There is a lot of punditry regarding the apparent rise of populism in the world today especially in light of gains made in Europe politically, June’s Brexit vote, and the election of Donald Trump. Economic populism is defined as:
“an approach to economics that emphasizes growth and income redistribution and de-emphasizes the risks of inflation and deficit finance, external constraints, and the reaction of economic agents to aggressive non-market policies.”
Most pundits also note that economic populist approaches ultimately fail because they are unsustainable. However, “ultimate” can be a relatively long time because the policies are…well, popular. The unsustainability is borne in the fact that people shift spending from an uncertain future to the perceived “good” present. With “boom times,” the populist leader feels vindicated and their approval ratings likely improve also.
Since the 2008 financial crisis, most of the economies in the developed countries have grown little, Deflation- not inflation- has been the problem. Politically, however, there is no rhyme, reason or cohesive philosophy that binds populist leaders. People like Marine Le Pen in France, Boris Johnson in Britain, Deppe Grillo in Italy, Geert Wilders in Holland and Pablo Iglesias in Spain have disparate political views in other areas. Instead, they reframe the message and take advantage of the establishment’s crisis of legitimacy to achieve a common economic ends- the redistribution of wealth. Economically, populism becomes a message that wealth is not being redistributed enough, or in some cases, not to the right people. If anything unites these disparate leaders it is the raw spirit of revolt.
Populism is nothing new. Latin America has been home to some of the biggest movements since 1945 and they foretell the future of populism. People like Juan Peron, Alan Garcia in Peru, Daniel Ortega in Nicaragua and Salvador Allende in Chile- leaders Left and Right- have seized on economic populism. Recently, Hugo Chavez and Nicolas Maduro have taken it to new lows. They all share one thing in common- an economic agenda based on protectionist trade policies, huge budget deficits, increased debt and eventually inflation and a currency crisis.
Their approach can best be summarized in a message from Juan Peron to Bolivia’s Carlos Ibanez in 1953:
“My dear friend: give the people, especially the workers, all that is possible;
There is nothing more elastic than the economy, which everyone fears so much because no one understands it.”
Peruvian economist Oscar Vidarte has noted the similarities and, more importantly, the differences between the rise of populism in America and that of Latin America:
Trump fits the bill. But in Latin America, the rise of caudillos (strongmen) is enabled by weak institutions. In the U.S., you have to look for different reasons.
Today, however, there is a serious backlash against these leaders as evidenced by recent elections in Argentina, Brazil and Bolivia. Even in Venezuela it seems on its last legs. One economist noted that the best way to get rid of a populist is to let them govern because they are notoriously bad at it.
The reason is that is easier to mobilize an angry electorate, but much harder to consolidate it especially when the hard decisions of governing have to be made. Although great at catchy slogans (“the 1% versus the 99%” or “make America great again”), they defeat their own cause with their outlandish policy solutions (Sander’s “Medicare for all/” free college tuition or, a wall on the border and a 35% import tax). The solutions they offer, however, make them no less popular. Instead, their rise is symptom of a crisis that the old order has broken down and something more “popular” is the answer.
Perhaps the biggest blow to the old order and the one that put the world on notice was the Brexit vote. To illustrate the relative short-term gains of a populist agenda, most people predicted an economic catastrophe for Great Britain, but eight months later their economy continues to grow. Likewise, most economists predicted the same after Trump won the election but the stock market after an initial hit has rebounded, commodity prices have recovered and estimates of growth have also increased. Trump may very well stimulate the economy for a while until the imbalances eventually emerge.
Leaving aside the economic shortcomings of his policies, Trump is suggesting that to make America great again, we address the working middle class which basically means addressing income inequality. The typical Trump supporter is supposed to be displaced, older, less educated, white, middle class, and male. But this person did not propel him into the presidency. Trump did very well with people outside that description. Hence, something else besides the economy and income inequality is at play.
