Dividends and Us vs. Them – The Failure of Globalism

If you are optimistic about the future and that is a good thing, chances are likely that you are something of a globalist. Part of the reason maybe you see tremendous positive change that technology and automation can bring. Part of the reason is you are paid above average or expect to be paid above average. In the coming years, there will be plenty of people who are on the opposite side of the coin, for no fault of their own they do not see themselves doing better than their parents. They may and in our economy there are many different ways to earn money that did not exist.

Us Vs Them is book by Ian Bremmer published by Portfolio/Penguin, New York, 2018. In the coming years, many of the existing jobs will be automated. There is always good and bad, but in the US 47% of all jobs; 65% in Nigeria; 69% in India; 77% in China. No one knows how people will make the transition, but if the expectations turn out to be true then there will be lots of people looking for income. The issue is related to if a manufacturer in the US can replace a  middle income worker with a no wage robot than sending the work out of the US, what does that mean? Will 3D printing change the dynamic even more?

If you wish to watch countries put these on your top ten list – South Africa, Nigeria, Egypt, Brazil, Mexico, Venezuela, Turkey, Russia, Indonesia, India and China. Together these 10 countries contain over half the people on earth and equally important a high percentage of the world’s youth. For example in South Africa there are 20 million people between the ages of 15 and 35, only 6.2 million have jobs. Most of them were born after apartheid, perhaps the ANC will not be the dominate political party.

One reaction to the coming changes will be protectionism, there is a long history of trying however other countries will react to the changes or make changes which end up hurting the original one. President Trump has asked for a physical barrier or wall, but there are walls on information – China apparently watches its citizens more than most countries. They are experimenting with a social credit system. – a good credit score helps you win a promotion, a better apartment, better schools and list goes on. The credit score is essentially does the state trust you? yes – one path, no – in the movie Casablanca the police officer says round up the usual suspects.

Linking to dividend paying stocks, as an investor you have expectations the company will continue to preform the same or better in the next year and that is a good think. There are many challenges which face countries but companies although part of the solution are not the solution. Governments have to help out and rather than dividing people must bring them together. One example given in the book was John Hopkins University and hospital in Baltimore. After some civic problems in the city, the institution hired people from the worst affect areas with a $69 million HopkinsLocal program.  If government is not helping, one hopes you company has a very solid monopoly like hold on the marketplace.

There are more questions than answers, till the next time – to raising questions.



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