Blain’s Morning Porridge October 3^rd 2025: The Death of Democracy as Markets Jump Higher?

“We’ve subordinated the public to profit, we’re literally cooking the planet to create shareholder value, and we’re wondering if Democracy is the problem?”

Fascinating times we live in. Democracy is struggling. Nations are caught with crippling budgets, unpayable debt, and gridlocked political systems that mitigate against solutions. Don’t you hanker for the old days, when the king could just lop of some heads to make things happen? That’s one solution for the USA, according to some.

The Perfect Government

The most effective form of Government I’ve come across is found in the fictional city of Ankh-Morpork, the locus of the late Terry Pratchett’s marvellous Discworld Series, a work of comedic-satirical genius. I only have to pick up one of his books and I start laughing.

The city is ruled by The Patrician, Lord Havelock Vetinari, who believes implicitly in the democratic concept of: “One man, one vote.”  Vetinari knows “He was that man and had that vote.” His unlimited and unchallenged power, and aura of menace (he is a fully paid-up member of the Assassin’s Guild) means he is feared, but he is benevolent and effective ruler, tolerant of individual rights.

Vetinari exercises short, sharp, demonstrative brutal justice against anyone who would put their interests above those of the City. He maintains his power through stability and crowd control, persuading angry mobs “holding pitchforks it’s all the fault of the ones carrying the torches.” Pratchett probably based him on Machiavelli’s Prince. Ankh-Morpork is chaotic, but the richest city on the Disc, which rests on the shoulders of 4 Elephants who ride the stars on the shell of a great start turtle…

Its fiction… but..

Back in the imaginary real world….

Apologies to the many Morning Porridge readers who think I write too much about politics – but its regulations, rules, laws, and the confidence instilled by politicians that sets the base for the economy and, ultimately, the price of markets.  You can’t put markets in context without understanding the underlying politics. Political competency is one element of national success. Wisely-led nations tend to thrive. Foolish ones fail. Understanding how systems of government work and influence both the macro and micro economy are critical factors in investment decisions.

November 5^th is going to be an “interesting day”. The US Supreme Court (the “Justiciary”) will opine on the legality of Trump’s Tariffs. Did Trump (the “Executive”) have the authority to unilaterally use the excuse of a “trade emergency” to impose tariffs without the approval of Congress (the “Legislature”)? It could be the biggest test yet of the USA’s famed balancing system of checks and balances…. Will Trump’s Supreme Court support the man who appointed most of them, or will they let the legality of the case and the Constitution guide them to a non-partisan decision?

It’s pretty fundamental. Should Trump win, it will confirm one of the key precepts of Project 2025, the Libertarian blueprint for Trump’s second presidency: a move towards the establishment of an American Monarchy. It will undermine the Constitution by establishing precedent for the President’s pre-eminence above the palaver of checks and balances by Congress or the Courts. This week demonstrations against an American King are planned across the US by concerned democrats (note the small “c”) who will be dismissed on X as dangerous Radical Lefties.

The case could fundamentally reset American Democracy – and that will impact markets. Maybe not in the short-term – this week stocks have rallied into the Government shutdown. But, long-term how will it impact the way commerce and finance work? I expect the future is going to look very different to the past we’re still in.

History illustrates how the last 250 years of industrial revolution, technical evolution, and wealth creation is largely due to capitalism enabling entrepreneurship. Aside from 3 or 4 global wars (depends how you count them), the era has been one of mercantile expansion, political stability (except anywhere that isn’t the UK or USA), the development of clear legal frameworks, rising health and wealth, democracy and freedom, particularly the freedom to fail – the secret sauce that flavours genius.

The political debate during that time has largely been about more government vs less government. Taxes are viewed with horror by those expected to pay them. Austerity is an afront to those dependent on state handouts. There are few details to observe, including: regulation typically protects consumers, and less regulation favours shareholders. The lesson is the need for balance.

However, we live in a time when that democratic-capitalist model seems to be breaking down. The current US government shut down is one example. The increasing polarisation between parties, the gridlock around decisions that have to be taken, and the horse-trading, pork-barrelling government spending decision process simply does not work. Would it be better to just slice through it, the Gordian Knot of US politics, and let a competent CEO run America?

It’s happened before. After decades of internal conflict and growing corruption, the Roman Republic was replaced by the Empire – in much the same way as Congress could suddenly find itself irrelevant. And we all know how honest, fair and benign the emperors proved to be. (US Readers – mild sarcasm alert.)

