Summary
This article argues that continued assaults on American political institutions will have a profound negative economic impact both at home and abroad. Accordingly, institutional investors must begin to account for political risks in the United States and they should take a more public stance supporting electoral integrity.
Democratic backsliding is defined as the “state-led dehabilitation or elimination of the political institutions sustaining existing democracy.” The United States is currently undergoing such a ‘backsliding’ process as evidenced by recent increases in election-denying candidates and office holders. Investors and the financial community have a vested interest in reversing this trend. Political stability has long been a cornerstone of American investment. Given the United States’ centrality in the global economic system, a loss of confidence in this political stability could have global economic reverberations.