Market Thinking

making sense of the narrative

Will a Jedi Return?

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Note, this is not intended as a judgement on the likely outcome of today’s US Election. Instead it is intended to raise some long term structural conflicts which exist, but are to some extent concealed behind our traditional left/right or Democrat/Republican conventions. Regardless of the outcome, these conflicts will persist and continue to shape the investment landscape.

When George Lucas began writing the Star Wars saga, he was reportedly thinking about Vietnam and the way that Democracy becomes a dictatorship, so in that sense the allegory has always been one of political structures. The rise of so called Populism, most obviously expressed in Brexit and the Election of Donald Trump in 2016, but also foreshadowed by populists movements in Italy, Greece, France and Germany, was essentially a push back against the Globalist Elite vision for the world of no borders and a Global Governing Class (GGC) as represented by those flying in by private jet to the World Economic Forum at Davos every year and structured around Climate Change and now ‘The Great Reset’. China was first embraced and then criticised for not adhering to the Rules based International Order as decreed by the western governments and the multi national corporations that comprised the GGC. The conflict between the Globalists of the GGC and the nationalists and Populists is not over and will continue to define our economic, political and investment landscape.

The rise of Populism was aimed at delivering ‘ A New Hope’

The Global Financial Crisis of 2008 was the first shock to the certainty of the GGC ‘Empire’, triggering reactions such as Occupy Wall Street and discussions of inequality within western society, with many fastening onto (but not actually reading) the books of Thomas Piketty. However, the populist, rebel alliance really began to gather support in the wake of the European Banking crisis that followed in 2010/11. In Italy, the Empire installed a technocratic government in 2011 under former EU Commissioner and Goldman Sachs banker Mario Monti, triggering a populist backlash and the arrival of Five Star as a major political movement in the 2013 Elections. In early 2015 the Syriza party was elected in Greece to fight the dramatic austerity measures demanded to bail out the country in 2010 – although they ultimately appeared to back down. Then of course came Brexit and Donald Trump and while the populist wave threatened to take France as well in 2017 with Marine Le Pen, the GGC managed to stem the tide with the election of the Globalist Macron.

This then is the variation of the Rebel Alliance that was documented by Lucas in his first Star Wars film – subsequently subtitled ‘ a new hope’. It is not the traditional left versus right, it is what has been termed the Citizens of Somewhere versus the Citizens of Nowhere. The GGC versus the populists.

But with Covid, the Empire has decidedly managed to Strike Back

What is clear however, and to continue our analogy, is that with Covid the Empire has Struck Back. The economic crisis the world currently faces is not down to a collapse in demand through a plague, but down to a policy induced collapse of both demand and supply in the anticipation of one. Ignoring all previous epidemic planning and based on modelling from Imperial (!) College, the GGC has imposed a near universal policy of economy-destroying lockdown, while suppressing any dissent from their narrative of a deadly disease to justify their measures. In this, not only do we have the establishment conspiring to reduce dissent – in the UK Ofcom guidelines restrict discussions questioning government health policy for example – but the billionaires of the Big Tech Oligarchy are joining in. The CEO of google for instance has declared that anyone contradicting the official WHO line on Covid will have their YouTube videos taken down.

The logical fallacy playbook of the Globalists is being used for Covid

Here it is interesting to notice the strong similarity in tactics for dealing with critical opinion between Covid lockdown supporters and Global Warming supporters – of which there is of course a significant overlap since both are part of the Globalist UN Agenda 2030. Stage 1, action is demanded by lobbyists on the basis of dramatic ‘projections’ based on mathematical models. These models are based on carefully guarded and curated data-sets with little transparency and seemingly only available to those modellers. Moreover, the media are encouraged to focus on the worst case scenarios. The logical fallacy of Appeal to Authority demands that we do not question their models or their motives. Stage 2. Anyone who nevertheless does question either the data or the predictive power of the modelling is ‘shut down’ even to the extent of being denied freedom of speech. This is the logical fallacy of Ad Hominem attack. The expression ‘denier’ is used both to shut down and as a conscious ad hominem and aligned with the term ‘conspiracy theorist’ to further undermine the credibility of anyone questioning the orthodoxy. At no point is the science actually debated, it is declared to be ‘settled’. Stage 3. The lobbyists then use the logical fallacy of Appeal to Emotion, citing polar bears or not killing your granny. The reality is that both locking down and not locking down have costs and benefits (as do most aspects of a zero-carbon policy), but those framing the agenda only focus on the costs of not doing what they say. They also employ the logical fallacy of The Straw Man – “so you are saying we should just let it rip?”- declaring your position to be something easy to knock down. This of course is also another logical fallacy known as a false dichotomy or false choice. The choice was never only between full lockdown and nothing, in the same way it is not between zero carbon and doing nothing. On Covid, the Swedish policy was and remains a sensible one, but by imposing the false middle between a (lobbyist preferred) action and a false extreme, you end up with the worst of both worlds (known as the fallacy of the false middle).

