You would think that once we elected a small minded populist that we would have learned our lesson, right?
Not even close.
Across the globe populism and populist thought has become the rule of the day…..but is it here to stay? You betcha.
The vote for Brexit and the election of Donald Trump has baffled the main stream and the establishment. Most market participants and observers didn’t believe ex ante that they were possible, and as a result were completely surprised when the unexpected happened. Ever since the term populism has become socio-politically relevant in modern-day public discourse. Google Trends illustrates that there was a veritable explosion in search queries for the term “populism” last year:
But, populism — regardless of its political flavor — merely represents a symptom. The generally surprising results were consequences of the economical erosion of the past years Although there are idiosyncrasies in every country that foster the rise of populist movements, the ailing foundation of the economy provides the fertile soil and is the major driver of people’s dissatisfaction and the associated voting decisions. To assert that populism is the reason for this process of political change is in our opinion far too simplistic. An analysis of stating that economic erosion is responsible for the rise in populism is supported by by a McKinsey study, which examines the trend in real household incomes in 25 industrialized nations.1 McKinsey arrived at the striking conclusion that real incomes of 65 to 70 percent of households in developed countries either stagnated or even declined between 2005 and 2014. The following chart illustrates the trend in household incomes in selected countries.
In this country the question on most every normal person mind is…..just why is this brand of populism working?
Watching the Republican tax plan race through Congress, one is reminded of a big apparent difference between Donald Trump’s program and other populist movements in the Western world. In America, Trump is leading something that is best described as plutocratic populism, a mixture of traditional populist causes with extreme libertarian ones.
Congress’ own think tanks — the Joint Committee on Taxation and the Congressional Budget Office — calculate that in 10 years, people making between $50,000 and $75,000 (around the median income in America) would effectively pay a whopping $4 billion more in taxes, while people making $1 million or more would pay $5.8 billion less under the Senate bill. And that doesn’t take into account the massive cuts in services, health care and other benefits that would likely result. Martin Wolf, the sober and fact-based chief economics commentator for the Financial Times, concludes, “This is a determined effort to shift resources from the bottom, middle and even upper middle of the U.S. income distribution toward the very top, combined with big increases in economic insecurity for the great majority.”
Populism? Or Nativism?
Last week the Cambridge Dictionary declared populism its 2017 word of the year. In many ways, that makes perfect sense. Since Brexit and Trump, virtually every political event has been couched in terms of populism, from the Dutch parliamentary elections to the French presidential elections earlier this year. New media catchwords such as “fake news” are linked to populism.
However, it has become the buzzword of the year mostly because it is very often poorly defined and wrongly used. Indeed, the Cambridge Dictionary’s definition perfectly illustrates this. It describes populism as “political ideas and activities that are intended to get the support of ordinary people by giving them what they want”.
Oddly enough, this is almost identical to the interpretation used by many populists themselves. However, rather than populism, it describes responsive politics, as exists in idealistic models of democracy. The only part of that description that has some overlap with more common academic definitions of populism is the reference to “ordinary people”.
This is working for the GOP….why? Basically they are gutless wonders that will lick anyone’s boots that will give them a legislative win…..they care little for the country….their only concern is pushing crap through the legislative process….the American people can be damned for all they care…..and they have the perfect president to do their crap for he cares NOTHING for the American people.
Populism is not just an American thing…….
There is no doubt that nationalist populism will remain an important driver of Europe’s debates. As we showed in our 2017 Chatham House research paper on the future of Europe, elites across the EU identify populists as their number one challenge. Thus, as we leave 2017 it seems that many observers were too optimistic about the ‘Macron moment’ and the supposed defeat of nationalist populism that was reflected in losses for Marine Le Pen and Geert Wilders in the Netherlands.
Indeed, as Macron’s popularity plunged, Austria swung sharply to the right, electing the young conservative Sebastian Kurz, who has entered negotiations to form a coalition deal with the hard-right Freedom Party. Then, the Alternative for Germany (AfD) captured 12.6 per cent of the vote and 94 seats in the Bundestag in Germany’s federal elections, the strongest result for populism in the country’s post-war history and one that overturned the assumption that such parties could not find success in the country that gave birth to National Socialism.
And the beat goes on…….