In 2008, a book by Bill Bishop called The Big Sort documented the polarisation of US society. Its thesis may be instructive for interpreting this year’s elections. Hillary Clinton famously referred to half of Donald Trump’s supporters as a “basket of deplorables”. Mr Trump has done some name-calling as well.
The Big Sort maintained that there are in fact just a few 'baskets' – not using that term, but describing how birds of a feather are increasingly flocking together. The flocking goes beyond the red state/blue state level and in fact is more apparent between neighbourhoods. The most highly contested states are those where the flocks, while physically separate, are roughly equal in size.
When The Big Sort took policy analysts by storm eight years ago, social media was just beginning to come into its own. Now, in addition to geographic clustering, we have virtual clustering. This spreads and reinforces what the president referred to as the US having people who appear to be living in different countries, depending on their news sources. They are in different feedback loops that reinforce their different world-views.
Pundits make the claim in every election cycle, but for investors it does seem that much may turn on this election and its aftermath, including changes in business taxation, regulation and workforce immigration. And the losing side will remain significant and will not retreat, despite some celebrity promises to move to Canada or beyond.
Polarisation has become institutionalised by cash contributions, peer and media intimidation, and even by direct and indirect public funding. After November 8, there are two things for direct investors to watch out for. First, whether the momentum for tax and trade changes is sustained and whose version is ascending; and second, in the last two months, a spurt of unencumbered legacy-building through regulatory and other executive actions from the White House.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations.