The US vice presidency was famously likened to a “bucket of warm piss” by President Franklin Roosevelt’s first vice president.
But J.D. Vance is likely thinking about pouring a bucket of champagne over ice, as are supporters of Trump’s economic populism.
Vance is well known on Wall Street and in Silicon Valley.
After graduating from Yale Law School, he worked in venture capital.
He wrote about the economic and social despair of the Rust Belt in his best-selling memoir, “Hillbilly Elegy.”
He has since served as a U.S. Senator for two years.
A few years ago, he was a free-marketeer who believed foreign investment in the United States would save Ohio’s mill towns.
He did not like Donald Trump’s nationalism, especially economic nationalism.
But something has changed for Vance since his autobiography became a hit in 2016.
Many die-hard liberals were shocked by reality and became conservatives.
Vance’s heist led him to economic populism – tariffs, a weak dollar, trade denunciations – and veered away from free markets towards Trump populism.
After the settlement, with President Trump’s approval, he will serve as a U.S. senator and may become vice president.
On Wednesday night, Americans will hear him speak in person at the Republican National Convention in Milwaukee.
In the case of Vance, it seems likely that Trump intends to go all-in on MAGA in his second term and then pass the baton to someone more capable of carrying out this plan (although it remains to be seen what will actually happen with Donald, but more on that later).
Indeed, Senator Vance has only served in the Senate for two years, but he has attracted attention for his articulation of Trump-style populism.
Trump has chosen perhaps the most articulate spokesman for the MAGA economy.
Remember, Trump’s economic populism was much more immature when he was elected, but it was in many ways tempered by his choice to remove key economic advisers, supply siders, traditional conservatives, and business figures from key economic posts, including Mike Pence, Larry Kudlow, Gary Cohn, and Steven Mnuchin.
He recently let slip to Bloomberg that he would consider JPMorgan CEO Jamie Dimon, a globalist’s globalist, for Treasury Secretary.
Indeed, The Donald has proven to be a somewhat unorthodox economic populist, and it has worked.
These people helped craft economic policies that led to tax cuts and deregulation, softening the economic blow from Trump’s trade war policies as other countries retaliated.
That will be even more difficult with Vance whispering in Trump’s ear and having a say in key economic policy decisions.
So what does this mean exactly?
First, Trump has always maintained a more moderate stance on economic issues than his critics have criticized him for.
Tech billionaire Mark Cuban famously predicted that the protectionism he promoted during his first term would wreck the economy and markets.
In fact, the opposite happened.
President Trump has deregulated the economy, pushed for lower corporate tax rates and correctly portrayed China as a pernicious global threat that benefits from a one-sided “free trade” policy in which American companies are forced to hand over trade secrets in exchange for access to China’s fast-growing economy.
President Trump’s tariffs on China are hurting America’s farming regions, but they seem reasonable given China’s continued aggressive stance.
But there is an argument, and many on Wall Street agree, that a second Trump term would be free of the desire to appease the Reaganite economic conservatives in the party.
Vance’s choice is evidence of that.
Lawrence McDonald, a financial commentator and author of “When Markets Speak,” told me he expects Vance to pressure President Trump to appoint former populist U.S. Trade Representative Robert Lighthizer as Treasury secretary.
The policy of weakening the dollar, aimed at bringing jobs back to the Rust Belt, will continue.
In MacDonald’s view, this is protectionism on steroids, or at least that will be its selling point to win the middle class vote.
McDonald said some of this is being priced into the market, as Trump’s chances of winning the November debates are looking up, especially after Biden’s disastrous debate performance.
The long end of the Treasury market has been selling off and the yield curve is in a “bear market,” in part because global investors are wary of buying Treasuries for fear of the inflation that inevitably follows a trade war.
“Vance and others will argue that a little more inflation is worth bringing hundreds of thousands of jobs back home,” McDonald said. “They mean well. The downside of free trade is job losses. The downside here is inflation, and that’s a burden on the middle class and the working class.”
This fear is also being reflected in the price of gold hitting new all-time highs and Bitcoin’s growing popularity as an inflation hedge (as my colleague Eleanor Terrett has reported ). Vance actually owned Bitcoin).
I hesitate to label Vance as a pure MAGA devotee.
Among his advisers is tech guru Peter Thiel.
He understands economics and he understands why we need free trade.
Even if you’ve long since shed your Silicon Valley skin, your years as a venture capitalist must have done you some good.
He’s an advocate of oil drilling (good for inflation), he would also support lower taxes, and his regulatory obsession seems most focused on big tech companies that are gaining near-monopoly powers.
But having a smart person explain the need for protectionism may be unpleasant for many voters, including minorities.
McDonald said he estimates that globalization and free trade have led to a net loss of five million jobs over the past 30 years.
The latter had a positive effect on inflation, strengthening the dollar and being very good for big business, leading to an explosion in the information economy.
There are plenty of jobs for programmers, but not many for factory workers.
Globalization has had a devastating effect on large swaths of the working class in terms of employment and social dislocation.
Consider the opioid crisis that has swept across America’s middle east and is now beginning to reduce overall life expectancy.
Wall Street is waiting for JD Vance to deliver the best anti-globalization argument anyone has made before or since.
