What the Rise of Populism Mean for Traders – Introduction
On 8th November 2016, American voters went to the voting booth. The result at the end of the day shocked the world. Donald Trump had just done something that him too did not expect. It has been widely reported that Trump expected to lose the election. His victory upended everything we all know about politics.
A few months before that, the voters of the United Kingdom went to the polls too. They went to vote for or against the European Union. Many experts expected the remain side to win the referendum by a wide margin. When the results came in, the leave side had won, albeit with small margins.
Last year, the French went to the election. The final contest was between Emmanuel Macron and Marin Le Pen, a populist with a huge following. When the final results came in, Macron had won the election. But, Marin le Pen too had many supporters. In the next election, the dissatisfaction among Macron’s voters will likely hand the government to Marin Le Pen or one of the populist candidates.
When Germans went to an election, Angela Merkel won. However, the dissatisfaction with her policies made her lose the majority she has had since 2005. This means that there is a likelihood that a populist government could come in a short period.
The most significant thing happened this year in Italy. When Italians went to the election, they elected a populist government. Recently, the two populist parties merged to form a government.
In other words, the rise of populism is being seen around the world, including in small countries. For example, in the election held in August last year in Kenya, the residents of Nairobi voted for a populist governor. In Zimbabwe and South Africa, their old two leaders were ejected from office.
The rise in populism is associated with the current happenings in these countries where many young people are graduating from colleges and lacking jobs. When they find jobs, the wages are not as evident.
In the United States, Trump’s populism was more about the ‘forgotten men and women’ in states like Pensylvania and Michigan. These people felt that globalization had done more harm for them than good. For example, when NAFTA came into effect 20 years ago, these people lost their jobs, factories were shut, and more people became jobless. These people have never moved on since then.
The same is true in Europe, where most people feel that unelected officials in Brussels were making decisions for them. These are the leaders of the European Union. A good example is in immigration where Brussels has opened the door for immigrants. Some of these policies might look good in private, but many people are dissatisfied with them. They believe that immigrants introduce inferior cultures and deny them jobs. They have also accused immigrants of lowering their wages.
In the next short period, this populism will continue to rise. More countries in the European Union will continue to fight the EU, especially if the UK gets a good exit deal. Therefore, in all trading and investing decisions they make, traders must think about this and how it will affect their investments.