The Financial Times has recently added an interesting new Opinions columnist, Rana Foroohar. In her column yesterday, she writes that while the Democrats believe that they lost the presidential election because of misogyny and racism, the more likely cause is wage stagnation and job insecurity. In other words, long-time Democrats voted Republican in the last election in spite of the victors’ abhorrent social views, not because of them. Further, she implies that by continuing to seek favor from large corporates as well as by taking up the former Republican mantle of mindless legislative obstruction, the Democratic party risks further establishing itself as part of the economic problem, not the solution.
Clearly, the Democratic leadership doesn’t believe this, although personally I think Ms. Foroohar is correct. Moreover, as Ms. Foroohor notes, the issue of job insecurity and wage stagnation is a dynamic one, not static. As recent research from the University of Cambridge suggests, and the emergence of self-driving cars illustrates, the range of human tasks subject to replacement by machines is continuing to expand, putting more blue-collar jobs as well as some white-collar occupations as risk.
So this central issue is not going to go away. It’s going to get bigger.
Social issues aside, a stock market investor must, I think, address two questions:
–how to participate through stock selection in the substitution of hardware/software capital for labor, and
–how closely continuing political dysfunction in the US resembles the situation in Japan thirty years or so ago, in which a foolish political defense of the status quo in the face of structural change has resulted in a decades-long impairment of GDP growth there.