The default mode in Western history since the fall of Rome was a central monarchy which allocated the resources of the state to powerful nobles to manage in return for their vassaldom. The dance between these nobles and the throne is what historical dramas, and fantasies like Game of Thrones, are all about. Even Star Wars was effectively the same tale. The reality is the players in the real world were driven by greed, power, avarice and opportunities for personal advancement. Meanwhile… the poor people (ie everyone else) were pawns.

Parliamentary, representative democracy is a relatively recent development. After the English Civil War in the 1640, it became established following the Glorious Revolution of 1688, and Sir Robert Walpole becoming the first Prime Minister in 1721. UK Monarchy evolved into its current constitutional and largely ceremonial form. We all know our American cousins, and especially Trump, have long had a regretful fondness and longing for the trappings and fripperies of power and palaces.

There are increasingly strong opinions voiced by the Libertarian Right that our current system of democracy has reached its limit. Not only is decision-making gridlocked, but they blame weak governments for beggaring their nations through crippling welfare costs, debt, high taxes and the imposition of left-wing “wokery” weakening the resilience of  the people, while over-regulation has put private enterprise at a competitive disadvantage. They point to the Libertarian philosophies of Hayek et al to reverse economic decline and empower growth.

They say it’s time to find something better in Politics. 30 years ago no one would ever suggest replacing democracy with autocracy as anything but nonsense. Today, it’s become a genuine debate. The Libertarian “Project 2025” wants to make America more effective, remove the polarisation and gridlock in Washington that is holding back the nation, by putting a King of America in charge – someone who can run the country properly.

Funnily enough, the gridlocked failure of democracy in Washington comes exactly at the point in time where the long-term economic K2 (Kondratieff) cycle of hegemonic change is occurring (every 120 years or so). China (and Asia) is challenging America to become the Most Powerful Nation as the cycle reaches its top. Such times are often a time of conflict, internal as well as external.

The Americans, understandably, are looking for solutions and to retain their power. It’s no surprise America’s failure is now being defined by the observation “America is governed by Lawyers, while China is led by Engineers” – pointing out the surfeit of talkers rather than doers on Capitol Hill. What should the new America look like?

I was listening to the BBC’s excellent Moral Maze Radio 4 programme the other night. The current episode “Is Democracy a failed experiment” is worth a listen. The main guest was the leading Libertarian of the day, Curtis Yavin, a man whose thinking on the need to replace democracy with a modern monarchy now dominates political thinking in the upper echelons of the Trump administration and across the Dark Alignment of Tech Barons and Financiers (think Thiel, Andreessen et al). Many see it as the only way to unblock America’s sclerotic decision making in Washington, get the budget back under control, and maintain American global hegemony.

Yarvin was the main “witness” on the programme. He is fascinating in the same way an unfed tiger is. He dismissed democracy as a dead notion. He says we live in managed democracies, where public opinion is set, guided and manipulated by liberal elites, the media, and academia (what he terms the “Cathedral”). (I would counter by reminding him who owns most US media (the right) and ask who owns Twitter/X? He will say.. “whatabout” the NYT!)

I suspect Curtis Yarvin has read all about the Patrician of Ankh-Morpork.

Yarvin’s plan, and he has worked it all out, is to replace democracy with a modern version of monarchy. The King (for that is who it would likely be) holds power by the grace of a board who can control his access to the buttons of power. Naturally this power will be enforced by a blockchain voting system among the “barons” who make up the board.

Yarvin expects the King and the Board will act rationally and in the public interest. The king will be motivated to ensure the board does not dismiss him, while members of the board will act to collegiately to ensure they aren’t voted off by the others. He reckons any decent Fortune 500 CEO would be able to the job…

Interesting… a king not subject to democratic control would be rational? Yesterday the Trump government sent a 10-point memo entitled “The Compact for Academic Excellence” to some of the leading US learning institutions. It offered preferential access to Federal Funds if they sign up, the key proviso being to abolish any course that “punish, belittle, and even spark violence against conservative ideas.”

 Of course, the idea of a benevolent dictatorship that employs the best talents, and directs them in the service of the nation has been proven time and time again. Nepotism? Tush and Nonsense. Greed? Never.

Don’t believe me? Just take a look at the USA at present. We are watching a masterclass in politics for profit as the President, his family, his son-in-law, and his associates gorge themselves on opportunities for self-enrichment. I don’t criticise them – Donald Trump won the election, and by his reckoning that gives him power – its up to the US courts and constitution to stop him. That is what the Constitution is there for. But, those who are daring to find fault in the Trumps treating the economy as their personal piggy-bank are finding the state mobilised against them.

Monarchy is an interesting concept…. But the reason the World got rich these past 300 years was largely due to Democracy, and the rights of the many over the rights of the few replacing it – in my humble opinion.

Out of time and back to the day job…. Have a great weekend.

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital