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TREND 3: A turn to the left…at least in the developed world

What do the 2020s have in store for investors? Big-picture thinker David Dowsett sets out the ten trends he foresees emerging over the next decade, along with their investment implications.

TREND 3: A turn to the left…at least in the developed world

Quantitative easing (QE), combined with global labour and product markets, has intensified inequality.

The average American CEO now earns 350 times the average American worker.

The sense that the rewards accruing to the elite who have gone too far is now widespread.

Even the Business Roundtable has recast its mission statement to include “Investing in our employees, dealing fairly and ethically with our suppliers and supporting the communities in which we work.”

A far cry from the dictum of Milton Friedman, who declared that “the only social responsibility of business is to engage in activities designed to increase its profits.”

While the charismatic populist leaders who have dominated the political airwaves have come from the right, the policy solutions gaining traction to address inequality have come from the left.

The policy initiatives of Elizabeth Warren, Alexandria Ocasio Cortez and John McDonnell may sometimes overreach, but they also strike a chord: A role for an activist state to moderate the excesses of capitalism is seen as broadly desirable.

The downsides of unfettered global trade are better understood. Policy initiatives for redistribution will surely follow. Expect:

  • more taxes on property and other forms of wealth
  • more initiatives to increase worker representation on boards
  • fewer stock buybacks – expect more ‘worker investment’.

The Green New Deal (or a version of it) may become the millennial take on Kennedy’s vision to put a man on the moon.

These policy developments are likely to occur regardless of whether the elected leaders are actually from the left. Witness the recent fiscal expansion of the UK Conservative government. The right may need to look like Gaullists if they want to remain in power.

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