If there’s one thing to say for the complex and rather bizarre US electoral system, it’s that it has a sense of spectacle and drama. There is little in politics that comes close to the raw theatre of the build-up, adrenaline and production of the climactic final night.
When the US votes, the world watches. But it isn’t just for the show. The outcome matters to everyone, including South Africans. It affects SA’s currency, domestic economy and place in global markets.
This was the first major national election since the Covid-19 pandemic took hold around the world. But contrary to initial suppositions, it wasn’t quite the "Covid election" that many expected. Instead, the effect of the pandemic was more indirect, if no less influential.
Last Tuesday’s election was about the social crisis that has followed the health crisis; about how the structure of the global economy has accentuated that crisis; and about the mortality of the human race, revealed so starkly to those who previously neglected it.
It was also the first significant reversion from the divisive, populist and digital extremism that has ravaged the political culture of some of the world’s most powerful actors: rational versus irrational; reason against fear.
Beyond Covid-19, for SA the 2020 US election was about two things. Who would win and govern the country for the next four years was, of course, one of them. But more profoundly, it was a referendum on the crucial role that the US will play in international relations over the coming decades. To that extent, it was about the cohesiveness — or otherwise — of multilateral processes and institutions, such as the World Health Organisation and the UN Framework Convention on Climate Change.
This is what will trickle down to the ground in SA.
The multilateral "world order", painstakingly built up in the decades following the end of World War 2, has been under pressure — and under attack from inward-looking nationalist-populists such as President Donald Trump and Brazil’s Jair Bolsonaro.
The global pandemic has added new, systemic pressure to the once-dominant norm of globalisation. But in truth, that shift began more than a decade ago.
The financial crisis of 2008 changed the world and its geopolitical landscape. As governments bailed out banks to ensure the necessary liquidity to stave off a depression, the average citizen waited in angst for similar, desperately needed relief. Only, it didn’t come.
The social and political impact was delayed by a few years, but as people began to realise that they were getting poorer — and that fiscal policies in response to the crash were mainly protecting the interests of a wealthy elite — so the domino effect was triggered.
When that realisation hit, it hit hard, and plenty of political opportunists were there to thrive on renewed support for populist, nationalist policies. With that came the looming threat of a repeat of the inexorable slide towards fascism that was the violent hallmark of the 1930s.
So the world built its walls up once again — politically, metaphorically and, in some cases, physically.
The Brexit vote and Trump’s electoral victory in 2016 were symptomatic of this shift towards more inward-looking policies and neomercantilism.
Adherence to international organisations and treaties, such as the critical Paris agreement on collective climate action, have been significantly undermined.
It was a poignant coincidence that the day on which the US formally left the climate accord was election day — November 3.
Political risk across the world has never been greater. So Joe Biden’s victory, and his immediate promise to return the US to the Paris agreement, matters for everyone, everywhere.
Love it or hate it, the US has long played a unique role as a global leader. For all the times it has erred in its exercise of power, so too has it often been willing to adopt a "redemptionist" stance on major conflicts.
For all his sabre-rattling talk, Trump, in contrast, has largely turned his back on the world, either declining to intervene or seeking to withdraw troops from places such as Afghanistan and Iraq.
In addition, his willingness to play fast and loose with democratic conventions and principles at home has reduced Washington’s influence further.
When secretary of state Mike Pompeo tweeted his concern about electoral fraud in Tanzania last Wednesday, he was widely ridiculed, given the outrageous, unsubstantiated allegations that his president was — and is — throwing around regarding his own election race.
Clearly, a Trump victory would have reinforced "America first" policies and fuelled the continued retreat of the US from its position as a global leader, further straining diplomatic relations across the world. Trade between the US and Asia would have continued to decline, and the US’s accession to several other international instruments would have been threatened.
With their tendency to react to short-term rather than long-term effects, markets may have initially responded more positively to a Trump victory. But Biden has it. The only uncertainty that remains is the further damage that a rogue president will inflict on the US democracy as he resists the reality of his defeat — either in attempting to cling to power or, when the reality hits that he cannot, in taking as many as he can down with him.
But Trump will soon fade into the realms of history, quietly or otherwise.
So, what next for the US’s place in the world?
From an economic viewpoint, the Biden presidency will create its own headwinds.
The election was the first significant reversion from the divisive, populist and digital extremism that has ravaged the political culture of some of the
world’s most powerful actors
"America first" policies won’t fall away entirely. Even in SA, localisation of products and supply chains is seen as fundamental to steering out of the crisis. Raising taxes, especially for wealthy individuals and corporates, and higher spending on social programmes will put pressure on the US’s growing national debt — generally speaking, putting pressure on the dollar.
This might be good for most emerging market currencies, including the rand. Unfortunately, the benefit might be short lived here, given SA’s fast-approaching fiscal cliff.
The rand rallied against the dollar as the Biden path to victory became clearer during election week, dipping below R16/$ for the first time since the SA lockdown was imposed in late March.
Why? The end of Trump’s isolationist approach, and Biden’s openness to repairing the US’s international trade relationships, especially with China and the rest of Asia, filters down to emerging market currencies such as SA’s with a positive effect.
In some respects, it is surprising that the market did not react more negatively to the Biden victory. Some early falls were countered by the positive sentiment that comes with certainty. It’s not the socialism or communism that Trumpites like to label it, but untrammelled free market capitalism is definitely losing popular political support during these times.
But it is over the long term that Biden’s win will reap its rewards. It has the potential to restore the US to its position as an influential global leader, to tackle global crises that will shape the next generation (particularly the climate emergency), and enhance and diversify international trade — with tangible, positive effects on emerging markets such as SA.
But the battle is far from won. Trump’s demise does not spell an end to the dangers that his presidency brought. Trump will go, but Trumpism will linger. The painful divide in US society, and the "culture war" that underpins it, will not vanish overnight.
The fact that Trump pushed the presidential race so close shows there is still plenty of appetite in the populace for his approach.
The Senate race will now swing this election, and the fate of the US for the next four years.
Both Georgia seats up for re-election will face January run-offs. If both flip from Republican to Democrat, it will mean a 50-50 balance of power in the Senate — with the vice-president holding a casting vote.
Over and above being the first woman vice-president, Kamala Harris is set to play a significant role in the next four years — more so than many of her predecessors.
However, if the Republicans retain either or both of the Georgia seats, Biden’s presidency becomes that much more difficult. A deadlock between the White House and Senate will prove a very difficult hurdle to overcome.
In fact, the Democrats overall face more difficult questions coming out of the election, despite having won the White House.
In many respects, if the Republican Party does retain its majority in the Senate, the election represents a good (perhaps even ideal) outcome for the party; many Republicans will be privately relieved that the erratic Trump era is over.
The first major post-Covid election has removed a maverick president from power. The electoral college made Biden’s victory appear more slender than it really was. In fact, on the basis of the popular vote, the margin was significant — more than 4-million votes.
In that sense, it was a victory for reason and decency over fake news and bigotry. For science over defiance.
The rest of the world can now plan for a future in which at least one big piece of a complex jigsaw puzzle is in place, leaving the world that much less uncertain.
*Citadel is a specialist wealth management and advice-led company that has partnered the Paternoster Group to provide key economic and political commentary and updates. The Paternoster Group, an independent consultancy, provides political risk and political economy analysis, and strategic advisory services
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