The foundations of American power are rooted in the rule of law at home and credible commitment abroad, the very things that Trump has attempted to dismantle. – Drezner and Saunders, Foreign Policy

A few months ago I wrote about the relationship between freedom, democracy and long term stock market returns. In short, these forces work together and reinforce each other. I concluded:

As investors we need focus on the potential long term damage that populist leaders can do the underlying scaffolding of democracy and economic freedom. While there may not be short term consequences for these actions, over the long run the economy and stock market will feel the degradation of institutions and stability.

Nothing has really changed in the meantime. In that post I mentioned Perth Tolle and the the Freedom 100 Emerging Markets Index ($FRDM). Tolle was recently interviewed on Barry Ritholtz’s At the Money talking about the dangers of investing in dictatorships. You can listen here.

Apparently I’m not the only one worried. Robert Rubin, former co-chairman of Goldman Sachs and Treasury Secretary noticed that business leaders have been noticeably quiet about what is happening. In the Wall Street Journal, Rubin writes:

Free markets can’t be separated from other freedoms Americans have cherished and sometimes taken for granted. Due process, the rule of law, free speech, a free press and honest elections have been among our most powerful advantages in the global economy. Countries where the rule of law is tenuous are viewed, rightly, as riskier places to do business. Most American leaders have an additional reason, beyond protecting our long-term prosperity and constitutional principles, to support sound policy and the rule of law: They live here.

There has never been a shortage of risk(s) in the world. For a long time the U.S. was viewed as low risk, which provided us a great advantage. That no longer seems to be the case.