US Election: Red Flags For Investors (Part 1) – OpEd
The implications of the upcoming US election are obviously very important not just for American citizens, investors and ordinary savers, but for the rest of the world too. Economic, fiscal and monetary developments and trends that take place in the US influence the global economy in a major way, and the policies that are adopted there often come to define the rest of the West. After all, central planners in general tend to think alike and seek to confirm their own misbeliefs and biases through the actions of their peers.
Any attempt to describe and properly capture the level of political division, social friction and infighting within the American society, especially since the start of this year, will probably result in an understatement. It is clear by now that the nation is buckling under the pressure of months of social unrest, violence and extreme polarization. Mainstream media, social networks, “experts” and celebrities, all seem to be very content with their role in aggressively fueling the flames and widening the rifts that divide the American people. And if one were naive enough to expect any sort of maturity, calm, pleads for unity or even just simple civility from the political leadership of either major party, they’d be deeply disappointed.
This became abundantly clear in the first Presidential debate, between Donald Trump and Joe Biden. Any hopes that the downward spiral in the quality of political discourse we’ve been witnessing for at least the last decade would end with this election, swiftly evaporated within the first few minutes of the debate. Many viewers already gave up at that point, as the boorish exchanges, the constant interruptions, the kindergarten-level name-calling was too high a price to pay for what turned out to be for a 90-minute-long vacuum of actual policy discussion. Unfortunately, this kind of deterioration in the quality of political debate is hardly unique to the US. We see it increasingly in other parts of the world, as political camps and their strategists appear to have fully embraced, wittingly or not, a Hegelian approach, as they promote and fuel the flames of false divisions, “divide and conquer” tactics and overall hostility among the citizenry.
In any case, to those patient and brave enough to suffer through the entire performance during that debate, a couple of things probably stood out. First, unless one is a partisan fanatic, it was painfully obvious that, while it can be argued that one candidate might be better than the other, neither of them is actually, objectively good. If the times weren’t as polarized as they are, if there was more space, time and will for meaningful, honest and civil discussions and if we could magically strip away the radicalizing influences of social media and mainstream news, it is highly dubious whether we’d end up with the same two choices for the world’s top job. In a country of 330 million people, with rich, diverse ideas, beliefs and backgrounds and with a history of cherishing independent thought, speech and rights, one would have thought that it’d be easier to find leaders that better reflect the nations’ rich and complex identity, putting forward realistic ideas that seek to protect its citizen’s hard-fought individual rights. At the very least, one would expect said leaders to be mindful of the country’s history and to put those individual rights above the interests of the State, above collectivist pressures and lobby groups and certainly above personal interests, petty political point-scoring, and self-serving, hollow catch-phrases and promises.
Another interesting take-way was that the two camps seemed to be arguing about two entirely different versions of reality. The very basis of the discussion, in this debate, as much as in all the rest of the arguments that are taking place in the mainstream today, seems to be compromised. The two sides, “left vs right” and whatever that distinction may really signify these days, cannot even agree on what is happening, on what the problems are, let alone on what to do about them. There is no such thing as a commonly accepted set of facts and this is a serious concern for those of us who actually rely on them to make important decisions, to plan ahead and to protect our future.
Throughout the presidential debate, its most recent vice-presidential equivalent, but also throughout this entire campaign season, not one serious word has been uttered about the astronomical levels of debt that the nation has accumulated, the surreal deficits it’s running, or the ever elusive “how you’re gonna pay for all the free stuff” question that no journalist or debate moderator seems to care about anymore. Both sides appear to be obsessively focused on “providing support” to the economy, either for the artificial recovery in stock markets or through checks, handouts and new government jobs, all fueled by more debt and on the back of the taxpayer.
All this has very serious implications for citizens and investors, and not just for those in the US. This open acceptance and full embrace of the idea that “deficits don’t matter”, once considered a fringe concept of the chronically innumerate extreme Left, is not only setting the pace for the US economic outlook of the next four years, but it’s also introducing the framework of the policies we can expect to see, and are already seeing, in the rest of the West. The covid crisis has fired the starting pistol in a political race where only spending promises matter, stimulus programs and free lunches, while no-one, nowhere, seems to care about the bill that will arrive at the end of this feast.