Populism, or the Collective Blindness that Leads Nations to the Abyss.

This is an English language version of an essay previously published in Spanish.
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Abdicating Governance: The Failure of Institutions

Winston Churchill’s description of democracy as the worst of all systems of government except for all the others is famous. Democracy, it has been argued, carries within itself the seeds of its eventual destruction by allowing within it by definition voices and factions that oppose it. In democracy it happens that the universal right to vote is considered the desideratum-and yes it is; but, doubtless, universal suffrage is occasionally captured by leaders who hear voices from a dissatisfied populace within the system. Voices echoed by those who will use the liberties of the democratic system to exploit emotions arising from heterogeneous, and sometimes contradictory, dissatisfactions and coalesce a political movement against the cold pragmatic reasoning offered by traditional leaders. A popular movement with the intention of rewriting existing political and social institutions outside the trite formulas and solutions spread by the elite and the intelligentsia of the status quo. A movement that is usually described as populism.

The average citizen has many things top of mind: family, job, garden... The common citizen has many occupations and prefers to devote more time to them than to government. The ordinary citizen wants to have the confidence and satisfaction that his or her government is led by capable people who protect the common interest to the best possible extent. Those are the terms of the political contract that the citizen, the people demand from their government and institutions. When public officials break that contract, that confidence, dissatisfaction arises and the populist seed is sown.

As a further condition, populism flourishes not only when dissatisfaction is widespread, but when existing-political, economic, social and the media institutions ignore this dissatisfaction or do not offer a clear message about how to respond to it—that is, fail in their role. Symptoms of institutional failure include:

• Media with credibility gaps,
• Partisan and ideological polarization driven by self-interest or perceived as such and,
• Low voter engagement with an institutional discourse seen as sterile and irrelevant.

Under these conditions a growing group of people becomes a diminishing group of voters so, and as a result of such low participation, traditional representatives are perceived with scant legitimacy. “Don’t blame me, I didn’t vote for…” is the bumper sticker capturing that sense of illegitimacy.

The citizen body has many needs and demands. When political representatives address these needs before letting them escalate into a general grievance, democracy works. By ignoring these needs and allowing them to become widespread anger against what is then perceived as a detached elite, fertile ground for a populist movement is created.

It is at that moment that the disenchanted, cynical, disenfranchised, marginalized, poor—the forgotten—are easily seduced by a snake charmer who gets from the fervor awakened in the popular mind an adrenaline rush feeding his/her own narcissism while inflaming the masses. The populist dynamic thus enters into a cycle of increasingly toxic feedback between the leader and the mass—as in any overdose of any drug.

Deceit: The Anti-democratic Nature of Populism 

The populist discourse is sectarian by nature. The populist seeks to establish a simple reason why people are dissatisfied with their status and targets the blame on an easily identifiable group and the institutions, politicians and intellectuals affiliated to that group. Common base emotions exploited in sectarian speech are resentment, envy, xenophobia, racism and revenge.

For these reasons (sectarian, anti-institutional and emotional discourse) populism is one of those bad words in politics that few allow as a valid alternative. Recent political movements such as Podemos, in Spain or Kirchnerismo in Argentina, have sought to redefine the term positively, repackaged as "popular democracy." However, as with every populist, they label themselves anti-institutional or protectors of the oppressed. That so called Popular, Participatory or Democracy for the Masses preaches a sectarian credo without respecting the rights or even the legitimate participation of opposition minorities [i]. Also it begets concentration of power, destroying or nullifying institutional checks and balances and separation of powers. It is the tyranny of the majority in full-fledged form.

Populism’s true nature, sometimes in the past and certainly nowadays, hides within the very rules of the democratic game. But make no mistake, populism is fundamentally undemocratic despite looking as if it seeks to legitimize its power from the people, as the name suggests. Even when populist leaders fail to reach power they will change the political dialogue, planting in their followers deep skepticism about the validity of the institutions; and when democrats use populism’s seductive tools to gain power, they equally undermine democratic institutions by the skepticism sown (drunk uncle's "inconvenient truths" -mercantilism, favoritism and corruption- suggested by B. Arditi, as cited by Frei and Rovira, 2008).

Democracy can only be sustained when people trust their institutions. When trust declines a leader can take advantage of that lack of trust by calling the institutional system incompetent, corrupt or rigged. The expectations created by the leader’s promises feed a craving for radical change and breeds hope in the movement’s followers. When achieving power by institutional means, i.e. popular vote, the only way for the leader to fulfill the promised change is by eventually destroying the institutional system that brought him or her to power; otherwise followers in the future will seek a more radical populist. When the populist leader achieves power through non-institutional means, ferocious purges are unleashed against the institutional representatives of the previous system. Undoubtedly the populist and authoritarian go hand in hand. Unbridled populism always and eventually will become totalitarianism.

