The age of career politicians and civil servants is over – Fat Tail Daily

‘Petrol prices aren’t high enough!’ the German taxi driver told me. ‘There are still too many people on the roads. I want to push the pedal to the metal!’ And he promptly showed me what he meant.

But it wasn’t half the acceleration my mum used to manage. She lived at the beginning of an Autobahn. But watching her turn money into carbon emissions hit differently back then. When the idea of an energy crisis was laughable, and the migrant crisis had barely begun.

Indeed, the German delegation did laugh at President Trump when he told the United Nations what was to come. Reliance on foreign powers for your energy supply is a ticking time bomb, he told them. There were plenty of warnings from inside Australia, too. But civil servants around the world assured us that Russia and the Middle were perfectly reliable partners. Energy storage could safely be shut down. And refining could be left to people willing to pollute their environment.

Now oil tankers are turning around. Refineries are dodging export contracts. Production facilities are blowing up. Our truckers, fishermen and taxi drivers are getting squeezed by fuel prices.

My German taxi driver can’t raise his prices because they are set by the local government. Fuel prices here in Germany are about a dollar higher per litre than in Australia, and rising just as fast. Imagine how a taxi owner’s income is getting crushed.

My favourite fishery in Mooloolaba is without diesel altogether.

My sister’s horticulture business is about to buy more fertiliser, if they can find it.

Next up are consumer price spikes. All these costs have to be passed on. Preferably in a manner that doesn’t trigger super profit taxes. (Super profits that were only triggered by political mismanagement in the first place.)

I’ve got to book a flight back home at some point. Jet fuel prices went through the roof and flight tickets with them. In Europe, flights are already being cancelled due to fuel costs.

It is yet another reminder of how energy politics and policy are intertwined with every aspect of our lives. The hopes and dreams of politicians and environmentalists are now having consequences. As often in a democracy, those who won elections and those who pay for the consequences don’t overlap much.

But if the consequences get bad enough to make jet fuel expensive, even jet set greens voters might wake up and demand change.

Who voted for this?

I haven’t listened to any politicians’ speeches for years. They usually have no bearing on policy, let alone reality. And the civil servants are the ones in charge anyway.

But, given I’m back in my childhood hometown, I’ve dabbled a few times lately. Listened to a few political speeches and debates. And, let me tell you, it’s like the world’s gone mad.

I can’t imagine what I missed between hearing Gerhard Schroeder’s carefully composed austerity speeches in 2003 and what passes for political discussion today…

The German Chancellor recently described the shutdown of Germany’s nuclear power a strategic error, but an irreversible one. This is so obviously incorrect that it is entirely surreal.

It’s not just Germany. Trump’s diplomatic skills have plunged since his UN speech in 2018.

I am fond of telling the story of when my German mother asked my Japanese parents-in-law why they attacked Pearl Harbour. Imagine my astonishment when this sort of comment is now considered high diplomacy, coming out of the US President’s mouth!

A few years ago, an absurd conspiracy theory gained popularity. It alleged that the political class are really just a ring of paedophiles using politics to dodge accountability. Now we just wonder how many members of the corporate class were also in the cult.

For someone who has dodged the political gossip and speeches to focus on how actual policy will move financial markets, it’s like the debate descended into a theatre of the absurd. 20 years ago, I would’ve expected a violent revolution if voters were led like this.

In politics today, there are no debates, projections, estimates, details or analysis. Politicians have no grasp of any facts. They just pretend the other side is genuinely evil, not just stupid.

Even the political revolution of my friend Nigel Farage is, so far, based more on showmanship than substance.

But yesterday I watched the press conference of Alternative fuer Deutschland. And I am flabbergasted.

One Nation’s rise is not a surprise

AfD is a bit like Germany’s One Nation. At least, that’s what I expected.

But their press conference featured five politicians with a CV you would never see in the English-speaking world. People so ingrained in industry, business, engineering and trade that they knew, from experience, more than anyone else in the country.

The AfD put a nuclear power plant engineer in front of the German media. I expected him to be torn apart by journalistic tricks. But his deadpan command of all the facts left the media with nothing to do but nod their head at the inescapable conclusions. It was an engineer’s approach to politics. Not one slogan.

I have never seen journalists so comprehensively dominated by a bunch of politicians purely by pointing out facts. No showmanship needed. The conclusions were self-evident by the time the politicians finished detailing why they were correct for inescapable reasons of engineering and physics. It wasn’t politics at all. It was the presentation of an engineering plan to rescue Germany’s energy system.

Now, absolutely none of this sounds like Pauline Hanson. But she does try to convey the same message about needing politicians who have been successful in the real world. One echoed by Nigel Farage in the UK and other populist parties around the world.

This is a campaign angle that none of the existing political parties can even comprehend. Their political machinery is built around think tanks, academia, lawyers and career politicians. No wonder they can’t get a grip on the civil servants they are supposed to control. They know less. And have no plans to actually change the country.

But the age of career politicians and dominant civil servants is over.

What is going to replace it?

Populist political parties will impose the will of elected experts with experience. People who have completed coherent plans and solutions that might actually work. People who know their field better than the civil servants who regulate it.

This could go well, or very badly indeed.

What Australian investors need to prepare for now that we’re dysfunctional too

One Nation’s performance in the polls and elections has already upended the Australian political system. What impact will it have on our financial markets?

Well, we’re a few years behind other countries when it comes to rising populism. The Europeans are wondering what took Australia so long.

Their lead means we can take a few educated guesses about what else happens next in Australia.

Each time populists get close to power, government bond yields spike. This is happening today. UK 10-year government bond yields surpassed 10% for the first time since 2008. The market isn’t just pricing in inflation. It’s pricing in Nigel Farage.

This isn’t necessarily the right reaction. You might believe that populist policies are precisely what’s needed to prevent a sovereign debt crisis. But you’d have to convince central bankers first. They haven’t supported populists. That’s what bond markets worry about.

Higher bond yields undermine other parts of the economy. The point being that there is a crash before the boom. As there was when Trump imposed tariffs, when the UK voted for Brexit and when populists took over Italy in 2018.

But these are buying opportunities.

The firewall is burning

In each country, there is a firewall against right-wing populists. The French call it the cordon sanitaire. The Germans call it the Brandmauer.

It is the refusal of legacy political parties to work with upstart populists. The hope is to delegitimise them.

But the Brandmauer is burning. Trump is demanding the German government ‘Tear down this wall!’

The French mainstream is discovering it is on the dirty side of the cordon sanitaire.

And in the UK, Reform UK is putting together the policies and the experts that promise plenty of specifics.

With the South Australian election, the sort of change we haven’t seen in Australia yet has popped up here, too. We’ll help you navigate it. Here’s how.