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 Salomons Judgement

When the facts change, I change my mind, Keynes once said. Influenced by protectionism and populism, politics has become an inseparable part of the investment portfolio.

In my columns I look at the world from different perspectives, always searching for connections. They are often about investing, and they are practical. As a professor, I look at the economy from an ivory tower. And sometimes, I also take a political stand.

In this age of protectionism and populism – which is also the theme of the annual seminar where Kempen shows customers its market view – finding connections is sometimes difficult, but it comes together in a series of articles and a debate called #OpenFuture. The Economist acts against protectionism and populism and emphasizes the importance of open markets, progress, open borders and sharing and discussing ideas.

Although a liberal preference shines through the articles, the themes are relevant for every democracy. Why is #OpenFuture so important? For understandable reasons, confidence in the market economy is under pressure. But we know that markets function better than a centrally planned economy does. Free trade enriches everyone (on average), but also excludes groups in society. Should we restrict free trade? Compensate the losers? These are tricky questions, but there is no doubt that we should not make everyone poorer (on average) by closing the borders. Protectionism is not the answer. Another form of sharing is.

Competition makes capitalism work, but only on a level playing field. It’s worrying that markets are less competitive than before. It’s also no coincidence that this was the subject of the annual brainstorm session of central bankers in Jackson Hole. I have mentioned it here before, but more competition and more market would be good. Policy makers have a task in enforcing this.

There are no easy answers, even if populists do think so. It’s they who should read the articles in The Economist, but that’s probably wishful thinking. I also don’t think they read this column, but that doesn’t mean that I shouldn’t look for the debate. Something I do here.

At the upcoming seminar, we will discuss the impact of protectionism and populism on client portfolios. One message will be that capital providers will have to get used to less. Labour will get an increasing share. Moreover, investors have a role to play in this discussion. Together, we shape the future. Clearly we do not have all answers. So there must be debate. With Julian Samways, Arend Jan Boekestijn, Maarten van Rossem and Lars Duursma we will try to do so. This column functions as a modest kick-off.

For those who want to read up before the seminar, I refer to #OpenFuture. Those who want to stick to the economic issues due to a lack of time, I recommend reading the articles under the header markets. In The Economist I found two articles about Hayek and Keynes that are worth reading, also because there are misunderstandings about both economists that are sometimes magnified in the classical debate between socialists and liberals.

It’s clear that politics has become an inseparable subject in determining the investment portfolio. The tricky thing is that economists come from Mars and politicians from Venus. Sometimes things are less rational and therefore more unpredictable. Interesting times, in which profit sharing is just as important as voting ratios. The extent to which we let our portfolios be impacted by protectionism and populism is up to us.

The author

Roelof Salomons

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