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The Enduring Populist Threat

If anti-elitism is a pillar of modern populism, it should be no surprise that populists have come to power at a time of soaring income and wealth inequality. But the “them” versus “us” populist narrative does not capture merely a conflict between haves and have-nots.
WASHINGTON, DC – JANUARY 06: A large group of pro-Trump protesters stand on the East steps of the Capitol Building after storming its grounds on January 6, 2021 in Washington, DC. A pro-Trump mob stormed the Capitol, breaking windows and clashing with police officers. Trump supporters gathered in the nation’s capital today to protest the ratification of President-elect Joe Biden’s Electoral College victory over President Trump in the 2020 election. (Photo by Jon Cherry/Getty Images)

As Donald Trump’s presidency begins to recede, his defeat now seems to be a harbinger of populism’s demise, with the storming of the US Capitol that he incited on January 6 amounting to little more than his presidency’s death rattle. And yet, there is plenty of reason to think that populism will persist – and possibly even gain ground in the coming months and years.

It has a lot of momentum, growing in strength in the advanced economies since the turn of the century, and receiving a major boost from the 2008 global financial crisis. But it was in 2016 – with the Brexit vote in the United Kingdom, followed by Trump’s electoral victory in the United States – that populism began to dominate western political discourse.

At that point, Hungary’s right-wing populist prime minister, Viktor Orbán, had been in power for more than six years. Poland’s Law and Justice Party (PiS), led by Jarosław Kaczyński, had controlled the country’s government – often following Orbán’s illiberal playbook – for a little over one year. And in Greece, a coalition of right- and left-wing populists had emerged following the country’s 2015 debt standoff with the European Union.

But, after 2016, support for populists across Europe went into overdrive. While the National Front’s Marine Le Pen lost France’s 2017 presidential election, she made it to the second-round runoff against Emmanuel Macron. Later that year, the far-right Alternative for Germany won 12.6% of the vote in federal elections and entered the Bundestag for the first time, with 94 seats. The AfD – which Germany’s domestic intelligence agency is now moving to investigate as a possible threat to democracy – remains the country’s leading opposition party. Far-right parties are now the second and third largest in Finland and Sweden, respectively.

In Italy, two populist parties – the Five Star Movement (M5S) and Lega – formed a coalition government in 2018. And in the 2019 European Parliament elections, populist parties from a number of countries performed strongly.

Populism is no rich-country malady. Latin America’s long history of left-wing populism – exemplified by Venezuela’s Hugo Chávez and Nicolás Maduro, Ecuador’s Rafael Correa, and Bolivia’s Evo Morales – has not spared it from the ascendance of a right-wing variant, exemplified by Brazil’s Jair Bolsonaro. Elsewhere in the developing world, the Philippines’ Rodrigo Duterte, Turkey’s Recep Tayyip Erdoğan, and India’s Narendra Modi have all embraced elements of right-wing populism, such as religious and ethnic chauvinism and subversion of constitutional norms.

With so many populists still firmly in power, the notion that the trend will simply dissipate following Trump’s defeat seems like wishful thinking. In fact, even in the US, Trump’s brand of right-wing populism has not been definitively repudiated. Despite his bungling of the pandemic response, Trump won more than 74 million votes in the 2020 election – the second-largest number for a presidential candidate. And, far from rejecting his legacy, the Republican Party has continued to kowtow to Trump, including by refusing to convict him for inciting the insurrectionists at the US Capitol. In Congress, the GOP is now represented by Trump supporters like Marjorie Taylor Greene, who touts bizarre conspiracy theories and has endorsed political violence, and Madison Cawthorn, who faces multiple allegations of sexual harassment and has a record of making false and unsubstantiated claims.

THE POPULISM PUZZLE

And yet, while populism may not weaken on its own, it is hardly invulnerable. We have learned a lot since 2016. Social scientists have written thousands of papers and books examining the causes and consequences of the recent rise of populism. In our recent survey, “The Political Economy of Populism,” we discuss 250 works written and published in the last five years.

We structured our survey around four key questions. First, what exactly is populism? After all, the term is applied to a wide diversity of movements and leaders, which may seem to have as many differences as similarities.

Second, what drove populism’s recent rise? From economic insecurity to immigration to cultural change, several factors must be addressed if we are to weaken populism’s appeal.

Third, what are the consequences of contemporary populism? Most latter-day populists seem to have learned from the mistakes of their predecessors. But that does not mean they have fulfilled their promises to their constituents.

Finally, how can populism be countered? Unfortunately, given its complex economic, political, and social causes and the lack of real-world test cases, we can only engage in well-founded speculation.

LESS THAN IDEOLOGY

According to Socrates, “the beginning of wisdom is the definition of terms.” But a clear definition of populism has proved elusive.

