Published in Nikkei Asia 23/4/2022
In the first round of the French presidential election on April 10, hard right candidate Marine Le Pen racked up a strong result, with a share of the vote just a few percentage points below the total garnered by current President Emmanuel Macron. Opinion polls suggest that 56% of younger voters plan to vote for her in the run-off on April 24.
How could this happen? Quite easily, would be the answer of Eric Protzer and Paul Summerville, the two authors of the recently published book, “Reclaiming Populism”. Indeed, France is one of the case studies they provide, the others being the U.S., the U.K. and Italy.
Why the narrow focus? Because these are the rich countries where populist movements have been successful enough to change the political weather.
The authors do not examine middle-income countries like Brazil or the states of Southeast Asia as historically it is hardly a new or surprising phenomenon in the developing world. High income Asian countries are mentioned, but as positive examples, like the Scandinavian countries, in such matters as the social status of teachers.
The conclusion is straightforward and has implications everywhere.
Contemporary populism is rooted in structural economic unfairness that has been almost a half-century in the making… Populist grievances stem from a sense of durable and genuine economic unfairness and must be earnestly addressed rather than dismissed. Demonizing voters as deplorable, entitled, racist or privileged is a sure way to push them to illiberal extremes.
Eric Protzer is a research fellow at Harvard University’s Growth Lab, and Paul Summerville is an adjunct professor at the University of Victoria. Both men are Canadians, which may give them a cooler perspective on the cases they analyze. Their thesis is concise, clear and convincing.
There has been much discussion on populism since the momentous year of 2016, when Donald Trump won the U.S. presidential election and the British electorate voted to leave the EU against the advice of the government, every major political party, big business, the trade union movement, the U.S. president, the Japanese prime minister, myriads of celebrities, and even Xi Jinping.
“Reclaiming Populism” uses an economic approach to understand the “why, when and where” of populism – why it succeeded in some places and times, but not in others.
Complex human phenomena often have multiple causes. In the case of the rise of populism, all kinds of contributory factors have been cited. Amongst them are immigration, social media, the policy response to the global financial crisis of 2008 and trade shocks from globalization.
Protzer and Summerville do not dismiss these lightly – indeed, they cite evidence that financial crises, as opposed to other kind of economic crisis, are associated with rising populism. However, none of these explanations are sufficiently powerful to answer the “why, when, where” question. These factors were present to a similar degree in many places where populism never took off.
At first glance inequality looks as if it might be a promising candidate, but the authors note that France has lower inequality than so far populism-resistant countries like Australia and Portugal.
Meanwhile, Swedish billionaires have greater wealth than American billionaires relative to GDP, but are respected for creating multinationals like H&M and Spotify, rather than being vilified by the Swedish equivalent of Bernie Sanders, the radical US. senator.
The key concept that Protzer and Summerville favour is “fairness”, which may seem similar to equality, but is very different when explained in terms of evolutionary biology. It requires equality of opportunity – so no ethnic bias or educational advantages – but also that individuals are rewarded for intrinsic talents that raise productivity, thus benefitting the group. Aggressively equalising outcomes breaks the relationship between reward and contribution, reducing overall welfare.
Fairness is hard to quantify, though the authors try by proxying it with social mobility. They bolster their case by citing experiments, with young children and even chimpanzees, which show that inequality is accepted, indeed welcomed, when based on contribution. It’s the unfairly earned rewards that cause the chimp to rattle the bars of his cage or the angry politician to propose a swingeing wealth tax.
Having made their diagnosis, the authors sketch out a set of remedies, paying due attention to the significant differences between countries. Thus, in the U.S. the costs of college education and vocational training is forbidding to low income people; public transport networks are underdeveloped; the disappearance of medium skill routine jobs has not been offset by the increase in medium skill non-routine jobs, as has been the case in the EU and Japan. There is a role here for remedial government action.
For the UK, the increasing dominance of London and associated sky-high house prices and rents has “left behind” large swathes of the country. With nearly all tax revenues going to central government, local governments in far-flung areas are unable to finance new infrastructure. The authors propose regional devolution and more housing supply.
France, by contrast, has yet to be “de-Marxified”, with workers’ rights entrenched to such a degree that hiring is deterred and start-ups are penalized. In the authors’ assessment, Macron’s reform program was sensible, but his decision to hike the gasoline tax, thus provoking the revolt of the “gilets jaunes” (truckers) was a classic instance of an “unfair” policy – and confirmed his image as an arrogant technocrat.
Italy also needs labour market reform, simplified taxation and a host of other changes if is to break out of its multidecade downward cycle.
The authors recognize that there is no quick fix: addressing populism is “a generational task”, they say. They also point out that populism isn’t necessarily “bad”. At the very least, it delivers new information to policy makers that might otherwise have been ignored.
America’s first populist party, The People’s Party, was active in the late 19th century. It was anti-immigrant and anti-trade, but also anti-monopoly and anti-corruption. It merged with the Democratic Party at the turn of the century and several of its proposals, such as progressive taxation, became features of the New Deal reforms enacted by President Franklin Roosevelt in the 1930s. As the authors note, “the fact is that populist voters have historically protested key societal injustices and often paved the way for much-needed reform.”
For Asia-based readers, an obvious question remains. Why was there no populist backlash in Japan during the “lost decades” after the collapse of the economic bubble in the early 1990s? Is there something to the “culturalist” explanations that the authors are keen to avoid?
Not necessarily. After all, Japan was no stranger to violent street protests from the early post-war period through to the 1970s. In the case of the 1980s bubble, it was akin to a mass delusion that everyone shared to a greater or lesser extent and everyone had to face the consequences.
Wealthy asset owners did worst of all as stocks and real estate prices plunged 80%. Crucially, and in stark contrast to the global policy response to the financial crisis of 2008, many famous financial companies disappeared off the radar screen and those that remained dwindled into shadows of their former selves.
Even so, Japan continued to rank highly on the OECD’s social mobility metric, particularly in terms of access to high quality education. Life may have been tough – with the development of a two tier labour market – but there was little sense that ordinary people were being disrespected and ripped off by greedy, arrogant elites.
Japanese politicians rarely get much credit from their own citizens, let alone foreign commentators, but it is hard to avoid the conclusion that they have done an excellent job in preventing the “structural economic unfairness” that drives populism. On that vital score, Japan has better politicians than the UK, the US and France.
That said, there is no room for complacency in the case of Japan or indeed other Asian countries. Even a top scoring socially mobile country such as Norway is experiencing protracted decline in mobility as working class educational attainment stagnates.
If AI were to cause widespread job destruction, if another global financial crisis were to trash our economies or a more deadly pandemic were to divide us into rich work-from-homers and impoverished virus-exposed manual workers, if conventional politics was deemed to have failed, anything could happen. Wise politicians understand that instinctively and keep perceived “unfairness” to a minimum.
“Reclaiming Populism” appears at a time when a number of wildly different futures lies before us, as symbolized by the Le Pen – Macron runoff. It takes populism seriously and makes a valuable contribution to the debate.
What the book does not say but could have is that when it comes to social cohesion, Western countries have plenty to learn from the wealthy Asian democracies.