Institutionalists left behind by the wave leading the populists to power in the best of cases retire, and in the worst end up in exile, prison or executed. Survivors write and ponder from their political paleolithic cave, sometimes not even realizing how they failed the constituents and institutions or media they led.

Thomas Jefferson argued that institutions should be renewed radically every so often—periodic elections originate from that reasoning. Institutional stagnation undoubtedly can decelerate, prevent or reverse the political, and therefore economic, development of nations. For industrial cycles in business theory Schumpeter referred to a similar concept calling it Creative Destruction, caused by technological development and its consequent effect on both production and distribution systems as well as lifestyle preferences. Populism is inserted into the political world as an alarm, like the canary in the mine, indicating the need for a fresh renewal in a nation’s institutions as social needs evolve—or else be forced to face a destructive transformation.

When populism appears democrats need to read the signs and take a stance against it, even if it seems contradictory that a democrat is apparently against popular will. The leader in a liberal democracy must recognize the grievances behind the populist movement and rectify the institutional elites' rule. A populist leader is not fooling people, he is channeling dissatisfaction, collecting and making a powerful emotional echo that appropriates the voice of those alienated by socially bankrupt institutions. [ii] True democrats need to expand horizons outside their political bubble and recognize that the alienation the populist harvests exists. True democrats have to address and rectify the social and economic conditions that cause dissatisfaction, because allowing populism to take over political and media institutions causes serious damage to democracy. And democracy must be protected even though it is the worst system of government, except for all the rest.

Populism has its role in democracy, that of the canary. It is attractive and sings a song, but is toxic and dangerous, as botox can be. The utopian idealism offered by populism is seductive when it groups heterogeneous complaints under the large cover of general dissatisfaction and promises to satisfy these complaints with simple symbols and slogans instead of specific and complex proposals. Liberal Democracy is in danger under those conditions but must hold its political ground to balance the attacks of populists with the need for social redress. 

The fundamental promises of Liberal Democracy are: defending the dignity of the individual, equal protection under the law, ensuring equal opportunity, and protecting private property. Those also are seductive promises. Those are the conditions under which individuals can take charge of their life freely in their pursuit of happiness and thrive, a pursuit that brings benefits to the collective of society—as postulated by Adam Smith almost 250 years ago and proven in practice.

It is only under a system of Liberal Democracy that nations have been able to improve the economic and social condition of their population. There are flaws of course but, we must reiterate, it is only in an alternating democratic system committed to solving these flaws that they can be rectified, as history has demonstrated. Human, civil and social rights have flourished and developed under democratic governments with constructive dialogue. Herein lies the largest and most damaging failure of populism: its purposeful ignorance of history. And that ignorance has led prosperous societies to the abyss of economic suffering, social disintegration and destruction of civic values under regimes using the state’s monopoly of legal (and para-legal) violence to remain in power.

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NOTES

[i] Qualifying democracy with adjectives is an unfortunate necessity to distinguish ideological systems. Just as "populism" often has implicit negative connotations in its terminology, "democracy" is considered a positive descriptor for any system of government, as was the case for the German Democratic Republic (DDR – East Germany, a fiercely totalitarian regime) or is that of the Democratic People's Republic of Korea (North Korea). Because the usage of the word democracy has been distorted so much it needs the qualifying adjective “liberal” to describe a government system based on free periodic elections, rule of law, and free market principles.

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[ii] Regarding the link emotion / reason Frey and Rovira (2008) make this interesting observation: "The fact that the establishment of populism is based more on passion than reason points out one of its greatest political weaknesses: the problem of duration. Rational criteria are much easier to stabilize than emotional factors. Thus, the permanence of a populist movement depends on its continued ability to activate and sustain collective passion. To do this it exploits emotional attention niches, such as speech and images arousing emotions like anger, fear and hatred that keep alive the distinction between friend and foe in society. "

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REFERENCES

Whatdo we mean when we speak of Populism?; Ezequiel Adamovsky. AMPHIBIOUS, National University of San Martin, Buenos Aires Argentina - Accessed August 11, 2016

Populismas Political Experiment: History and Political Theory of Ambivalence; Frei, Raymundo and Rovira Kaltwasser, Cristóbal. Journal of Sociology 22, 2008; Faculty of Social Sciences, University of Chile - Accessed August 11, 2016

Populismwith a Brain; Lynn, Barry C. and Longman, Phillip. Washington Monthly, June / July / August 2016 - Accessed August 11, 2016

It'snot just Trump. Authoritarian populism is rising across the West. Here's why; Norris, Pippa. The Washington Post, March November 2016 - Accessed August 14, 2015

Sorry,Obama: Donald Trump Is a Populist, and You're Not; Chait, Jonathan. New York Magazine June 30, 2016 - Accessed August 14, 2016

All images copyright of their respective owners.

