidge was a ‘small government’ Republican who famously coined the phrase “the business of America is business”. Wealthy men were in his cabinet such as Treasury Secretary Andrew Mellon, who worked assiduously on self-serving tax cuts. Foreign policy steered clear of multilateralism because Coolidge couldn’t see the business benefit to America. Like Trump, Coolidge disdained regulation, and his administration did as little as possible to restrict the activities of American businesses, making the regulatory environment under Coolidge “thin to the point of invisibility” especially in bank lending. Last week Trump started disassembling the prudential infrastructure of US bank regulation.

Like Trump, one of the keys to Coolidge’s broad popularity was that, as his biographer put it “he embodied the spirit and hopes of the middle class, could interpret their longings and express their opinions.” A la Trump, Coolidge used new media for the first time to communicate directly to the electorate.  Coolidge’s second inauguration was the first to be broadcast on radio, no doubt achieving a genuine record in terms of it being witnessed by the masses.

On taking the White House, Coolidge ramped up immigration controls.  With minimal Congressional opposition, he moved a federal law “to preserve the ideal of American homogeneity”. It limited the annual number of immigrants who could be admitted from any country to 2% of the number of people from that country counted in the 1890 census.  This favoured countries like Ireland – which had built up a large diaspora since Famine times – restricted immigration of Italians and Eastern European Jews and contained an effective outright ban on the immigration from Japan, reneging on a long-standing understanding.

In economic policy terms, both Trump and Coolidge were cheerleaders for smaller government, protectionism and key elements of mercantilism, which aims to enrich and empower the nation to the maximum degree, by acquiring and retaining as much economic activity as possible within the nation’s borders. Everything is a “deal” and the country is run as a business.  This is accomplished by imposing high tariffs on imports of finished goods; low, or no taxes on exports of finished goods; and finding new markets. (Theresa May take note).

Of most concern is that historically, mercantilist policies tend to coincide with worrying frequency with wars and drives of colonial expansion to capture resources. (Bringing to mind Trump’s recent question about why the US left Iraq without ‘taking its oil’?).

Like Trump, the economic problem Coolidge faced in his presidency was trade flows and imbalances but of a slightly different nature. Currency was backed up by gold bars in the 1920s and such was America’s economic superiority that over half of the world’s gold was in a vault in Lower Manhattan. When you think of running your country on business terms this is, ironically, a big problem.  Nobody out there has money to buy from you, with a European economy that was still largely in rubble after the First World War.

I think we all know how the story ends.  Americans and Europeans in 1927 drove a plan to relocate deposits and therefore gold from American to European banks and encourage demand for US goods.  They did this by cutting interest rates in the US and raising them in Europe.  Mellon reassured the country that “the stock market is doing just fine”.  It worked a treat, for a while.  Apart from the Wall Street Crash on the back of the resulting US unregulated credit bubble. And the Great Depression.  And the ignition of the Second World War, the most enduring part of which was a war with Japan.

Coolidge’s presidential story is not in all respects a direct parallel to Trump and on a personal level they could not have been more different.  Although he was a skilled and effective public speaker, in private he was a man of few words. “The words of a President have an enormous weight,” he would later write, “and ought not to be used indiscriminately”. Dorothy Parker, upon learning that Coolidge had died, reportedly remarked, “How can they tell?”. One doubts that Trump’s epitaph will be similar.

America is a truly great country, with many strengths and outstanding values. I have had the wonderful experience of living and working there for four years and consulting to some of its greatest companies. And there I learned that businesses ought to be run like businesses; marriages like marriages; armies like armies, and countries like countries. While certain good practices can transfer across, it is a fatal mistake to try to run a country like a business and it almost always ends in tears, if not outright war.


Brendan Lenihan is Managing Director of Navigo Consulting (www.navigo.ie) which specialises in business planning, change and governance.  He is a former President of the Institute of Chartered Accountants in Ireland and has held a number of Executive and Non Executive roles in business.