Populism Is Rooted in Politics, not Economics
Some one billion people around the world are now being ruled by populists of one sort or another. That number will continue to grow if we continue to view populism as the result of economic rather than political dysfunction.
LONDON – Nearly 330 million Americans are governed by Donald Trump. Brazil, with 210 million people, has a newly-elected populist government. Nearly 170 million Europeans live under governments with at least one populist in the cabinet. Add the Philippines, with more than 100 million people, and Turkey, with nearly 80 million. All told, at least one billion people are now being ruled by populists of one sort or another.
The new populism is often blamed on a generation or more of stagnant median wages. In countries like the United States and the United Kingdom, the distribution of income has worsened, and the top 1% are reaping the lion’s share of gains from economic growth. The 2008 global financial crisis not only caused much pain; it also reinforced the conviction that Wall Street is Main Street’s enemy. No wonder politics has become confrontational.
If this story is right, the policy conclusion is simple: throw out the rascals who did the bankers’ bidding, tax the rich, and redistribute income more aggressively. Populism will then eventually fade away.