There is an old adage, "Fool me once, shame on you; fool me twice, shame on me." The lesson is that after having once been fooled one should be more wary and more alert in future dealings. And yet, even after the momentous Brexit vote, exceptionally few people were prepared for Trump winning the presidential election.
These results are indicative of many things, but a lack of warning signals is not one of them. For a variety of reasons such signals have often been viewed as "abstract" or "irrelevant" and have often been dismissed or substantially devalued. Investors would do well to start tuning in because politics has shined a bright light on economic reality and there will be far-reaching consequences. Recent political events should dispel any doubts that, in the words of the 2016 Nobel prize winner for literature, "The times they are a-changin'."
In concise terms, the election represented a burgeoning anti-establishment fervor borne from large groups of people slowly but steadily losing ground economically. Instead of trying to solve this problem, however, too many government officials and mainstream media (MSM) alike have tended to gloss over them by creating rosier narratives. The result is that a large gap emerged between perception and reality for a lot of people. For better and worse, this is exactly where interesting things tend to happen.
This gap was facilitated by MSM which is a primary source of information for many investors and has had an extremely important influence on them. Charged with reporting news, validating sources, checking facts, and largely entrusted with being arbiters of "the truth", MSM in many ways instead became more of a platform for voicing its own beliefs. Rather than investigating players and informing the public, they became players themselves.
Harsh criticism emerged after the election, even from within MSM itself. Charlie Beckett quoted Matt Taibbi: "We were too sure of our own influence, too lazy to bother hearing things firsthand and too in love with ourselves to imagine that so many people could hate and distrust us as much as they apparently do." He didn't stop there: "Just like the politicians, our job was to listen, and we talked instead. Now America will do its own talking for a while. The world may never forgive us for not seeing this coming."
While MSM did not cover itself in glory over the election, neither did social media. Fake news and false information were prominent features of the 2016 campaign landscape and not in a good way. As reported in the Financial Times, "One former Facebook staffer also says the way the company is run may have exacerbated the distribution of fake news. Its engineers focus on improving engagement — clicks, likes, comments, shares — as the primary measures of success of any new feature."
The article goes on to say, "Yet the business imperatives the internet platforms follow may have given them too little incentive to exercise this type of responsibility [for content quality]. Weeding out false information ‘hasn’t been a priority’, says Mr Borthwick. ‘Content, more often than not, has been a means to an end — and the end is more sharing, more connectivity’.”