This week, Theresa May announced that she was running to lead Britain’s Conservative party. Bookmakers say that she has the best chance of becoming its next Prime Minister.
If May wins, she, Hillary Clinton, who has significant advantages in upcoming U.S. elections, and Angela Merkel of Germany will head three leading global economies.
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But that is just at the top. Even if May and Clinton fail to get elected, investors need to recognize the approach of a crucial tipping point.
A tidal wave of growing female power is set to unfurl over western nations, which will massively increase women’s domination of major political, social and economic centers.
- Women vote more. According to the Center for American Progress, women comprised 53% of voters in the 2012 U.S. Presidential election, compared to 47% for men. That is a 6% gap right out of the gate. In fact, women have outvoted men in every U.S. presidential election since 1980.
During the 2012 election, women favored Barack Obama. There are strong signs that this time they will favor Hillary Clinton. How women, not men, vote, will determine who the next U.S. President will be.
- The world’s two most powerful people are women. Janet Yellen, who heads the U.S. Federal Reserve, and Christine Lagarde, who runs the International Monetary Fund, are almost unknown to the general public. However, through their influence over credit and the money supply, these are arguably the world’s two most important jobs.
During the past two years, Janet Yellen has driven the opening of the monetary spigots to get Hillary Clinton elected. But she could just as easily have ensured a Trump win – simply by normalizing interest rates. That is real power.
- Women are smarter. According to Time Magazine, women now account for 57% of college students, compared to 43% who are men. Guess who will get the top jobs during the coming decades?
- Women are starting to out-earn men. Studies that show large gaps in male-female earnings have long been grossly misleading. For the same job, with equal skills and experience, men and women generally earn the same amount of money. In fact, it is the law.
However, according to the Guardian and the New York Daily News, younger women are starting to earn more than younger men in many categories and jurisdictions. During coming years, higher education levels will vastly exacerbate the gap.
- Women have better job prospects. As Hanna Rosin, a pioneer thinker on women’s growing power pointed out in The Atlantic and subsequent book, The End of Men: “Men dominate just two of the 15 job categories projected to grow the most over the next decade: janitor and computer engineer.”
- Women benefit disproportionately from government programs. Salaries only tell part of the story. Women have long been big winners in government spending, which eats up nearly half the economy in most Western countries. That’s particularly true of three of the largest categories: education, pensions and healthcare.
Women live longer than men, so they collect pensions for longer than men do.
The fact that women live longer also means they consume a greater proportion of healthcare budgets, the lion’s share of which are targeted towards seniors.
Public spending on education also disproportionately benefits women due to the fact that more of them take advantage of educational opportunities.
- Women dominate education and thus set societal values. According to the National Center for Educational Statistics, 76% of public school teachers are women. Women thus play a dominant role in setting values students carry into adulthood.
That dominance is gradually spreading to community colleges and universities, where women now collect more than half of all doctorates .
However women’s influence in academia is likely understated. Through their roles in tolerance, and in many cases encouragement of political correctness tactics, which limit even comedians from speaking openly on college campuses, women now effectively control dialogue there.
- Women control reproduction. Technology advances, such as birth control, artificial insemination, and egg freezing have quietly given women total control over the entire reproductive process. Men can provide input, beg, or offer suggestions; however, women alone will henceforth determine future birth rates.
- Women are increasingly safe in their daily lives. Forget media scare tactics. Pervasive video cameras in mobile devices and public places, upgraded surveillance, and crime prevention technology make women safer from violence and harassment than at any time in history.
- Women are now threats in their own right. The U.S. military now hands out medals to drone operators who launch Hellfire missiles into Arab towns from the safety of their Nevada bunkers. The stage is thus now set for women to achieve full equality in the defence world. Women can push buttons just as easily as men.
- Men dominate the Fortune 500 – but their bosses are women. While men head most major corporations, women’s rising education has created a groundswell of female vice-presidents set to burst into the CEO suites and boardrooms in coming years.
We are seeing signs of this already. Marillyn Hewson, who heads Lockheed Martin, the world’s most powerful defence contractor, is a woman. As are Mary Barra, who heads General Motors, and Sheryl Sandberg, who is COO at Facebook.
More importantly, the agendas of corporate America already prioritize women’s interests – because that is where the money is.
According to the Harvard Business Review: “Women make the decision in the purchases of 94% of home furnishings…92% of vacations…91% of homes… 60% of automobiles…51% of consumer electronics.”
Much bigger government is on the way
As any introductory economics student learns on his first day of class, people have unlimited wants. Like any interest group, women will thus almost certainly push their growing power as far as they can.
How this scenario, a multi-electoral cycle phenomenon, will play out is unclear. Mankind has never seen a shift of this magnitude in the balance of power between the sexes, so we have no historical precedents.
At a minimum, women’s increasing dominance will likely involve growing roles for organizations that women broadly support or tolerate.
Government, academia, and regulatory bodies – the most important of which is the Federal Reserve – are all likely to increase substantially in coming years.
A virtuous circle sparked by growing dominance of the political process
The key driver of women’s exponentially growing power during coming years will be their increasing presence at the ballot box. This is due to two reason: 1. women are more likely to graduate from college and 2. college graduates are far more likely to vote.
According to a U.S. Council of Economic Advisors report, 25-34-year-old women were 21% more likely than men to be college graduates and 48% more likely to have completed graduate school.
Furthermore, U.S. Census Bureau data show that in 2004, 76% of U.S. citizens who were college graduates reported voting, compared to just 49% of high school graduates.
Over time, female college graduates’ growing dominance in in the electorate will spark a virtuous circle in which they will leverage their voting power to increase their advantages in other spheres of their lives.
One can imagine a scenario in which women vote for governments that increasingly divert funds to female-dominated interest groups such as healthcare and academia. These interest groups in turn use the funds to create more female-friendly jobs of ever-growing power.
Old girls’ clubs and an expanding role for the Fed
Janet Yellen’s actions to get Hillary Clinton elected stem mostly from overlapping interests. However, over time “old girls’ clubs” will broaden. At that point, men will start to get a real taste of what women have been witnessing for millennia.
One area in which men and women of all educational levels share near total equality is in their befuddlement regarding monetary policy. However, the Federal Reserve being a government body, women are likely to continue to rubber stamp its policies without raising a question.
Precious metals lovers take note: The Fed’s role is set to grow, not shrink, during coming years.
The private sector will be hit hard
Growth in government will come almost exclusively at the expense of the private sector, which will be increasingly crowded out of the economy by rising taxes and regulations.
In the United States, there is a real possibility that “job taxes” – such as Obamacare fees, minimum wage laws and the like – could kill entrepreneurship for a generation.
In a global economy, it is prohibitively difficult for small businesses to generate USD $15 per hour worth of value – the levy suggested by Bernie Sanders – out of an unskilled American worker.
Private sector stagnation will however be well-hidden because big businesses, particularly monopolies and government protected-oligopolies – such as the “too-big-to-fail” financial institutions – will do much better. Sectors favored by protectionist trade legislation, which is on the way whether Republicans or Democrats take power, could also do fine.
The 1% will be cut down to size
The top 1%, who control an out-sized portion of the western world’s assets, are particularly vulnerable. Their wealth won’t last long if growing government starts taking a good look at it.
A new regulation here, reinterpretation of an anti-trust law or capital gains exemption there, and a good chunk of it could easily be wiped out. Unless lobbyists can significantly up their game, much of the rest will increasingly be taxed away.
Excesses in the other direction?
Generations of discrimination endured by women will almost certainly spark excesses in the other direction.
We are seeing signs of this in current insensitivity towards young men, who are being made to feel increasingly uncomfortable in public schools and universities. During the coming years similar developments will unfold in other segments of society.
Precise timings are hard to predict, in part because women, most of whom are just as troubled and stressed out by current tough economic times as men are, haven’t yet fully recognized their growing relative strength.
In many ways, women’s current position can be likened to that of a 15-year-old bullied kid who grows six inches in one year: you know something will happen, but you can’t be sure of what and when.
All you can do is sit back and hold your breath.
Women respond to “Rosy Scenarios”
The fact that women vote more than men, spend more, and are gaining power goes a long way towards explaining why the U.S. Federal Reserve, the White House, and consensus economic forecasters havenever accurately predicted a recession .
Turns out there is anecdotal evidence that what David Stockman calls “Rosy Scenarios” work particularly well with women. Through far from conclusive, a variety of data suggest that women have a greater desire to be “nice” and are more optimistic than men.
A recent article in the Atlantic notes that women dominate the field of public relations (which involves highlighting the positive) while men prefer journalism (a more neutral, fact-based profession). Women also appear to have a greater bias towards fantasy. For example, women buy more fiction books, while men prefer non-fiction .
Governments, central bankers: brightening outlooks to encourage women to vote and spend?
Current optimistic economic forecasts have thus almost certainly evolved – consciously or unconsciously – in part because governments, central bankers, and businesses have concluded that is what women buyers and voters want to hear.
If women’s relative clout continues to grow, then one would expect the gap between forecasts (which in this scenario have effectively degenerated into marketing tools) and actual economic activity to also increase.
Investors who develop the best ways to monitor that gap will thus have a huge advantage.
This would also suggest that the long-term value of hard money may be significantly underestimated.