For some time, we have been puzzled by the apparent complacency in the general population despite the growing gulf between the haves and have nots. Real incomes have struggled to grow through the early part of this century and have only just begun to advance from the pre-crisis peak. However, the picture for the average worker is far less rosy as the chart below details. Incredibly, median salary US male workers are now worse off than they were in the 1970s in real terms.

Back in Oct 2015 we posited that one possible reason for this apparent complacency was that while the western democracies 'may not quite be the land of milk and honey, food is in the kitchen and 50" TVs are on the wall.'

2016 has brought two major electoral surprises which has shattered our view that the electorates might be happy with the status quo. Though admittedly it is not immediately clear to me how either a vote for an expensive European divorce or an arch-capitalist will act to help those on below average incomes.

The OBR reckon that Brexit will cost the UK £58bn in forgone growth in the first two years and the Chancellor has lengthened the time horizon of his austerity programme as a result. In America, Trump seems to believe that the combination of greater public spending, trade restrictions and lower taxes is the route to economic Nirvana. If it was, surely politicians and even economists might have stumbled upon this before now?

Trump may have caught the popular imagination by suggesting that a curtailment in global trade will help blue collar workers but is a burger flipper really going to be any better off watching an American 30" TV than a 50" version made in China?