We have just had the US mid-term elections, and once again we see a country sharply divided between the right-leaning Republican Party and the left-leaning Democratic Party.
Over the last three presidential elections there has been a noticeable trend in the popular vote towards the left-wing Democrats and in fact, even when the Republicans won the Presidency for George Bush, in 2000, and Donald Trump, in 2016, they won despite losing the popular vote. This is possible because of the Federalist style of governing practiced in the United States. The Constitution called for this style of government to even out the power of the various states, so that heavily populated states could not dominate less populated ones.
This shift to the left is likely to continue for several reasons. Firstly, the population is aging, and it is the older generation that is far more likely to vote Republican. As the bar chart below shows, each generation becomes more Independent, primarily at the expense of the Republican party.
Secondly, there is a noticeable change in the ethnic diversity of the United States. The percentage of Whites is expected to fall from just under 60% currently to approximately 45% by the year 2060. The 15% drop in Whites will be made up by increases of ~9%; ~1%; and ~5% in the Hispanic; Black and Other races, respectively. Whites are more likely to vote Republican than are other races.
Finally, numerous studies show the continuing urbanization of the population has the effect of shifting the political landscape further to the left. This shift is likely to continue as an increasingly larger percentage of the population is expected to live in cities in the future. (2000 – 75% urban; 2020 – 82% urban; 2050 est. – 90% urban).
Thus, from an investment viewpoint, it is prudent to expect that the future of American (and Western) politics will see further shifts to the left. Hopefully, as younger generations demonstrate less allegiance to any party, the heavily partisan views of today will be forced to moderate and more cohesive governments will evolve.
Sources: Statista and studies by the US Census and Pew Research
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