Why Sanders’ rise could be bad news for stocks, US-China trade

March 02, 2020 12:30
Many Americans are now attracted to Bernie Sanders’ socialist thinking. Photo: Reuters

Bernie Sanders is solidifying his status as the front-runner for the Democratic presidential nomination, according to recent polls. That means Sanders could potentially become a rival to US President Donald Trump in the Nov. 3 election.

A graduate of the University of Chicago with a Bachelor of Arts degree in political science, Sanders began his political career in 1971 as a member of the Liberty Union Party.

Sanders served four two-year terms as mayor of Burlington, in the northeastern US state of Vermont, and was credited for implementing extensive revitalization projects in the city's downtown area.

He served as representative for Vermont's at-large congressional district from 1991 to 2007, and has been a senator for the state since 2007.

But he hasn’t made many achievements beyond that, as the so-called Washington Consensus that advocates free market and loosening regulation has been the trend since 1990s.

Sanders has never changed his democratic socialist viewpoint. He has advocated for raising the taxes of wealthy people, reviving labor unions, and putting a tight grip on the financial industry, among others.

In 2015, Sanders announced his campaign for the 2016 Democratic presidential nomination after joining the party at the age of 74. He lost to rival Hillary Clinton.

But this time things look different. Sanders is leading with a 26 percent of the votes in the party, according to a poll on Tuesday last week, ahead of former vice president Joe Biden and former New York mayor Michael Bloomberg, who each has 15 percent of the votes.

Why is Sanders getting a lot more support this time around?

A big number of grassroots Americans have been financially struggling as a series of quantitative easings have only widened the wealth gap. They voted for Trump four years ago in the hope that things would change. But they have been disappointed.

His tax cuts and other economic measures have benefited the rich and businessmen more.

Thus, many Americans are now attracted to Sanders’ socialist thinking. If he is elected, he would surely bring unprecedented changes to the country's capitalist system.

Even billionaire investor Warren Buffett is getting a bit worried. He said he agrees with Sanders that capitalism is leaving people behind, but he doesn't think it should be completely killed.

Buffett indicated that the US stock market would react in a rather negative way if Sanders beats Trump in November.

Sanders has been opposing any "ceasefire" deal with China during the trade talks. His victory, therefore, would also be bad news for China.

This article appeared in the Hong Kong Economic Journal on Feb 28

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist