How Did We Get Here?

January 22, 2025
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Woodford Views set out in April last year to comment on economic, financial market, social and political issues. Since that first blog, nearly all the commentary has been preoccupied with economics and markets, although I have strayed into slightly murkier political waters from time to time. This is not because I am setting out to be overtly political but because, from time to time, it is hard to separate politics from economics. It’s worth saying that whenever I do, I always feel slightly nervous for obvious reasons. It’s not my specialist subject, and expressing political opinions can be divisive. However, sometimes it’s unavoidable, especially when the two come together so clearly as they have with the election and inauguration of President Trump.

I have (like many of you, I expect) spent the last two days thinking a lot about what has happened in the US following last November’s elections and Trump’s inauguration on Monday. I have listened to his speech and tried to order my thoughts on what it all means for the things I care about and how it will affect economies and financial markets. But as important as all this is, and much to my own surprise, I now think the social and political implications of his election are more profound and will affect us much more than any of his tariff or tax-cutting policies. As a sense check, I have also listened to and read the conclusions of a number of commentators I respect, some of whom I often disagree with, just to make sure I hadn’t lost my mind. LBC’s Andrew Marr, for example, described the address as the most important political speech of his lifetime.

One thing more than any other has driven this point home to me, and it speaks to one of the most important characteristics of a liberal democracy, namely free speech and the freedom to think and articulate opinions and ideas without fear of retaliation, censorship or legal sanction. Clearly, some of these freedoms have in recent years been impaired, and although the implications of this in the corporate world have been less obvious, I think they have had a profound and troubling impact on the way businesses have behaved, how they have deployed capital, how they have communicated with their shareholders, employees and customers and ultimately who they have hired and fired.

The change already brought about by Trump’s election on how businesses behave in the US has been dramatic. For example, a research piece written by a leading analyst at one of Wall Street’s top investment banking businesses published earlier in January said, “It can legitimately be described as a stampede from wokeism”. The analyst goes on, “Following Trump’s decisive victory, we have noticed a change in behaviour in meetings. People are increasingly willing to say what they really think, even in the presence of colleagues on such politically charged issues as ESG or DEI.” This also follows a list of actions by social media companies to stop “moderating” content and the growing list of major US corporations dropping their all-powerful DEI committees.

Although all of us would now acknowledge that both ESG and DEI have become highly “politically charged issues”, in my opinion, this was never the intention of those who originally conceived of these initiatives, after all, who could oppose the concept that businesses should take seriously their responsibilities for the environment for example, or that they should be responsibly and transparently governed, or that they should seek to treat people fairly and justly. These are all laudable ambitions. The problem, of course, is that in common with the adage that the road to hell is paved with good intentions, these noble ambitions were hijacked and weaponised in a way that was never intended and led to the problems we now witness.

So, not everyone will welcome these developments, but I do, not because I’m opposed to the principles embedded in these initiatives, but because they have led to sinister groupthink in businesses, reflecting in part what has been going on in the public sector, academia and wider society, and which had increasingly dominated the way companies behaved, squashing meritocracy and silencing dissension. It is this that led to the fundamental dishonesty highlighted in the comments above, and when honesty doesn’t prevail in business or in every other walk of life, very bad decisions follow. Having said this, it’s important to state clearly that I am not a Trump apologist. I fundamentally disagree with important aspects of his policy agenda, but on this issue, clearly, I welcome this rapid reversal of what had led to a cult of endemic dishonesty and censorship.

So, I find myself agreeing with Andrew Marr in that no other election that I can remember has ever resulted in the sort of changes I am now seeing happen across the world. The speed of these changes is also remarkable, suggesting to me that these policies had become resented and silently opposed, which, in turn, makes me wonder and worry how they ever became so distorted and ubiquitous in the first place. Without wanting to be at all hubristic, maybe there is a distant parallel here with what happened in Eastern Europe back in 1989 when the Berlin Wall fell, and millions were released from an altogether more frightening tyranny.

Disclaimer: These articles are provided for informational purposes only and should not be construed as financial advice, a recommendation, or an offer to buy or sell any securities or adopt any particular investment strategy. They are not intended to be a personal recommendation and are not based on your specific knowledge or circumstances. Readers should seek professional financial advice tailored to their individual situations before making any investment decisions. All investments involve risk, and past performance is not a reliable indicator of future results. The value of your investments and the income derived from them may go down as well as up, and you may not get back the money you invest.

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