“In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed.”
~ Charles Darwin, Evolutionary Biologist

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This year’s Nobel Prize in Economic Sciences, awarded to Daron Acemoglu, Simon Johnson, and James Robinson, confirmed the crucial role that social and government institutions play in determining living standards. Their research highlights a powerful insight: societies with inclusive institutions — where government, legal, and economic systems work for all — tend to achieve higher and more equitable growth. By contrast, exploitative institutions concentrate power and wealth, creating environments that hinder economic progress and limit social mobility. These insights are particularly relevant as it proves the importance of aligning interests in order to address the pressing challenges we face today.

One of the critical issues in – and we would argue natural result of – our capitalist democracies, are the ever-growing gap between the “haves” and “have-nots.” Politicians, driven by short-term objectives in a four-year cycle, often pursue policies that prioritise short-term gains over long-term benefits. Another concern is the lack of lateral thinking in politics, as opposed to dogmatic linear thinking. Politicians’ inability to change norms and move away from the status quo, even though technology and social cultures have evolved significantly over the last hundred years, is one of the biggest challenges we face.

The current approach sidelines essential structural reforms that would improve living standards for everyone, opting instead to delay difficult decisions. The UK’s recent budget is a prime example. A pretentious promise to enter a new paradigm by merely doing what every government of the last 75 years have done: increasing debt and tinkering with taxes. Rather than introducing innovative policies that address the core challenges of anaemic growth and rising inequality, we see the same traditional methods. While stabilising in the short term, it does not foster the kind of economic resilience and inclusivity necessary for a sustainable future.

In less than a week we will have elections in the United States. Whilst Democrats and Republicans have exceedingly polarised supporter groups and policies, the reality is the U.S. have very similar dynamics at play.

There’s potential for unconventional approaches that may challenge established norms. A future administration might embrace bold policies, but without bipartisan cooperation and a stable institutional framework, these changes may lack the foundation needed for long-lasting impact. Acemoglu, Johnson, and Robinson’s research emphasises that successful reforms require reliable and inclusive institutions that can foster public trust and equitable growth across society.

In the globalised world we live in, international cooperation is increasingly important. But sadly, self-interest and the lack of understanding means cooperation of any kind is slowly fading away on the horizon.

As we navigate these uncertain times, we continue to assess how political and institutional decisions shape economic outcomes, both now and for future generations, as it is becoming more important. Our approach remains focused on maintaining stability amid ever growing reliance debt. By understanding these broader societal trends, we aim to help our clients reach financial security in a rapidly evolving world.

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The Nobel Prize, established by Alfred Nobel in 1895, is awarded annually to honour individuals or organisations whose work has profoundly benefited society in the subjects of Physics, Chemistry, Medicine, Literature, Peace, and Economic Sciences. Eligible individuals must be alive in order to be nominated for the various Nobel Prize categories, whilst organisations are limited to only being considered for the Nobel Peace Prize.

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