2024 is set to be an important period for politics. Already dubbed ‘the biggest election year in history’, more than 70 countries representing half the world’s population — c. 4 billion people — will hold regional, legislative and presidential electi ons. A number of commentators see this next 12 months as a real test of democracy itself; with this style of government of the people, by the people, for the people increasingly being tested in a world where both domestic and regional tensions are escalating.
This swathe of elections also comes at a time when those tasked with protecting the integrity of elections are raising questions and concerns about manipulation of voters by ‘invisible’ bad actors. AI technologies, fake news and cybersecurity attacks are all issues which will bring unprecedented challenges and require considerable oversight and control to ensure election results are a fair and accurate reflection of the will of the people.
Financial markets will not operate in a vacuum outside this political news flow and as thoughts inevitably turn towards portfolio positioning for this calendar year, investors will have yet another uncertain variable to evaluate. From our perspective, we have been thinking about how the current macroeconomic environment resonates with the 1920s and this has led us to find some interesting political parallels impacting today’s democracies, exactly 100 years ago.
The UK’s first Labour Government – 1924
The incumbent Conservative government – led by Stanley Baldwin – went to the polls in late 1923 largely on a ticket involving a policy U-turn in favour of protectionist tariffs on imports (a de-globalising policy before the world had even globalised!) The result proved disastrous for the Tories and, on 22 January 1924, Ramsay MacDonald became Prime Minister in Britain’s first Labour government.
Fast-forward to 2024 and expectations are high that the Conservative government will call a General Election this year. They are currently forecast to lose this vote and for a new Labour government, led by Kier Starmer as Prime Minister, to take the reins. They will inherit a country reeling from a period of austerity and the wake of a pandemic in just the same way Ramsay MacDonald did a century earlier. Starmer will also face many of the same hurdles as this ‘first’ predecessor. For example, his government will be tasked with winning the trust of financial markets; making a material difference for the lives of the poorer cohort of society; and working with the unions in tilting the balance of workplace power.
A Labour-governed Britain – particularly one which is predicted to have an overall majority in Parliament – is rare. Over the last 100 years, Labour have produced just six Prime Ministers; only three of whom have done so as overall majority winners (Attlee, Wilson and Blair). In many ways, a Labour government in 2024 could be as noteworthy for the country as that first one in 1924. Politics in the UK are set to matter.
Mahatma Gandhi becomes President of India’s Congress Party – 1924
India – by far the largest democracy in the world – is set to hold general elections between April and May this year. Current Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) is expected to hold on to its majority in the Lok Sabha, India’s lower House of the People.
India’s democracy can, of course, be traced back to Mahatma Gandhi, the anti-colonial nationalist and political ethicist who employed nonviolent resistance to lead the successful campaign for his country’s independence from British rule. In 1920, Gandhi was the dominant figure on India’s political stage, and had refashioned the Indian National Congress (now the Congress Party) into an effective political instrument of Indian nationalism. His approach – the non-violent, non-cooperation movement against the British government – galvanised the country, broke the spell of fear of foreign rule and led to the arrests of thousands who defied laws and cheerfully lined up for prison.
Gandhi himself was arrested in March 1922, tried for sedition, sentenced to six years’ imprisonment, but subsequently released in February 1924. In his absence, the Congress Party had split into two factions, and the unity between Hindus and Muslims had dissolved, spilling over into violence. Finally, after a serious outbreak of communal unrest, Gandhi undertook a three-week fast in the autumn of 1924 to arouse the people into following the path of nonviolence. In December 1924 he was named president of the Congress Party.
100 years on, opposition parties accuse Modi of undermining the country’s democratic institutions, jailing and intimidating journalists and using state investigative agencies to target political opponents.
Politics in India are set to matter. This fast-growing economy is creating wealth, power and increasing influence on the global stage. In a multi-polar world, India has a voice it wants to have heard and from a financial markets’ perspective, it will be included in the JPM GBIM global bond index from June 2024.
J Edgar Hoover appointed Director of the FBI – 1924
Arguably, the most important election in 2024 will be for the office of President of the United States. As the country looks inward, bracing for another showdown between President Joe Biden and former President Donald Trump, it is preparing for public protests across an increasingly divided nation which carries the potential to destabilise the most powerful democracy in the world.
This period of increasing social and political unrest in the US carries similarities with the 1960s when the civil rights movement – inspired by the approach of Gandhi and led by the charismatic Martin Luther King – gripped America. Much of the retrospections to this time centre on law enforcement and the role played by the FBI and its powerful Director, J Edgar Hoover.
Born in 1895, Hoover lived in Washington DC his entire life. Desiring to enter into politics, in 1917 Hoover obtained a position with the Department of Justice. His efficiency and conservatism drew the attention of the Attorney General. His stock continued to rise and President Calvin Coolidge appointed Hoover head of the Bureau of Investigation (which became the FBI) in 1924.
Hoover inherited the Bureau just after it had been severely tainted with scandal from previous administrations. He set out on a rejuvenation campaign, with his supporters praising him for building the FBI into one of the world’s outstanding law enforcement agencies. His critics accused him of abusing power, failing to combat organised crime, and violating individuals’ First Amendment rights.
For years Hoover’s FBI was widely suspected of using questionable or illegal methods to gain information. The existence of a Counter Intelligence Program became known in 1971, and the full extent of Hoover’s misconduct became clear in 1975, when Congressional investigators uncovered secret files and disclosed that Hoover had often abused his powers. Hoover’s longevity as FBI director can in part be attributed to these secret files. They enabled him to intimidate even sitting presidents by threatening to leak damaging disclosures about them.
As the 2024 Presidential race ramps up we can only speculate what secret files might exist today. The election puts the spotlight on polarisation in the US and its effect on governance. The two leading candidates for President are a person apparently suffering from some kind of neurodegeneration, while the other faces multiple criminal indictments.
Politics in the US are really set to matter. Trump’s indictments and his potential conviction and imprisonment may or may not be deserved, but the process conjures up the appearance of tactics used by banana republics and sets a dangerous precedent. Biden’s seemingly deteriorating mental health raise important questions about his ability to govern effectively.
