Will this US Presidential Election be the beginning of the end of Populism?
Four years ago after the 2016 US presidential election, I attended a talk at the German Historical Society in DC. The talk was about the political environment in Germany before the rise of the dictatorship in the 1930s. Even though I was interested in learning history, I must say that I was a bit confused about the purpose and timing of this particular topic for discussion. Listening to President Obama’s speech at the Democratic party’s national convention last night, I now realized that I wasn’t the only one in this state of mind four years ago. Moreover, my subsequent experience and perception until now also matched with what he so eloquently verbalized in his speech. Certainly, there is a good closeness feeling you get when you discover someone else, the US President in this case, that relates to your own experience. However, my good feelings remain limited to this validation experience. I still remain uncertain and unsure about the future after the elections.
What led to the rise of the dictatorship in Germany was the result of the economic hardship in Germany. Sadly, some of this was the direct result of severe economic constraints imposed by the Allies in the form of WWI war reparations on Germany. Analogous to the German interwar period, the rise of populism in the US has been the consequence of economic hardship experienced by the working class of society. This economic hardship has been the result of twin effects of technological changes and globalization. Technological advancements and globalization have overall been beneficial for both developed and developing countries. But they had an adverse impact on those previously employed in now obsolete industries or those employed in using obsolete technologies. Unfortunately, as Paul Krugman recognizes in “What did we miss about globalization?”, policy makers failed to realize the significance of the geographic and skill gap concentration of the adversely affected working class. The efforts to remedy their misfortune were puny and misdirected at best. Raghuram Rajan writes in his book “Fault Lines”, that misguided policies of subsidizing housing loans, meant to boost the feel good factor for the economically affected class, instead created a financial bubble that crashed in 2008. This crash led to a long and painful recession recovery period in subsequent years. The working class that suffered the most economic hardship was not mono-racial. It included many Whites, Blacks and Hispanics. Black population in the US has endured economic depravity for decades if not centuries. In the 2016 election, Blacks and the Hispanics reduced their participation in voting with disillusionment in the political process. Economically affected white population on the other hand found populist ideas based on exploitation of ethnicity based social fractures seductive. They overwhelmingly voted for the populist ideas.
Sadly but unsurprisingly, populist ideas and policies of the last four years have failed to address the plight of the economically affected class. In fact, unilateral policy actions in international trade have backfired by further economically hurting this class.
Response to the populist attack based on ethnic identity is warranted. It is absolutely overdue in the case of black population which has endured not just economic but also undignified social discrimination. Hispanics also are now victimized under the rubric of immigration issues at the south border.This social malaise has to be addressed head on and corrected in the coming years. But at the same time, there are also measures needed for the overall economically deprived working class that also includes the affected white working class population. Certainly it is now clear that populist ideology of accentuating ethnic fractures has run its due course and reaching its end in its appeal, as the recent Brookings blog “President Trump is losing support among white working-class voters” shows. New ideas and solutions must be targeted to the affected working class. But the populist ideas should not just be replaced by the gimmickry like the housing subsidies, neither should the growth hindering right wing trade protectionist and obsolete industry protectionist policies be replaced by similar left wing ones. Rather than focusing on economic equality as the end goal, policies should focus on economic opportunity equality, especially for those who are at the short end of technological advancement and globalization. Productivity boosting and skills development measures should be the high priority, as I wrote earlier in my blog “It’s Productivity, Stupid”. Further beyond the domestic front, international rule based liberal order needs to be restored with more emphasis on protecting not just vulnerable countries but also vulnerable classes within countries.
Allies learned from the consequences of their post WWI treatment toward war losing countries. In the aftermath of WWII, reconstruction projects were initiated in the losing axis countries. International organizations like the UN, IMF and World Bank came into being to avoid further repetition. Then political leaders learned from their history. We may also find lessons from their own learning of history. As this democratic election campaign process unfolds in the remaining period, I hope that discussion on new economic development ideas and solutions percolate upward and become part of the important political agenda for a better future. I sincerely hope that this US Presidential election will indeed be the beginning of the end of Populism, not just in the US but globally.