Following extensive studies of left-wing governments in Latin America in the twentieth century, economists often used populism as shorthand for a particular brand of inefficient macroeconomic policy. As Rudi Dornbusch and Sebastián Edwards put it in 1991, populism is “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 nonmarket policies.”
But, while Latin American-style left-wing populism still exists, it has largely been superseded by a right-wing variant with little fondness for redistributive economic policies. Typically relying on xenophobic nationalism and religious conservatism, today’s populists tend to focus on issues of identity and morality, not class-based interests.
In his 2018 book The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era, the economist and political scientist Barry Eichengreen compared the challenge of defining populism to that of defining pornography. “I know it when I see it,” US Supreme Court Justice Potter Stewart famously said of the latter. But is identifying populism really so intuitive? Probably not – especially because political leaders often use it as an epithet to tar their opponents.

Nonetheless, the political scientists Cas Mudde and Cristobal Rovira Kaltwasser offer a useful place to start. In their view, populists subscribe to a “thin-centered ideology” that divides society into two “homogenous and antagonistic” groups: the pure people and the corrupt elite.

As a “thin-centered” ideology, populism isn’t really an ideology at all, but rather a template into which one can force a worldview or discourse. And it brooks no nuance: “we” are always good, and “they” are always bad. This logic of homogeneity feeds the common populist mantra that one strong leader can represent everyone – or, at least, everyone included in the “people” – and should be unencumbered by constitutional checks and balances, which are often regarded as tools of the elite.

THE TINDERBOX ECONOMY

If anti-elitism is a pillar of modern populism, it should be no surprise that populists have come to power at a time of growing income and wealth inequality. While globalization and technological progress have benefited the global economy overall, only some have won big – and many have lost.

The losers have tended to be middle- or lower-skill workers – such as manufacturing workers in the American Rust Belt – whose jobs have been outsourced, offshored, or automated. In the US, where access to health care and higher education depends on employment and income, the consequences have been particularly dire. These economic trends may be a major cause of the rise in what Anne Case and Angus Deaton have called “deaths of despair” (owing to suicide, drug overdose, and alcohol), which primarily affect people without a bachelor’s degree and partly account for the declining life expectancy of white Americans.

It is no coincidence that the same groups that have lost their jobs in industries like manufacturing have been among the most likely to vote for populist leaders and causes, not only in the US, but also in the UK and Western Europe. Nor is it a coincidence that support for populists surged after the 2008 global economic crisis, when ordinary workers’ livelihoods were destroyed, while governments used their tax dollars to bail out big banks.

Post-crisis austerity only intensified voters’ resentment. As Thiemo Fetzer has shown, in the UK, austerity-induced welfare reforms that began in 2010 helped boost support for the UK Independence Party and, later, for Brexit. Likewise, in Sweden, the center-right government’s flagship “make work pay” policy of 2006 bolstered support for the far-right Sweden Democrats.

These experiences suggest that the coronavirus pandemic – which in many countries has triggered a severe recession and large-scale unemployment – could well fan the populist flame. Like the post-2008 period, struggling workers are seeing those at the top bank soaring gains, with billionaires’ wealth swelling by $1.3 trillion since the COVID-19 crisis began.

Yet supportive policies – such as fiscal stimulus, job-protection schemes, support for national health systems, minimum-wage increases, and direct assistance to crisis-hit communities – could go a long way toward offsetting this impact. In this sense, US President Joe Biden’s $1.9 trillion COVID-19 relief plan bodes well. Yet, the heated debate over the bill – which led to the weakening of key provisions and the removal of the minimum-wage hike – shows that the risk of future fiscal tightening remains salient.

IDENTITY POPULISTS

But the “them” versus “us” populist narrative does not capture merely a conflict between haves and have-nots. If it did, a cartoon plutocrat like Trump would not have been able to campaign as the voice of the people and channel anti-elite sentiment. Instead, the appeal of populism contains a significant cultural component, encompassing race, religion, and values.

The political scientists Pippa Norris and Ronald Inglehart argue that populism reflects the rejection of “progressive” values, including freedom of expression, environmental protection, gender equality, racial and cultural diversity, and tolerance of LGBTQ+ and disabled people. In recent decades, these values have shaped a “silent revolution” – one that has left formerly dominant groups (especially white men) feeling isolated, anxious, and under attack.

The economist Benjamin Enke puts it another way, suggesting that populists tend to tout “community values” as an antidote for “universalist values.” The urge to reclaim one’s “community” may be tied to the fact that, as the political scientist Robert Putman showed in 2000, Americans have become increasingly disconnected from family, friends, neighbors, and democratic structures in recent decades.

Economic insecurity likely compounds these feelings of uncertainty and isolation. This may then trigger what Norris and Inglehart call an authoritarian reflex, in which people “close ranks behind strong leaders,” marshal in-group solidarity, reject outsiders, and expect rigid conformity to behavioral norms.

This tendency – and, more fundamentally, the link between cultural and economic insecurity – may explain why immigration is so central to the modern populist platform. Immigration itself is not what fuels populism; on the contrary – as shown in several papers discussed in our survey – if it is managed well, with newcomers being integrated effectively into society, it can ease populist sentiment. It is when people fear that immigrants are disrupting their communities or taking their jobs that populism finds fertile ground.

Populist leaders are well aware of this. That is why they exaggerate the scale and risks arising from immigration. There is no clearer example of this than when Trump declared a national emergency on the border with Mexico in 2019, claiming that the US was being “invaded” by “drugs and criminals.”

