The Paradox of Populism

The controversy of populism requires meeting with a fundamental reality: poor economic policies do not necessarily result in the loss of power by a government. In fact, it is already quite possible for irresponsible populists to strengthen their chances of re-election, making even bigger but impossible promises to keep, and causing more economic damage.

But how did we get to this point, and what measures can we take to get out of there as soon as possible? Strong economic structural factors in recent decades including automation, trade and financial crisis have led many people who feel ignored or mistreated by them, right and left, who have had control of economic policies.

When anti-Establishment populists ascend to power, they implement a range of policies that generate uncertainty and discourage investments. And a smaller investment means smaller economic growth, and fewer good jobs. This would usually lead to a reaction mechanism in which the relevant government would be held accountable in the ballot box.

But populists are bypassing this mechanism, by encouraging the belief that the media are biased, experts are always wrong, and that the facts are not facts. The more people get angry, the easier it is to persuade them to accept this temptation.

And Brexit is a classic example. If you ignore them, or do not believe in economic data, then your personal experience in the United Kingdom over the next 12 months may be this: the new conservative government, withdraws from the European Union without an agreement that prevents trade and decouples companies from investing in Britain. Either unemployment will increase, or there will be less good jobs or both.

But will the electorate blame this government? Perhaps not, as anger levels increase a direct result of economic and financial shock. Therefore, the government will find it easier to blame the EU, experts, academics, media and immigrants for the situation. And politicians who are directly responsible for Brex's disaster can benefit from elections.

In India, the Hindu nationalists of Prime Minister Narendra Modi expanded their parliamentary majority in recent elections, despite the government's failure to keep its promises to voters.

And in the United States, President Donald Trump's re-election bid can follow a similar course. Trump seems to be intent on ruining the American economy by waging a full-scale trade fight against China. Usually, it can be expected to damage its support to voters who worry about access to export markets like American farmers are.

Instead, support for Trump in rural areas continues to be high, as in other parts of its electoral base. The tariffs are a tax on consumers, and meanwhile, harming domestic companies using raw materials, which they import from abroad.

For example, the local steel industry may benefit from steel tariffs, but there are many more people employed in steel - powered industries, and more damage to the same fees. In addition, populists in the United States and other countries welcome different forms of protectionism.

If this slows down the economy, as happens almost always, voters will become angry and more easily distracted. The only way to break this cycle is to address the core of the problem, creating more good jobs where they are needed.

The transition of the populist paradox and preventing the downward spiral into the economy requires policies aimed at creating better jobs everywhere. Building these policies is a promise that politicians can really maintain, and that advocates of liberal democracy no longer have the luxury to ignore.

“Project Syndicate” World.al