Brexit, Trump....What Next?
I don’t have an extensive
knowledge of Chinese curses, but one I do know is the expression ‘May you live
in interesting times’. This curse is based on the fact that in human history,
‘interesting times’ have tended to coincide with upheaval, disorder and conflict.
In many of the developed parts of the world we have had an unprecedented period
of relative calm and stability, and in this post I will look at the changing
political scene over the last few months, what it forebodes and whether ‘interesting
times’ lay ahead.
My last post back in June on
the eve of the Brexit decision spelt out the situation ahead of the critical
vote regarding the future of Britain, and concluded that an independent
Britain, free of the diktats of the European Union was a better option than
being saddled to a flawed euro project that would shortly be going over the
edge of a cliff. It is now clear that a majority of the voters agreed with that
sentiment as the Leave camp won the vote by a slim margin of 51.9% to 48.1%.
Any hope that a result would
bring an end to the bitter disagreements between the two sides however has
completely evaporated, with the following weeks and months being marked by
political turmoil within Britain, increasingly hostile comments from some
European politicians and an ongoing legal challenge designed to prevent the
British Prime Minister Theresa May from triggering a formal exit without the
approval of Parliament. The binding referendum may not end up as binding as the
‘Leave’ voters envisaged.
Whilst the Brexit aftermath
held the news headlines for a while, it was soon relegated as the race for the
US Presidency took centre stage. The contest has been compelling viewing right
from the start. From the nominee process, through the race itself and the final
vote, with the Trump victory coming as a complete surprise to so many people
and the subsequent reaction so similar to that in Britain post Brexit.
So are there similar themes
with these two results and can a greater understanding of that connection shed
some light on what we will face over the next few years?
The simple answer to those
questions is yes.
For the specifics of our
current issues we need to go back to the start of the 1980’s. As we are all
aware, the decades since have witnessed a huge number of changes in many
aspects of people’s lives, but some have been particularly influential:
·
a massive uplift
in housing values leading to wealth for some, but increasing financial strain
for many others;
·
a general
movement in manufacturing and production jobs from developed to less developed
countries leading to a reduction in the number of jobs available for the lowest
skilled;
·
an increase in
mass migration as a result of religious and geo-political tensions leading to
increased competition for lower grade work, stagnant wage growth and most
importantly, an increase in racial and religious intolerance;
·
an increase in
the ‘consumer society’, with the stampede for new, more or better, fostering
general dissatisfaction with one’s lot.
·
an upsurge in the
level and extent of political corruption leading to an increasingly angry and
discontented electorate.
Obviously these trends have
not influenced every country, region or individual equally, but they have
provided the driving force that has led to this division within our societies.
If we now look back at the
Brexit vote, it is easy to see where these Leave voters came from. They were
the huge numbers of people that have seen their living standards drop, their
jobs dry up, their neighbourhoods forever changed by massive immigration, their
power to change the system stolen from them by lying, corrupt politicians on
all sides; and their cries of complaint silenced by a political elite that
didn’t want to hear it, and that actively labelled as ‘racist’ anyone that voiced
it. Locked into this cycle of despair, is it any wonder that when an
opportunity came about for a protest vote they grabbed it with both hands and
said ‘Up Yours!’ to the establishment.
If we now apply this thinking
to the US
election the parallels are obvious. Trump won because he got the protest vote
from those Americans that are not doing well. The regional voting split in both
Brexit and the US
elections bear this out. With Brexit it was the areas that have been hit
hardest that voted to leave, and the harder they have had it over the last few
years the higher the leave vote. With the US it was the same story. After
years upon year of elections creating absolutely no change for the majority of
the working class in the US,
finally there was an opportunity to vote for a non-establishment figure, and
they took it.
Yes, I know that Trump ran as
a Republican, but in reality he is an independent because his wealth allows him
to be. With every other president they are already in somebody’s pocket before
they even get to the Whitehouse. From the moment they walk through the doors of
the Whitehouse they lose any ability to reform the system, whether they were genuinely
minded to or not. It’s Trump’s ability to act independently along with comments
like ‘draining the swamp’ that scared the Republican elite into supporting
Hillary against Trump and the interests of their own party. They would rather
have seen a Democrat in the Whitehouse than see someone finally get a grip on
the corruption and end their gravy train. This is precisely the kind of
behaviour that many voters are sick and tired of, and only reinforced their
belief that a vote for change was needed.
We can now see that it is the
leaving behind, economically speaking, of a large part of society that creates
the conditions for what will follow. As the wealth gap widens over many years,
the feelings of disenchantment and animosity grow, resulting first in disengagement
from and an apathy towards the political process, but finally in feelings of
anger and rebellion that manifests in large voter turnouts and support for change
in the political system that has failed them.
