Dawn of a new age:Populism rules.Status quo–R.I.P.

As highlighted (here) investors are witnessing an electorate split betweenextreme right and extreme left. It is global and it is fuelled by dissolution oflabour markets and stagnating productivity. Low equilibrium is akin to a lowgrade fever (slowly destroying social fabric). As discussed in the past (here),we view secular stagnation itself as a manifestation of structural shiftsunleashed by the Third Industrial Revolution, aggravated by side-effects ofmonetary policies. These are inaugurating a new age of ‘declining returns oncapital and humans’. Hence, capital and people are rebelling.

    It is the reverse of 1980s-90s, when left and right converged on the centrerightstrategies of globalization and the belief the private sector knows best.

    Whether it was the left (Blair, Clinton) or the right (Reagan, Thatcher, Bush),consensus favoured deregulation and private sector-led growth. Thisconsensus has been dying for a decade. Whether left (Sanders, Warren,Corbyn, Clinton) or right (May, Le Pen, Trump) consensus is now the publicsector must play a larger role sponsoring growth directly, or by co-opting theprivate sector, and the pace of globalization must be slowed (or reversed).

    Also, locals must have preferential treatment (from trade to immigration). Theworld is now more exclusive in response to the people’s cry for ‘salvation’.