Yesterday, Exponential Investor looked at the demographic future of Europe. It’s a change so radical, it’s been termed “The Great Replacement”. The numbers starkly show that western Europe’s historic population, religion and culture is steadily shrinking – condemned by demographics to become a small minority, in an increasingly diverse continent. The result of this will be a huge change in UK society – one that will encompass culture, religion and politics. The economic effects will be huge – and traditional European populations are going to become a niche market, for the firms you’ve invested in.
How to profit from this seismic shift
As yesterday’s article explained, multiculturalism has given the UK a fragmented human geography. A diversity of communities is flourishing, but in increasingly separated areas. To give a personal example: during my life I have spent much time in Luton, but I’ve rarely had cause to go to Bury Park – and I do not know anyone who lives there.
The UK’s separated communities often live parallel lives. For UK minorities, key lifestyle choices – everything from clothes, to diet and family formation – may be framed within a distinct culture, often tightly defined by religion. Some communities even have separate financial and justice systems, handling both civil and criminal matters – in ways opaque to outsiders. Tom Winsor, chief inspector of constabulary, said “There are cities in the Midlands where the police never go because they are never called. They never hear of any trouble because the community deals with that on its own.” Such dramatic cultural divisions are radically changing the UK’s investment landscape.
Of course, among all the religions, cultures and communities present throughout the West, one philosophy stands out as defining the 21st century.
Islam is coming – and your portfolio had better be ready for it
The Pew Research Centre claims that Islam will be the world’s largest religion by 2070. Accordingly, it’s going to be a huge influence on our lives and culture. You may find the idea of an ascendant religion in today’s world to be counterintuitive. Improvements in education and social security are typically associated with reduced religiosity – and the world is undeniably becoming a better educated, more developed place. Yet birth rate differentials, and increased migration, are counteracting this trend in the West.
Regardless of global trends that may reduce religion’s reach, migrants bring their own cultures to the developed countries they settle in. Religion, by its nature, tends to persist down the generations – fading only slowly, as societies advance. Mass migration means that the cultures and faiths of less-developed countries are now becoming “baked in” to formerly post-religious Western countries.
There’s more to demographics than migration, of course – and family size has a huge effect. The fertility rate is higher in societies that suffer higher infant mortality, and have lower levels of female education. A community’s attitude to the family changes slowly – and traditionally high fecundity translates to rapidly expanding communities, once migration to less-risky developed countries has occurred. The difference in family size between communities is pronounced. Despite today’s relatively small minority populations, nearly half of all UK families with 3+ children are of black or south Asian heritage – according to Population Matters.
You cannot ignore these stark numbers when investing
We can expect a remarkable transition in UK culture, in coming decades. One effect is that the number of actively practicing Christians will dwindle, and Islam will replace it as the country’s main religion. With a majority of UK mosques reported to be from relatively strict Deobandi and Wahabi sects, a conservative form of Islam is likely to become the UK’s main religion. Unlike the passive style of Christianity we’ve become used to, this assertive Islamic culture will play an increasingly important part in all our lives.
Here’s how I’m betting on Sharia law
My own portfolio is already set up for mid-century Britain. None of the things I invest in are haram (forbidden) under Sharia law. If I do add in any non-Sharia investments, they’ll likely be either short-term or a minor part of my overall strategy.
Of course, I don’t expect a cultural transition to happen immediately. Nevertheless, I will ultimately have to sell my holdings on. Any future buyers may regard haram investments, in sectors such as alcohol, as carrying a significant long-term risk. This caution may stem both from lack of demand, and from a perceived risk of prohibition. Therefore, if I don’t consider Britain’s changing culture when I invest, I could end up facing a distinct shortage of buyers – potentially forcing me to sell my stocks at a deep discount.
British politics is already starting an unstoppable, long-term shift
When placing your economic bets, it pays to predict how the political climate may change. In coming decades, radical change is certainly coming. With a concentrated geographical distribution, UK minorities will increasingly vote in politicians who share their world view. London’s trailblazing Sadiq Khan administration is the beginning of a sustained trend towards more minority mayors. Khan is a moderate, outward-looking democrat – with a broad supporter base. However, some of his peers are most definitely not.
Tower Hamlets shows how UK politics could change radically
Lutfur Rahman’s brief reign in Tower Hamlets was a very different kind of leadership to that demonstrated by Khan. His wholly sectarian administration was described as “at best dysfunctional, at worst riddled with cronyism and corruption,” by Eric Pickles, the then communities secretary. In Britain, Rahman stands out – but it’s worth remembering that this kind of politics is very familiar to much of the world. Consequently, a repeat performance is something that investors should be mindful of.
Pickles saw the threat from Rahman, and acted quickly and decisively to dismantle his power base. But Rahman is unlikely to be the last of his kind – and future leaders of his ilk may be far better at overcoming external limits to their authority. Once fully established, an administration that has no qualms about manipulating elections may be very hard to displace.
Investors cannot rely on a future without a new generation of Lutfur Rahmans. These politicians may ultimately remain in power despite, in Pickles’ words, “… extremism, homophobia and antisemitism [that] has been allowed to fester without proper challenge.” Of course, Exponential Investor is not here to judge such trends; it’s all about profiting from the future – whatever it may bring.
You need to get your portfolio ready for the new population of the UK, and the changes that this will inevitably bring. Taking a deeper look at the recent history of Tower Hamlets gives us a window into one possible future for Britain.
My portfolio is well-prepared for Sharia law. Is yours?
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