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The Year Ahead 2019

The New Old Populism

As populist politics takes hold in developed countries, Latin America’s long experience with such governments is instructive. Ultimately, the lower- and middle-income voters who support populist leaders typically find themselves worse off than they were before.

LOS ANGELES – For the better part of a century, populism was widely regarded as a distinctly Latin American phenomenon, a recurring political plague on countries such as Argentina, Ecuador, and Venezuela. In the last few years, however, populism has gone global, upending the politics of countries as diverse as Hungary, Italy, the Philippines, and the United States. Jair Bolsonaro, Brazil’s president-elect, is the latest example of a larger trend.

Populist politicians gain traction when workers and middle-class citizens feel wronged by their countries’ elites. In their unhappiness, voters turn to strong, charismatic personalities whose rhetoric often focuses on the causes and consequences of inequality. Moreover, populist leaders are nationalistic, and their currency is confrontation. Hence, “the people” must be pitted against the political establishment, large corporations, banks, multinationals, immigrants, and other foreign institutions.

Once in power, populist governments tend to implement policies aimed at redistributing income. More often than not, this entails unsustainable fiscal deficits and monetary expansion. Populist policies – which also include protectionism, discriminatory regulation, and capital controls – violate most of the core principles of traditional economics. But heterodoxy implies a break from the status quo. And according to populists, because the status quo is the source of their countries’ ills, breaking with it is the only solution.

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