Monday, April 3, 2017
Populism Prevails over Policy
Ray Dalio, billionaire founder of the world's largest hedge fund Bridgewater, posted an 81 page report titled "Daily Observations" detailing the rise of populism and its potential impact on markets.
The report proclaims that it is an examination of populism, the phenomenon -- how it typically germinates, grows and runs its course. The article notes that populism is at an 80 year high and justifies it using a proprietary "Developed World Populism Index".
“We believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies,” Dalio and three Bridgewater Associates colleagues wrote in a “Daily Observations” report obtained by Bloomberg.
It has been interesting to watch Dalio's view on the market shift from the time of Trump's election, where he predicted that Trump would ignite "animal spirits" to a level that resulted in substantial growth. Dalio now seems to have changed his tone and likely his portfolio to match in light of the populism that seems to be moving forward as a counter force to globalization.
https://www.bloomberg.com/news/articles/2017-03-22/dalio-says-populism-may-be-stronger-than-fiscal-monetary-policy
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2 comments:
It has been interesting to see how Trump has somewhat changed his tone in regards to economic policy since assuming office. Specifically, his proposed tax plan and attempt to "repeal and replace" Obamacare would have the effect of hurting many of the very working-class individuals who propelled him to victory in the first place. In this way, the populist rhetoric and emotional appeals employed during the campaign trail seem to have been replaced by a traditional free-market approach. Moving forward, I wonder whether he'll continue to push for policies like a "border-adjusted" tax with China and Mexico.
Ontologically, the consciousness of the voters goes beyond theory in academics, and relates back to their shared history, experiences, and culture. What may in theory be best for their betterment economically, the history, experience, and their own subjective reality is stronger and more powerful in driving their actions. When leaders rhetorically tap into those shared feelings and beliefs, it does not matter if the leader gives shallow promises or impossible objectives- it matters more that the voter has been heard. As the embedded global liberal economic system fails the working class and continues to widen the gap between rich and poor, it will be easier and easier for leaders to tap into a consciousness of people who feel victimized by the current economic environment, and theoretically valid economic policy will become irrelevant in the wake of shared consciousness.
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