Considering Political Discontent
“A Strong Economy Won’t Make You Popular These Days.” That is the title of an opinion piece in the April 24, 2018 New York Times by Ruchir Sharma, who is the chief global strategist for Morgan Stanley Investment Management. Sharma observes that the leaders of Germany, France and the U.S. share one trait: “They are all unpopular at home despite the good economic times.”
Unlike most of the post-WWII era during which leaders of big democracies were rewarded for strong economies, Sharma believes the link between politics and economics has broken. He cites Donald Trump’s low approval rating even while consumer confidence in the economy is relatively high. The same holds true for Angela Merkel, chancellor of Germany, President Emmanuel Macron of France, Prime Minister Justin Trudeau of Canada and Prime Minister Shinzo Abe of Japan.
Sharma believes the explanation may be found in “the rise of angry populism, built on a rejection of the established order and a growing focus on issues of culture and national identity, rather than practical economic outcomes.” Sharma laments this trend, writing that “Democracies work best when voters hold politicians accountable for economic results.” If a good economy no longer matters, leaders “are free to push any policy that will energize their base,” and he cites Russia and Turkey as current examples of authoritarian leaders attaining high approval ratings while stirring nationalism and suppressing opposition.
It is unarguable that western democracies have done a poor job in delivering economic benefits to those sectors of their populations negatively impacted by globalization. Steven Brill wrote an article in the May 17, 2018 issue of Time magazine titled “How Baby Boomers Broke America.” The article is adapted from his book published in late May titled Tailspin. His article presents a veritable litany of decades of U.S. actions that have divided the population, not between Democrats and Republicans, but “the protected vs. the unprotected.” Brill included:
o Financial and legal engineering that “turned our economy from an engine of long-term growth and shared prosperity into a casino with only a few big winners”
o The Great Recession that cost millions of families their homes, savings and jobs
o A bailout of banks that secured their future with billions of taxpayer dollars
o A corps of 20 registered lobbyists for every member of Congress tasked with blocking any legislation that threatens their clients’ wealth
o Gerrymandering of congressional districts that assure easy wins for incumbents
Add to Brill’s list the Citizens United court decision that gave wealthy donors the upper hand in elections; the 2017 tax reform that favors corporations and stockholders over employees and individuals; and a May 21, 2018 Supreme Court decision allowing companies to use arbitration clauses in contracts to prohibit workers from filing class- action suits.
Sharma suggests that “the rise of angry populism” may indicate that “economic factors may no longer matter as much in a bitterly emotional political age.” The actions cited by Brill inflict severe economic consequences on the “unprotected.” Is it reasonable to think that a more equitable economy and democracy would reduce the anger? Would anti-immigrant anger and racial prejudice decrease if good jobs were plentiful? Would feelings of helplessness in confronting distrusted governments be reversed if elections were not overwhelmed by wealthy donors? Is the origin of political discontent economic or cultural? The answers could provide clues for how policymakers concerned with inequality may focus their resources.