Again, compare this with the Brexit vote. The proponents suggested an exit from the EU because of the burdensome regulations and exorbitant fees. That is hardly a prescription for addressing middle class economic worries. In fact, some of the largest British businesses financially supported the Leave campaign. The emotions that led to the Brexit vote was not anger at the 1% or income equality. Instead, the middle class and poor in Britain were angry at other poor and middle class people- namely, immigrants.
What unites the Trump supporter and the Bexit supporter is not anger at exclusion at the hands of globalization, but a shared sense of anxiety that they no longer control their own destinies. Income inequality can add to the distress, but because of the distribution of support from various economic statuses, it is more likely economic distress is not the only factor. And the key to understanding the phenomena and the solution to deter it can be found in the immigration crisis facing continental Europe.
Trump’s executive order on a travel ban from seven Muslim countries is the key to understanding this. Immigration has been a hotly contested issue throughout American history. Surges of immigration or influxes of refugees have centered on concerns of their social impact. It forces one to confront what it means to be “American.” The same is true in Europe where what it means to be German, or French, or Hungarian have lines more greatly delineated than in the US. Immigration forces one to confront one’s national identity.
In a recent poll, only 32% of Americans say that being born in the US gives one a sense of their national identity. Instead, speaking a common language- English- is a major factor in determining one being American as 72% said. Another 45% said sharing American customs and traditions was important. And 32% said being Christian was important when deciding if someone was “American.” These results nicely mirror similar polls out of Europe with a common language coming out on top, customs and traditions being important, but religion considerably less important a factor than in the US.
European and American views on what it takes to “be one of us” are quite similar. This indicates that immigration and refugees will continue to be a flash point of contention for some time. As such, it becomes a weakness that allows a populist an opportunity to exploit. The rise of populist strongmen in Central Europe, possibly Western Europe, the Philippines, and Trump in the US has little to do with economic populism and much to do with a perceived sense of a loss of a national identity.
And to prove the point, there is one country where populism has not taken root and likely never will again (it did for a brief 8 years that resulted in economic disaster)- Japan. If any country cries out for a need some immigration reform, it is Japan given the aging of their population and declining birth rates. Simply, they need more workers.
Unlike the US, Japan has no birthright citizenship. People who get visas to work in Japan pass on their foreign citizenship to their children unless they go through the arduous, burdensome naturalization process. A class of outsiders is created that face all forms of informal and institutional discrimination.
A perfect example are the “dekasegi,” Brazilian immigrants working in Japan who entered the country in the 1980’s-1990’s. Although ethnically Japanese, culturally they were not. They failed to assimilate into Japanese culture. When the economy turned sour after 2008, they were asked to leave the country. Even Koreans who have a greater history in Japan who have assimilated are still treated with discrimination of some form.
Japan’s immigration policy is not based on racism. It is based on nationality. Guest workers are not considered true immigrants and their children and grandchildren are seen as outsiders. While on the whole the Japanese are very welcoming people, corporations are a different story and employers treat them as foreigners.
Among the Japanese population, therefore, xenophobia is practically non-existent, but among the perennial conservative ruling class and businesses, it exists. Essentially they fear higher crime and fewer jobs for native Japanese- something that spurs populism in Europe- but in Japan it is more an inculcated concern for the homogeneity of the population and what it means to be “Japanese.”
For example, when Ariano Miyamoto- who is half Japanese and half black- won the title of Miss Japan, there was an outcry. There was concern she was not Japanese enough. A popular website in Japan decried that fact.
Thus, the solution to ensuring that another populist like Donald Trump does not rise to the top is not the draconian measures of a homogeneous society such as that which exists in Japan. The United States is too much of a melting pot to go that route (although that is exactly what many on the alt-right want). Instead, given that melting pot nature of the American population, the solution is assimilation such as the relatively few Koreans have assimilated into Japanese culture and suffered less discrimination than their Brazilian counterparts. This would require a titanic shift of trends towards multiculturalism advanced by the Left over the previous decades. To stem the tide of populism, the answer is conservatism which respects legal immigration but insists on assimilation.