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Good Politics, Bad Economics

Advocates of liberalism find it hard to accept that populist and authoritarian governments could ever formulate sound economic policies, and they often assume that "free markets" will always provide widespread prosperity and accountability. They're mistaken on both counts.

LONDON – Bad economics breeds bad politics. The global financial crisis, and the botched recovery thereafter, put wind in the sails of political extremism. Between 2007 and 2016, support for extremist parties in Europe doubled. France’s National Rally (formerly the National Front), Germany’s Alternative für Deutschland (AfD), Italy’s League party, the Freedom Party of Austria (FPÖ), and the Sweden Democrats have all made electoral gains in the past two years. And I haven’t even mentioned Donald Trump or Brexit.

To be sure, this explosion of political extremism cannot be explained by economic distress alone. But the correlation between bad economic events and bad politics is too striking to be ignored.

By bad politics, I mean the xenophobic nationalism and suppression of domestic civil liberties seen in countries with populist governments. By good politics, I mean the internationalism, freedom of expression, and accountable governance that prevailed during the post-war era of prosperity. Let’s call them illiberal and liberal democracy for short.

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