Anti-market sentiment in the U.S. is gaining momentum with both Democrats and Republicans, according to David Frum, a writer at The Atlantic, during the keynote session at the Canadian Investment Review’s 2024 Risk Management Conference.
The latest election cycle is showing voters are interested in how an economic idea is presented and by the type of person delivering the message, he said, noting people who would typically vote Republican are growing weary of whacky characters in the political landscape.
“The kind of person who, in the past, has been a Republican voter now looks at this collection of weirdoes . . . [and says], ‘I want no part of this.’ And that’s the story of every election cycle since 2016.”
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Frum is also curious about the ongoing impact of borrowed money by governments around the world. He shared a story about his late father who was on several corporate boards and would ask these boards how any significant idea would look if interest rates went up two points. His father was frequently met with questioning looks from his fellow board members who were accustomed to interest rates going down. But following the effects of the coronavirus pandemic, interest rates are a significant challenge for governments.
“The whole question of debt and deficits and how we provide for an aging population, that has come crashing through the floor and we are all addressing it again, except in the United States, there is no plan from either party to seriously address it.”
Indeed, a rush of new retirees from the baby boomer generation will put a strain on the funding of social security benefits and Medicare in the U.S., he said, noting he doesn’t see a lot of plans for how it’s all going to be funded when “borrowing money costs real dollars.”
Frum also criticized an attempt by President Joe Biden’s administration to tackle climate change solutions through subsidies in the Inflation Reduction Act, saying it hasn’t yielded the expected return on investment. Climate change events aren’t going away, he added, and are impacting people directly; for example, homeowner insurance policies in Florida are becoming unaffordable from extreme weather events.
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And as the political cycle continues in the U.S., he said he’s interested in the relationship between Canada and its biggest ally when it comes to tariffs and industry subsidies. “If Donald Trump was the most protectionist American president since the Second World War, Joe Biden was the second.”
Frum also highlighted that Biden removed the trade tariffs instituted by his predecessor, as well as reducing some of the rules on allies like Canada and the European Union. However, he also noted new industry subsides instituted by Biden have left Canada in a difficult position.
“America’s friends are in a position where they either submit to this or they try to match it and Canada has been trying to match it at enormous expense. I think the cost is now past $40 billion of Canadian subsidies to Canadian green energy industries.”
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