If we now look around the
world we can see that there are numerous countries that mirror what Britain and the United States have experienced over
the last thirty years, and their populations will likely be feeling the same
way. The opinion polls in many European countries are supporting this view,
with support for independent or anti-establishment parties rising steadily. The
upcoming elections in France,
Netherlands and Germany will likely reshape Europe
in a way that would have felt unthinkable only a year ago.
I think there is a distinct probability that
the voters in these countries express their dissatisfaction with all that has
occurred over the last few years and vote out the incumbents, replacing them
with politicians of a more nationalist, populist persuasion. This will put Europe in the bizarre position of a European Union strongly
pursuing a federalist agenda, whilst the member countries move increasingly
away from it.
In theory this shouldn’t be a
problem, as the agenda for the European Union could be redrafted to better
represent the changing outlook of its member states. However, back in the real
world, the European Union has been pursuing its own agenda for years, and could
care less about the opinion of the average European citizen. We could easily
therefore be in the position of the European Union heading in one direction,
whilst the people of Europe head increasingly in
the other. This is not a recipe for a happy ending, and unless the elite of the
European Union accept that they are at odds with the will of the peoples of
Europe, then it threatens to pull Europe
apart.
When and if that time comes,
we would like to think that these people in power could accept the result of
the democratic process, however much at odds it is with their own personal
views, and however detrimental to their personal ambitions. However, Brexit and
Trump’s election have shown us that it is unlikely to be the case. These people
of influence and power do not relinquish control easily, especially when it
means an end to their time at the feeding trough.
But wider still, the reaction
we have seen from those on the losing sides in the aftermath of those two
events paints a very unpleasant picture of what we can expect. We seem to have
lost the ability to put ourselves in someone else’s shoes. To see the world
from their perspective and understand those things that have shaped their
decision making, even if we disagree with it. The wailing and gnashing of teeth
and the level of vitriol from some of those on the losing sides has been
incredible. The sense of loss, of frustration and fury at the defeat has seen
some verbal attacks of an intensity and ferocity that seems completely
disproportionate. We are seeing almost no attempt to understand why the
majority of people voted how they did and simply resorting to labeling all of
them racists, red-necks etc. Instead of coming together and moving forward,
opinion is polarizing further, and creating rifts that will be hard to heal.
In the case of President
Trump, it’s his lack of credibility that prevents many opponents from accepting
his victory. The view shared by many of his opponents that he is a sexist, misogynist,
racist, narcissistic, egotist means they are still dumbfounded as to how anyone
could vote for him. They don’t see him as a good candidate or as a viable
president of the US,
and certainly not the best person for the job. But on this issue they are
really missing the point. The majority of people didn’t vote for Trump (or
Brexit for that matter) because they weighed up the arguments and thought that
was the right decision. Instead, they saw what the establishment wanted and
voted against it. It was a protest vote, pure and simple. In fact in regards to
the US
election, had Donald Duck been running rather than Donald Trump he would still
have got in because it wasn’t a vote for anything, but against the
establishment. And there was no greater establishment figure than Hillary
Clinton.
In the big scheme of things
it is pointless to debate whether Trump is the right man for the job. Will he
be a good President? Judging by how he acted throughout the election process, almost
certainly not. But would Hillary have been any better? That depends on where
you are in the societal pecking order, but the answer is probably better for
some, not for others.
It is important to realise however that
irrespective of who is running the show, the outcome is baked in the cake.
Those Americans that have been left behind and been silent for so long, have
finally woken up and spoken, and the word was ENOUGH. They are not going to go
away. And no amount of dragging the chain by those in power that have profited
for so long will prevent it happening. Whether it is Trump or whoever follows
him, the momentum for change is building. It is the same situation in Britain, and the trend will move throughout Europe to the rest of the world.
Brexit may have been the first
indicator that something was different, but Trump’s election has shown that it
was not a one off. The opportunities for citizens to express their disapproval
will come thick and fast this year, and it will likely have some profound
effects in ways we are only just beginning to understand.
It would seem that ‘interesting
times’ do indeed lie ahead.
The Markets
As you can probably guess,
these trends will have huge impacts on financial markets. My long term views of
rising Stock Markets, US Dollar, Precious Metals and Global Interest Rates are
partially derived from my big picture view of the wider global economy. I am
overdue for an update on these markets but I felt this post was important in
establishing the political backdrop we will face.
I hope to get another post
out by early February.
Regards
Paul
