Just three years ago, who had ever heard about Donald Trump and Elon Musk ? Those who had stayed in New York during the Eighties remembered the story of a real estate magnate who got bankrupted but who recovered. There was a Trump Tower, on 5th avenue and rumors in tabloids about his misbehaviors and his divorces. But nobody paid attention to him anymore. Today, he is the republican candidate for the next presidential election, which will occur in six months from now, to the great displeasure of the party establishment, who has done all it could do to turn him down. His declarations have developed such a passion that he generates more interest in France, whatever people approve or disapprove him, than any candidate to an American election before.
Elon Musk did not attract more attention in the past. Electric car, which he was a defender, was still a marginal market and nobody before would have dared to compare him to American industry indisputable stars, to the unicorns, the new up-to-date word to indicate Smartphone creators, social networks or internet start-ups. Today, he is also active in the space industry and proposes flights to Mars, along with developing a quasi supersonic railway system, where some are saying that SNCF is interested in. It doesn’t matter if his project of a partly recoverable space rocket makes economic sense or if he will find clients to travel to space. And he launched a subscription to get a reservation for his next electric car, the S model, which attracted 400 000 clients paying a 1000$ fee. It is true that the fee is recoverable at any time, except if Tesla goes into bankruptcy, but nobody can imagine it. He expects, even when the plant is still under construction, to deliver 50 000 models in 2017 and reach his target of 500 000 in 2018, and even a million in 2020. Not less. Nobody intend to put in doubt the long term viability of his projects. The bigger it is, the easier it goes through.
Regarding Donald Trump, his economic proposals have definitely attracted less attention than his declarations about Mexican immigration or women. But they should not leave unmoved since nobody can be sure that he is not going to be the next president of the United States. It is true that the American constitution gives him, in these matters, less power than a president in France. Decisions on budget and fiscal issues are in the hands of the Congress. But his promises are starting to seriously preoccupy: the suppression of inheritance taxes, the reduction of corporate tax rate to 15%, against 35% today. Deficits increases which would result could add, for the next ten years, 10 000 billion dollars to the current 19 000 billion debt. But it is not a problem, said the candidate during a CNBC interview: “I love debt”, referring probably to his own experience. He successfully, when he declared himself bankrupt, renegotiated it with a substantial reduction, which permitted him to restart his business. Maybe he is confusing a private business with the management of a State. Does he really think he can do the same with his country? Anyway, to other journalists, he said that he will come back to a balanced budget and reimburses the American debt in eight years. How is it possible to take seriously such statements and their author?
Elon Musk is not doing much better. Despite his triumphant statements, his car business, Tesla, founded in 2003, has never made any profit. It has lost 280 million dollars during 2016 1st quarter, i.e. almost twice more than a year earlier. Annual turnover has risen strongly, reaching 1.6 billion dollars. His production objective, for his new model, if it is attained, would generate sales of 14 billion dollars in 2018, i.e. almost ten times more in just three years. Needless to say it is quite unlikely. But everybody continues to take him seriously, as they do with the candidate Trump. The wake-up will be painful.
We use to say that what happens in the U.S. comes to France some years later. It is interesting to understand this infatuation for these two men who operate on the political scene and on the financial markets, since it is sure that without their support, Tesla founder would have disappeared long time ago. What they have in common is boldness. The hugest it is, the most it is accepted and well received. Technical credibility, financial or industrial rigors are put, with these persons, on the backstage, behind appearance and blunders for the first one, and dream for the second. And nobody really dares to contradict them. Financial analysts and banks, in charge of providing resources, and being paid for that, are not going to kill the goose that lays golden eggs. Lesson from the subprime crisis have been quickly forgotten.
Regarding Bernie Sanders and Hillary Clinton, they concentrate their criticisms on the societal aspects of the program of their opponent, definitely highly questionable. But the proof of the absurdity of his economic declarations, which could also come from impartial observers, has still to come. It is what makes Donald Trump close to Marine Le Pen. They are the by-products of a media system where competition is more and more intense. To attract audience, sensationalism is prioritized against professionalism. Marine Le Pen audience success, and its consequence, her rise in poll opinions, has the same origin than the interest caused by Donald Trump in the U.S. Nobody cares to really contradict her and denounce the absurd and ruinous nature of her project to abandon euro and leave Europe since it attracts interest and audience. It is the reason why the American presidential campaign will be interesting since it could give a pre-taste of the election debate which will occur in France, some months later.