An ironic contradiction is likely to define the global economic community’s convocation in Davos this week as it awaits Donald Trump’s inauguration. There has not been so much anxiety about US global leadership or about the sustainability of market-oriented democracy at any time in the past half-century. Yet with markets not only failing to swoon as predicted but rallying strongly after both the Brexit vote and after Mr Trump’s victory, the animal spirits of business are running hot.

Many chief executives are coming to believe that — what ever the president-elect’s weaknesses — the pro-business attitude of his administration, combined with Republican control of Congress, will lead to a new era of support for business, along with much lower taxes and regulatory burdens. This in turn, it is argued, will drive a big rise in investment and hiring, setting off a virtuous circle of economic growth and rising confidence.

While it has to be admitted that such a scenario looks more plausible now than it did on election day, I believe that it is very much odds-off. More likely, the current run of happy markets and favourable sentiment will be seen, with the benefit of hindsight, as a sugar high. John Maynard Keynes was right to emphasise the great importance of animal spirits, but economists have also been right to emphasise that it is political and economic fundamentals that dominate in the medium and long term. History is replete with examples of populist authoritarian policies that produced short-run benefits but very poor long-run outcomes.