Thus we can see that the Imperial tactics employed are not new and importantly their very success in creating the Green Industrial Complex means that they will likely continue to be used to promote other GGC policies. Aggressive PR campaigns (Whitehall has over 4000 press and communications staff, which is more than the Department of Trade and Industry and Treasury combined) are used to terrify the populous to support a course of action (Project Fear on Brexit was another, albeit unsuccessful, example of this Imperial process). The populous are then polled on their ‘opinion’ and these polls are used to justify the government’s pre-determined course of action. Thus government by decree is given a spurious democratic legitimacy. As investors we need to be alert to this deliberate manipulation of narrative, for as we saw with both Brexit and Trump, it does not always work and then we need to adjust our perceptions quickly.

In a fascinating article in the American Institute for Economic Research , Jefferey Tucker goes a step further and highlights how in fact this actually represents a return to the old caste system, where the poor were allocated the task of building herd immunity from disease while the rich retreated to their ‘manor on the Hill’. At a global level this extends to a dramatic reversal in the improvements seen in reducing extreme poverty. Inequality is going to get bigger not smaller and while it may not be through the form of taxes, wealth and assets are going to be redistributed too.

For it is also quite clear (should we choose to look) that as well as the poor, those bearing the brunt of the measures are the self employed, the small business owners, those dependent on state provision of health and education and those who can not work from home. Small businesses are going bust and they will be replaced by those with access to cheap finance, who are unlikely to be the same people. On the other hand, those who work for the state or contract their legal or consultancy ‘services’ at high prices are barely affected. Most of them have been able to work from home, have access to gardens and supermarket delivery, can educate or tutor their children privately and visit their second homes, including ones abroad. In the UK then, the Remain voting hotspots in London and the South have fared much better than the Brexit voting North and Midlands. Equally those inside the peripherique have done much better than the Gilet Jaunes and those in the countryside. This is not so much a deliberate plan, rather that those in power are pursuing policies that mainly negatively affect other people rather than themselves. It is a classic principal/agent problem, where the returns of the principal are affected by the risks taken by the agent, not on the principal’s behalf, but the agent’s. In economics this is known as Bastiat’s principle of the broken window – ‘that which is not seen’, the ‘opportunity cost’ of what would otherwise have happened but did not, as well as the unforeseen consequences of our actions.

To return to today’s Election, as previously noted, the Globalist plan for the UN Agenda 2030 and its slogan of Build back Better have been eagerly seized upon by both Boris Johnson in the UK and Joe Biden in the US and represent a clear attempt to return to the pre-rebellion agenda. To the extent that the return of Covid to the front pages was deliberately engineered to help the Biden campaign, for whom Covid has been almost their only line of attack, we will only be able to tell with hindsight, but even if this fades as an excuse, we have to say that it looks like the technocratic elites are in the ascendancy and that a Biden victory is seen, by them at least, as being good for their agenda.

A Trump win, by contrast, would be a set-back for their agenda. He does not want the Paris Accord, nor to buy into the Sustainability agenda with its associated taxes and distributions. He will continue to attack the Crony Capitalist system of lobbyists and Congressmen who are little more than perpetual fund raisers and he will continue to challenge the dominance of Wall Street, Big Pharma and the Big Tech Oligarchs. This is not to say he is a Jedi master (not in the slightest), but it is to say that, as with Star Wars, the forces of populism are not going away if he loses. The person that replaces him will likely be even more explicitly ‘populist’.

Indeed, to mis-quote Obi Wan Kenobi’s line to Darth Vader “If you strike him down, Populism shall become more powerful than you can possibly imagine.”

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