The ‘Soft Power’ of Donald Trump

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
[U.S. flag in shape of U.S.]

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Throughout the country’s history, Americans have been always fretting about the decline of the United States. And the theme of the imminent collapse of the United States is a never-ending topic in the global media.

Whether it’s the Brits comparing the United States to the decline of the Roman Empire, or the Germans condemning “Amerikanische Verhaltnisse,” it seems that even America’s closest allies are constantly predicting (or hoping for) its impending collapse.

The United States: Always in Decline

Recently, I saw Joseph Nye of Harvard University’s John F. Kennedy School of Government speak on this topic at Chatham House — The Royal Institute of Economic Affairs — in London. He was over in the United Kingdom to discuss his new book, “Is the American Century Over?”

In his book, Nye cites recent polls that 15 out of 22 countries surveyed showed that China will replace or has already replaced the United States as the world’s leading power.

Broadly speaking, Nye rejects this argument, warning against the knee-jerk American reaction of underestimating the United States’ “soft” power.

Nye coined the phrase “soft power” back in 1990. It is the idea that “soft” values like culture and a country’s ability to attract and persuade supporters are a better measure of its power than hard power tactics such as coercion (“sticks”) or payments (“carrots”).

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As Nye himself put it, “A country may obtain the outcomes it wants in world politics because other countries — admiring its values, emulating its example, aspiring to its level of prosperity and openness — want to follow it. In this sense, it is also important to set the agenda and attract others in world politics, and not only to force them to change by threatening military force or economic sanctions. This soft power — getting others to want the outcomes that you want — co-opts people rather than coerces them.”

The United States’ Secret Weapon

The United States has been in decline as long as I can remember.

I grew up reading Time magazine in the late 1970s and I vividly recall it was chock full of graphs and illustrations confirming how the Soviets were on the verge of overrunning vastly overmatched NATO forces in the Fulda Gap of Germany during the Cold War.

By the time I got to law school at Harvard, the shelves in my dorm room were creaking under the weight of books like “The Enigma of Japanese Power” even as all my friends in business school were studying Japanese. (Donald Trump’s “The Art of the Deal” was on that bookshelf as well. But more on that below.)

Of course, neither the Soviet or Japanese threats lived up to their billing.

As Nye points out, it’s tougher to measure “soft power” than it is to measure, say, the number of aircraft carriers a country has or even its level of “global competitiveness.”

But whenever you do try to measure “soft power,” the United States consistently comes out at or near the top.

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The 2014 Monocle Soft Power Survey found that the United States holds the top spot in soft power, followed by Germany in second place. The top 10 is rounded out by the United Kingdom, Japan, France, Switzerland, Australia, Sweden, Denmark and Canada.

A recent survey by the London-based Portland communications and public affairs consultancy had a slightly different outcome, with the United States ranking third, after both the United Kingdom and Germany.

The U.S. ranking was dragged down by (surprise!) a poor score for government — where the United States ranked a mere #24. Revealingly, the government ranking was below famously corrupt Italy and former Communist countries such as Poland and the Czech Republic.

Still, the United States retained its #1 ranking in three out of the six categories — “Digital,” “Culture” and “Education.”

Silicon Valley, Hollywood and Harvard still dominate the world.

More interesting about the Portland study is the countries that didn’t make it in the list.

Russia and India — two of the so-called BRIC (Brazil, Russia, India and China) nations — were completely absent.

And for all the talk about this being the Chinese century, the Middle Kingdom was dead last among the list of the top 30.

The Soft Power of Donald Trump

My favorite story of U.S. “soft power” involves the now-ubiquitous Donald Trump of a very different era. This goes back more than 25 years — long before “The Apprentice” and before the media’s obsession with The Donald’s hair.

After graduating from Stanford University in 1987, I spent a year as one of the very first group of Fulbright Scholars behind the Iron Curtain. I was a student at the then-Karl Marx University of Economics in Budapest, Hungary. We used to take pictures of ourselves in front of the Karl Marx statue in the main hall after stuffing its fist full of U.S. dollars.

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The Karl Marx Statue at the University of Economics in Budapest, Hungary.

There I made friends with Gyuri, a fellow student who was already making millions (OK, it was in Hungarian forints) through a cleaning business he had set up. Gyuri was clearly doing well. He had plenty of money, drove a beat-up red Soviet Lada and, unlike most poverty-stricken students, he could afford ski trips to Bulgaria.

As I got to know him, I was surprised to learn that his goal in life was to become a wealthy real estate investor “just like Donald Trump.”

It turned out that Gyuri had already read “The Art of the Deal” published just that year — which had been sent to him by relatives in Miami.

Now, remember, this was in the bad old days before the fall of the Berlin Wall. In Churchill’s words, the Iron Curtain was still descended across the continent. Indeed, 200,000 Soviet troops were still stationed in Hungary. There was no Internet or even cable TV. And every piece of mail I received was judiciously opened by some crony at the dreaded Interior Ministry long before it got into my hands.

Yet, even back then, Gyuri didn’t invoke the name of “Churchill” or “Reagan” as the iconic anti-communist, pro-business hero from the West.

Instead, he invoked the name of “Donald Trump.”

In case you missed it, I encourage you to read the e-letter column from last week about the global market first-half scorecard. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.

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