Spend any time on Twitter and you’ll start to see a tug of war.
Right-leaning tweets on one side. Left-leaning on the other.
Depending on whom you follow, your Twitter experience will tend to be right or left. Conservative or progressive.
Twitter may amplify the right according to a recent study. Source: Beta News
Now, put your head above the parapet and make a right-leaning comment to a left-leaning tweet. Or vice versa. And you’ll cause a mini storm of indignant replies, likes, and likes to the replies.
It’s fun, if not a little explosive.
The left sees the right as greedy, selfish, and ignorant.
The right sees the left as controlling, feckless, and profligate.
Then there’s the conservatives — who tend to be on the right, though not always. And the progressives — who tend to be on the left.
To conservatives, progressives are immoral snowflakes.
To progressives, conservatives are bigoted rednecks.
So, where do you sit on the spectrum of right/left, conservative/progressive?
This is seen most powerfully in US politics, where the divide is clearer than it’s been for a long time:
- The Republican Party tends to be right/conservative.
- The Democratic Party tends to be left/progressive.
But it’s more confusing in New Zealand. Where the National Party comes across as sometimes right. Sometimes left. Sometimes progressive. Sometimes conservative.
No doubt, they will tell you this is all part and parcel of appealing to ‘the centre’ or being ‘broad church’.
Even I’m confused.
In which direction is the developed world trending?
Voters are becoming more tribal.
Powerful tribes can turn elections.
We saw this in 2016, when Trump’s huge right-wing conservative tribe won the day. And here in 2017, where New Zealand First became the ‘kingmaker’.
President Donald Trump hugs the flag at the Conservative Political Action Conference in 2019. Source: Vox
For many in the Democratic Party, modern America was to be its golden ticket.
More prosperous and more diverse than ever. The Hispanic voting block being the largest driver of growth.
What they didn’t reckon for was that Hispanics tend to be more conservative. Often coming from Catholic backgrounds. After a generation, they tend to identify themselves as ‘American’. And share very Republican concerns, like the border.
Here in New Zealand, the fastest-growing ethnic group is the Asian population. Coming from ‘self-help’ countries, they’ve been attracted toward the National or ACT parties.
Is America — or for that matter New Zealand — going more ‘right’ in 2023 and 2024?
Current polling would suggest so.
A personal view
Now, as you may expect, as an investor writing for investors, I tend to be towards the right economically.
You see, growing up, I observed a transformation of economic opportunity.
Following the implementation of economic policy led by Roger Douglas in New Zealand — and Reagan and Thatcher in the wider world — my experience was a closed world becoming one of opportunity.
Roger Douglas, Finance Minister, opened up the New Zealand economy in the 1980s, though his reforms were controversial. Source: Stuff
So my world view is somewhat tinted by that experience.
Governments cannot generate prosperity. Only entrepreneurs and risk-takers can do that. These individuals need freedom and unimpeded incentive to flourish.
But, more and more, I’m acutely aware that the market — left to its own devices — sometimes fails.
And when it does, the effects can be pernicious.
Here in New Zealand, for two decades, centre-left and centre-right governments ignored market failure in housing. Or, worse, they stoked it.
They focused on economic growth from very high rates of net migration. But not the downstream problems of housing shortages and infrastructure deficits this created.
Now I see the centre-left actually managing the problem with a raft of measures to curb speculation and misaligned investment.
While the centre-right appears to be crying out for lower-wage migration. And incentivising speculative money to once again run into housing.
I also see the centre-right calling for tax cuts that appear to benefit the already well-paid. Surely these tax cuts would be better focused on those at that lower end of the income scale to help them move upwards? In particular, the first $15,000 tax free.
In short, my guiding view is served by that great slogan of the German Social Democratic Party of the post-war era in rejecting Marxism: ‘As Much Market as Possible: as Much State as Necessary’.
And both left and right are more than capable of going too far at both ends.
An investor’s view
As investors, it pays most for us to be apolitical.
After all, each of us has only one vote in these matters. Just one dollar to throw into the ring amongst a whirlpool of views.
An apolitical investor sees the trends, puts aside their preferences, and invests for the likely outcome.
Should their conviction play out, they’ll make money.
In this way, opportunities appear where you may least expect.
Italy heads to the right
I’ve been following Italian politics for some time.
Maybe it’s because I have some Italian heritage.
But, moreover, it’s fascinating.
The country changes governments like underwear — boasting some 69 in power since World War II.
Heralding the next change is the resignation of Prime Minister Mario Draghi. After right-wing and left-wing populist parties that had supported his coalition defected.
The cause of this has been the dramatic rise of the Brothers of Italy party in the polls and in recent local elections, changing the balance of power.
Giorgia Meloni on Twitter
The Brothers is a right-wing party led by Giorgia Meloni. Poised to become Italy’s first female prime minister.
The Brothers’ rise has been rapid. From scraping by, with just 4.8% of the vote in 2018, to becoming the biggest party in the opinion polls today with 22.5% support.
Should these polls be accurate, the Brothers could lead a group of right-wing parties. Likely comprising itself, Matteo Salvini’s far-right League, and Silvio Berlusconi’s Forza Italia.
The pandemic has helped bring these parties together toward a common goal. And it has helped the Brothers cement a lead.
So, what does Brothers of Italy stand for?
It seeks to protect the Italian identity with conservative family policies aimed at turning around Italy’s low birth rate. Like the Northern League, it favours lower, flat taxation, and crackdowns on illegal immigration.
It does not support the legalisation of gay marriage, adoption rights for gay couples, nor euthanasia. And believes every 18-year-old citizen should provide at least one year of military service.
One of their politicians, according to The Guardian, suggested women should stay at home and look after the children while men lay down the rules. Though perhaps The Guardian is left-leaning?
Of course, any seasoned observer of history will have concerns for Italy heading toward the far right.
The Mussolini government that led Italy to war was right-wing fascist. The Brothers descended from its lingering supporters. Though the party has since distanced itself from that and maintains it would still support Ukraine and EU membership.
Now, despite what you may think of Italy’s lurch to the right, life goes on.
In particular, should their economic policies be followed through, expect a boost in economic activity. Lower taxes will lead to more corporate profits. Family-focused investment, particularly targeting birth rates, will lead to more consumption.
Is this, economically speaking, Italy’s Roger Douglas moment?
What we do know is that periods of tax reduction and deregulation lead to growth in certain stocks. There may be other negative social effects. But, as investors, there is always opportunity.
And Italy is one country that could benefit from deregulation.
So, for example, we’re investing in a large REIT (real estate investment trust) in Italy. At bargain prices.
The bottom line
Left or right. Conservative or progressive. These are matters of ideology. And personal viewpoint.
In a democracy, the majority — or at least some part of it — will at times take power. And lead a new direction.
No doubt, the pandemic has been a turning point. The centre-left helped get us through. But it also overshot with controls, spending, and money printing.
The cycle is turning again. It needs to be navigated.
Perhaps you want to chat further on opportunities and threats facing your finances in this fast-changing world?
We have helped our Wholesale and Eligible Clients build and protect their wealth since the pandemic. Now we’re assisting them to position for the next turning point.
I encourage you to take a look at our new Wealth Planning Service today.
It’s apolitical. But could be very profitable.
Regards,
Simon Angelo
Editor, Wealth Morning
(This article is general in nature and should not be construed as any financial or investment advice. To obtain guidance for your specific situation, please seek independent financial advice.)