Trump and Friends: The one with Ross as commerce secretary
Investor Wilbur Ross has always had an eye for a deal, but is he the right choice for an economy that is embracing new technology faster than any other?
Donald Trump with Wilbur Ross after their meeting in Bedminster on Sunday
Billionaire investor and ‘king of bankruptcy’ Wilbur Ross – a vocal Trump supporter throughout the presidential campaign – is set to be the next US secretary of commerce.
He's an unusual pick for such a prominent job as secretary of commerce, given he is turning 79 at the end of the November – although Trump, aged 70, doesn’t appear to be concerned by having septuagenarians in his cabinet.
Jeff Sessions, put forward as attorney general, will be 70 this year. Former New York mayor Rudy Giuliani, strongly tipped for a cabinet role, is 72. Mitt Romney, who is a candidate for secretary of state, will be 70 in March.
Ross is an accomplished businessman – amassing a net-worth of $2 billion – who understands the US economy and that of its peers in a context few others can claim to.
Seeking out distressed investments means he has an eye for a deal, while his engagement with European governments post-crisis to bail out banks such as Bank of Ireland, Bank of Cyprus and Greece’s Eurobank also means he is well-respected by governments and central banks.
Ross is revered by the finance community, too. Bankers in Asia told Euromoney Ross had recently been on a visit to the region, and had not demurred when asked about his potential to take a senior role in the Trump administration.
However, Ross’s view of economic growth and industry, like many of his generation that look set to advise the new president, could be perceived as outdated. Ross is known for advising on restructurings in the steel and coal industries, and betting on oil and gas. His personal business agenda has not included clean energy, digital innovation or tech, and certainly not the sharing economy.
In an interview with Euromoney earlier this year, Ross gave his view that some of the blame for the slow return to GDP growth since the financial crisis lies at the door of millennials. In addition to over-regulation of banks and central bank policy, the millennial “sharing concept of the use of things rather than ownership” was a “problem with large implications for all of finance”, he said.
It’s not hard to surmise that the sharing economy could possibly impact growth of, say, hotel construction, house building and car sales – although no hard data exists that connects the growth of one to the decline of another – but the sharing economy is not going to subside, unless it is curtailed by legislation.
Such talk of legislation sends fear into the hearts of millennials who rely on companies such as Uber, Airbnb and TaskRabbit, and with ideologies that support sharing over ownership. This year, 27 million people in the US will use the sharing economy at least once according to research from eMarketer – that’s almost 11% of the adult population, growing to 15.3% by 2020.
And according to PwC, the sharing economy is only going to get bigger. Peer-to-peer accommodation revenues are estimated to grow annually at a rate of 31% from 2013 to 2025 and car sharing at 23% globally.
The appointment of Ross to secretary of commerce – a role that involves promoting American businesses and industries – could mean that younger and ‘new economy’ entrepreneurs will be under-represented in a regime that harks back to the policies of the 1980s.
If that becomes the case, the US – known as a leader in entrepreneurship and innovation – might instead become bogged down in fossil fuels and real-estate construction while the rest of the world moves on.