Mercifully, the 2016 election is behind us. In hindsight, the polling data had it all wrong. The perception that Donald Trump’s path to 270 was too narrow proved to be inaccurate. Republicans will now retake the White House after eight years in the wilderness. The GOP also maintained control of the House of Representatives as well as the Senate. Make no mistake this was an historic victory for the Republican Party.
The lasting legacy of this election is the rise of the populist voter. Virtuous citizens believing (rightly or wrongly) that they are being mistreated by a small circle of elites, who can be overthrown if the people recognize the danger and work together. As our Chief Investment Officer Krishna Memani opined on the morning after the Brexit vote: “In the aftermath of the financial crisis, perhaps it shouldn’t come as a surprise that uninspiring economic outcomes lead to unexpected political outcomes—or at least those considered outside the mainstream.” With apologies to Elvis Presley, 59 million Donald Trump voters and 13 million Bernie Sanders supporters can’t be wrong.
As the authors of the Compelling Wealth Management Conversations program, the rise of populism places us in an interesting predicament. We recognized the systemic failures of American institutions during the 2008 financial crisis, and sympathize with the plight of select American workers.
Economic recoveries from financial crises are usually weaker than those we see during normal upturns. It’s the biblical seven years of plenty followed by seven years of famine: “Then all the abundance in Egypt will be forgotten, and the famine will ravage the land.” Even nine years later as world economic activity continues to expand at a modest clip, there is still more work to be done to support American families. Partisan politics aside, our leaders must do more to sustain American workers who have suffered from free trade and the automization of jobs.
And yet we can’t help but espouse our view that the world continues to get better for most inhabitants of planet Earth. Even a cursory glance at the 2016 election could leave one believing that the world is coming apart at the seams. As students of history, we know this to be anything but the case. Consider:
- Global gross domestic product, or the total value of goods and services produced, has exploded from $1.3 trillion in the 1960s to over $73.5 trillion today.
- That’s 56 times more economic activity produced by only twice the number of people.1
- The extraordinary achievements of the past 50 years were marked by a dramatic expansion in global literacy and a significant rise in the middle class. It is estimated that by 2025, half of the world’s population will be in the ranks of the middle class.2
- The world is significantly less dangerous. Battlefield deaths once killed on average more than 500 out of every 100,000 people. Battlefield deaths are now down to three-tenths of a person per 100,000.3 One life is far too many but to suggest that the world has never been violent or uncertain is to misunderstand history.
In aggregate, the average American is healthier, lives longer, enjoys more time in leisure, and enjoys a more luxurious lifestyle than at any point in history.4
The path to a more equitable and free society does not end with this election. The theme of President-elect Donald Trump’s candidacy was “Make America Great Again.” It is our hope that President-elect Trump governs more in the manner of the famous Langston Hughes quote: “Let America be the dream the dreamers dreamed.” The journey continues.
Now, we await the peaceful transfer of power from the Obama Administration to the Trump Administration and marvel at the splendor of our democracy. We remind ourselves that a free people in a free society living under the rule of law will continue to innovate and improve their lives in ways we can’t even yet imagine. While the unexpected outcome of this election may still disrupt markets in the near term, we rest assured knowing that well-positioned, well-managed companies will continue to transform and create great value for their shareholders as they have always done, regardless of who has occupied 1600 Pennsylvania Avenue.
Compelling Wealth Management Conversations is a program designed to help provide philosophical and historical context and perspective to keep investors “buckled in” and stay the course during uncertain times (and when have times not been uncertain), while providing a framework to help identify the best opportunities going forward.
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1 Sources: World Bank and U.S. Census Bureau, 12/31/15.↩
2 Source: Brookings Institute, 2012.↩
3 Source: Statistics on Violent Conflict, 2013. Associated Press↩
4 Sources: Federal Reserve Bank of Boston, Statistical Abstract of the United States, International Labor Organization, Bureau of Labor Statistics, 12/31/15.↩
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These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.