Democracy intact: Kotkin

The victory of Joe Biden over Donald Trump in the US general election is a “double repudiation” not just of Trump but of the “democracy in crisis crowd” who thought American democracy was under threat, argues historian and author Stephen Kotkin, the John P. Birkelund ’52 professor in history and international affairs at Princeton University.

The US system was not designed for good-hearted politicians, but to check the power of venal politicians and force consensus and coalition to get anything done, Kotkin said, speaking at a Conexus Financial event last week.

“The US system worked and the institutions are strong,” Kotkin said. “The genius of our system is that even with bad people we can sometimes get good results.”

Kotkin said the last time an incumbent president was beaten by a challenger with such a large percentage of the popular vote was when Franklin Roosevelt toppled Herbert Hoover in 1932.

Biden won because women in the suburbs swung massively in his direction, not because he increased his vote with traditional Democratic constituencies.

The result was also a backlash against racism, he said, with Americans increasingly mixed and in inter-racial marriages and no longer identifying racially the same way they used to.

Sponsored Content

“Trump’s vote among black people increased this time since the last time, 2016,” Kotkin said. “We know that 25 per cent or so of Americans are liberal, and 28-29 per cent are conservative, and 40 per cent are moderates. That’s the electorate and they repudiated the extremes. And give them credit, there was a kind of genius in that.”

With Biden having presented himself as someone who can unify both sides of politics, voters have “called Joe Biden’s bluff” by electing him with what is likely to be a Republican senate, although this won’t be confirmed until January, Kotkin said.

But deep divisions remain in American society and Biden will need to focus on possible areas of bipartisan consensus.

This could include providing broadband access to rural communities which are the base of the Republican Party, better funding community colleges and vocational education which educate more people than universities, and going after monopolies which dominate the economy and hinder new entrants.

“A deal can be made,” Kotkin said. “It requires Biden to govern from the centre and it requires Republicans to be cooperative, not obstructive. It remains to be seen, but I’m optimistic the option is there if both sides want to exercise it.”

Biden will also need to show he can build a working relationship with majority Senate leader Mitch McConnell, build a better working relationship with China, and manage the passions of the leftist wing of the Democratic Party, Kotkin said.

Stephen Kotkin will speak at the Fiduciary Investors Symposium on December 8.

Leave a Comment

NZ Super cuts benchmark return expectation on US valuation concerns

NZ Super cuts benchmark return expectation on US valuation concerns

A view that the US stock market is overvalued and equity risk premia will be lower over the long term has driven New Zealand Super to lower the return expectations for its reference portfolio following its recent five-yearly review of the benchmark. Co-chief investment officer Brad Dunstan also flags underweight commodity exposure as an area to address and explains why the fund remains sceptical of illiquidity premia despite seeing a growing case for private markets.

Sort content by

The path to net zero

Investors from Brunel, Wespath and Robeco talk about the challenges of shaping their net zero portfolios including data, benchmarks and holding managers to account.

The missing link: EM green bonds

Sustainability bonds issued by sovereign governments in developing and emerging markets offer exciting investor opportunities. The proceeds are used for impact and allow investors to target real change in sectors like health and education. Emerging market specialists describe how it could be the missing link to the ESG jigsaw.

Diversity: How to move the needle

Targets, allocating to diverse managers and acting on calls for change from diverse staffers are just some of the ways asset owners are boosting diversity in their own organisations. Investors at the Kresge Foundation, AP2 and AIMCo talk about their diversity, equity and inclusion action.

Bridgewater on the impact revolution

Integrating impact alongside risk and return is a revolution that will see more diversification among investor allocations to asset classes such as commodities. Elsewhere, it requires using multiple data sets to analyse stocks and sovereign bond allocations to see the real-world impact of a company’s product or services, and which governments are heading to net-zero. Bridgewater’s head of investment research Karen Karniol-Tambour explains.

Diversity doesn’t work without inclusion

Achieving diversity requires data, new recruitment practices and nurturing inclusion. And the financial industry must get its own house in order to better put pressure on investee companies.

Regulation and economics converge in ESG

Investors from Schroders, Trillium and PensionDanmark discuss how a changing regulatory picture and the economics of sustainable investment are coming together to create a tipping point in ESG, but they warn their peers to look beyond the label to what is on the inside.

Previous