The truth – as the late Alberto Alesina, Armando Miano, and Stefanie Stantcheva showed in 2018 – is that immigration is occurring on a far smaller scale than most people think. Immigrants comprise about 10% of the US population, not 36%, as the average American believes. In Italy, the real share is 10%, compared to a perceived share of 26%.

THE TWITTER ZONE

Similar gaps between perception and reality exist in many other areas, such as redistribution and trade. And, as with immigration, populists are eager to enlarge and exploit them. Thanks to the internet, that is easier than ever.

As one of the authors (Guriev), together with Nikita Melnikov and Ekaterina Zhuravskaya, found in 2019, the spread of 3G internet is linked to decreased confidence in incumbent governments – a trend that opens the way for populists. This effect probably stems from the increased use of social media, which research shows fuels polarization, xenophobia, and support for populists.

According to one study, users who deactivated their Facebook accounts a month before the 2018 midterm elections in the US displayed significantly reduced polarization (in addition to less factual news knowledge and increased subjective well-being). This shift may be linked to the escape from social media’s algorithmically constructed “echo chambers,” in which one’s existing views reverberate, but are never challenged. It may also reflect reduced exposure to false or misleading information, which is disseminated particularly effectively on social media.

After Trump incited the mob attack on the US Capitol, several social-media platforms – including his favorite, Twitter – banned him, as well as accounts associated with right-wing groups like QAnon. But serious questions remain about the extent to which deplatforming can dissipate populists’ influence.

THE PRICE OF POPULISM

That influence has far-reaching consequences. Given the lack of macroeconomic catastrophes, it may seem that modern populists have learned from the excesses of their predecessors. But evidence suggests that the adverse economic effects of their policies are far from negligible.
A study of more than 50 populist regimes in 60 large countries (accounting for 95% of global GDP) since 1900 showed that 15 years after left- or right-wing populists take over, real GDP is about 10% lower than it should be, relative to output growth in comparable economies. Moreover, the study’s authors find that the populists’ policies do nothing to reduce inequality.

The UK’s Brexit experience accords with these results. Since the referendum, the UK economy has lost about one percentage point of GDP per year. Domestic investment fell, and inward foreign direct investment plunged by about 20%. By March 2019, the number of investment projects from the EU’s remaining 27 countries had declined by about 9%, and the number of UK outward investment transactions in the EU27 had risen by 17%.

Meanwhile, increased import costs were passed through to consumer prices, which rose by nearly 3% by September 2020, costing the average household £870 ($1,200) per year. The costs appear to have been borne disproportionately by residents of the Midlands and Wales (who tended to support Brexit), rather than in London (where most voted to remain in the EU).

As for Trump, early evidence suggests that his policies did not have a profound economic impact. But, like many populists, he did mount attacks on institutions, undermining confidence in courts, the media, and elections. Given the critical role strong institutions play in supporting long-term growth, this could have lasting consequences.
Moreover, Trump seems to have significantly undermined civility and trust, with its associated impact on productivity and well-being. By normalizing hate speech, for example, he contributed to a sharp increase in hate crimes. Similar patterns have been documented in other countries and settings.

Finally, there are the excess deaths caused by Trump’s utter mishandling of the pandemic – a failure so great that some accuse him of “pandemicide.” Other populists are guilty of similarly botched responses. For example, like Trump, even after contracting COVID-19, Bolsonaro refused to implement effective containment policies and downplayed the risks.

This behavior discouraged populists’ supporters from taking even the most basic protective measures. In the US, for example, simple mask wearing became highly politicized. Reflecting populism’s “thin-centered ideology,” suddenly “community values” were far less important than “individual freedom.” When scientists and public-health experts warned that rejection of pandemic-related mandates was increasing morbidity and mortality, they were decried as elites – out of touch, dishonest, and corrupt.

DISARMING THE DEMAGOGUES

Despite much valuable research on the causes and consequences of populism, there is not yet a definitive answer to the question of what weakens it. But a few promising avenues for action stand out.

Beyond avoiding the austerity trap after the COVID-19 pandemic, policymakers must address rising inequality, with policies that provide greater economic security and opportunity to those whose lives and livelihoods have been upended by globalization and technological progress. Given the geographical concentration of populist sentiment, there may be scope for place-based policies. In any case, a strong social-safety net is essential.

At the same time, leaders must tackle unfair and illegal practices that reinforce elites’ unjust privileges, including tax avoidance and evasion, corruption, and elaborate transfer pricing. This could go a long way toward restoring the public’s faith in the fairness of the market economy.

Such measures should be complemented by more open dialogue and participatory policymaking – vital to narrow the gap between the “people” and the “elites.” As Michael J. Sandel stresses, this will require urban, educated groups to empathize with the exurban and rural communities that feel isolated, neglected, and dismissed.

Finally, countries should aim to strengthen regulation of social-media platforms. Here, the EU has taken some initiative, but much more must be done.

While these recommendations are mostly speculative, they reflect the substantial knowledge researchers have generated since the latest populist wave began. The ball is in policymakers’ court.

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