What triggers populist leaders to rise?
Political populism has often followed economic meltdowns like the one America has endured since the Wall Street meltdown in 2008 as a result of George W. Bush's stupid and criminal policy during 2000-2008, whose ripple effects rolled over in the past eight years. Most pundits say that had it not been for Obama's bail out of the Wall Street (a controversial move though), we would have seen the worst recession since the 1930s. But such hard facts are often forgotten by neocons and their supporters.
Financial crises have occurred throughout history, and they follow predictable patterns. In the post WW1 era, we witnessed the emergence of populist leaders like Hitler, Mussolini and Franco. You may recall that the general and dictator Francisco Franco (1892-1975) ruled over Spain from 1939 until his death. He rose to power during the bloody Spanish Civil War when, with the help of Nazi Germany and Fascist Italy, his Nationalist forces overthrew the democratically elected Second Republic. Adopting the title of “El Caudillo” (The Leader), Franco persecuted political opponents, repressed the culture and language of Spain’s Basque and Catalan regions, censured the media and otherwise exerted absolute control over the country.
In Japan, the financial crisis of 1992 touched off the “lost decade.” Smaller crises such as Black Monday in 1987 or the dot-com collapse in 2001 generally rebound in just two or three years.
This is not to say that nobody prospers for a decade after a severe financial crisis. Indeed, after the Great Recession of 2008-9, the wealthy came roaring back quickly. This gave the illusion of widespread prosperity but hid the fact that the recovery was wildly uneven, with a majority of Americans (from the silent 99%) seeing little or any economic improvement. [As I have mentioned earlier an Oxfam study showed that the economic disparity simply widened with 1% of the wealthy ones now owning 99% of the wealth. So, usually, the situation of those in the economic basement became worse.]
Census Bureau data show that from 2009 through 2014, only about the top fifth of the population saw any income growth while the bottom 80 percent have averaged no income growth at all.
Some scholars like Robert Barro of the American Enterprise Institute see the malaise not as the inevitable result of the crisis, but as the product of bad public policy. Whichever account you find persuasive, the financial crisis and the long, uneven recovery sowed the seeds for the current populism, argues AEI's president Art Brooks.
In an article in The European Economic Review, German economists look at the effect of financial crises on politics, reviewing 800 elections over 140 years across 20 advanced economies. They found that, after a financial crisis, nationalistic populist parties and politicians, using language that often attributes blame to minorities and foreigners, typically increase their vote share by about 30 percent. There is no such effect after ordinary recessions.
Consider moderate, so-called tolerant Sweden, where a 1991 parliamentary election came amid a financial crisis. Swedish voters rewarded a brand-new “New Democracy” party that focused heavily on law and order issues and proposed stringent restrictions on immigration. In recent years, we have seen one after another European countries embracing fascist leaders, some even elected to run the government.
With no simple solution for reviving equal opportunity, conventional politicians struggle with increasingly angry voters. Into this gap walk populists who specialize in identifying culprits: rich elites who are ripping you off; immigrants who want your job; free trade that’s killing our nation’s competitiveness. Their proposed solutions usually involve some combination of increased redistribution, protectionism and restrictionism. What a irony that Trump, the filthy rich casino mogul, whose wealth is acquired by denying others, now has become the successful populist leader!
So what path should conservatives follow to tackle such rises of populist leaders that even threaten platform? Here is the suggestion from AEI's Arthur C. Brooks -
"But merely returning to the narrow economic strategies of past decades will not work, either. Conservatives love to emphasize the need for higher economic growth, but have often missed the importance of more widely distributed growth. Leaders should set their focus on a system with more opportunity in the middle and bottom of the economy.
This requires a generational strategy to build an education system based on innovation, school choice and an emphasis on vocational training. It means rewriting tax and regulatory law to stop discouraging domestic investment and squelching job creation, while also attacking the corporate cronyism that gives special treatment to wealthy and entrenched interests. It demands authentic compassion for people on the periphery of society."