Trump's Trade Deals

We have seen a glimpse. Trump, the business man benefiting from Trump the politician. He relished in the thought of more vacationers in Turnberry, Scotland staying in the magnificent lighthouse suites of his Golf Resort, taking advantage of a devalued British Pound. But, if you look closely, other political issues that he so heartily embraces are very good for his pocket. His relentless attack on the Trans Pacific Partnership is not only a populist stance, it is good for the business of his branded products. 

China is the big loser if TPP goes through, as the rest of Asia would be aligned with the US in a commercial alliance, and Trump has repeatedly said in the past that he has made great deals and lots of money with China. Perhaps that is why polls in China are more favorable for Trump that in any other country. But even if he moves from China to licensing his brand to manufacturers in other countries such as Bangladesh, Malaysia, Chile or Peru, his vested business interest is for the Trans Pacific Partnership agreement to unravel. A frequent point Trump does not make or conveniently does not mention is that there is no special trade deal with China to “rip up” unless the US withdraws from GATT altogether.
 

If any portion of Trump’s income comes from Trump branded products he would be affected adversely when TPP countries manufacturing such products are forced to ensure and enforce the following (as Thomas Friedman has pointed out):

 

• Freedom for workers to form independent trade unions, elect their own labor leaders, collectively bargain and eliminate all child and forced labor practices.
• Adopt laws on minimum wages, hours of work and occupational safety and health.
• Halt human trafficking from countries such as Thailand, Myanmar and Bangladesh and require each signatory to improve access for human rights groups to assist victims of trafficking.

Those are real provisions included in the TPP that would impact Trump branded products by raising their manufacturing cost. Provisions with teeth, because if signatories fail to meet them, they would be slapped with tariffs.

Other TPP provisions include, lowering or eliminating 18,000 tariffs and restrictions placed on products manufactured in the US, such as cars, machinery and digital products, to improve US’ access to a billion person market; establish criminal penalties for stealing industrial secrets; recognizing and balancing unfair competition from state-owned and subsidized enterprises; and combat endangered animal part trafficking and penalize overfishing.

There are, however, provisions anathema to some legitimate critics. Pharmaceutical patent protections have been denounced by Sen. Bernie Sanders, for example, as too generous. These provisions restrict the production of unlicensed generics, potentially raising the cost of medicines to the region’s poor. But time limits originally sought by Big Pharma were substantially reduced and quality control increased by discouraging unlicensed and knock-off products.

Opponents also argue that multinational companies can sue governments in venues of their choosing to maximize legal advantages, and cite for example the case of Philip Morris vs Australia using ISDS (Investor-State Dispute Settlement) provisions. Philip Morris incorporated operations in Hong Kong to use tribunal arbiters from that country (China) and sue Australia for damaging the brand when it passed a law forcing plain warning packaging for cigarettes; the suit was eventually tossed out. TransCanada, the corporation behind the Keystone XL pipeline, has threatened to sue the US government, using ISDS provisions in NAFTA, for blocking its project on account of environmental concerns.

Clarification of ISDS rules is important but is not a deal breaker for TPP. Licensing, patents and intellectual property issues have been addressed and Big Pharma did not get all it wanted, just as generic manufacturers did not either. These are true concerns that a global economy needs to deal with. Ignoring the reality of global commerce is not going to diminish its transformational impact on labor markets all around the world. This reality is ignored by any country at its own peril. It is in establishing common rules and practices that global commerce can benefit a maximum of countries while regulating the negative externalities created by transactions carried out under different conditions and resources for each country involved. I addressed this issue before in my book Campaign Journal 2008. The term “Free Trade Deals” in itself is somewhat misleading, as these treaties in fact regulate the unfettered commerce practices creating those negative externalities as opposed to making such commerce more “Free.”

Steel Mfg. Processes as a Percentage of Total Produced

The economics of global trade are relentless, disruptive and heartless. But not more so than those of technological innovation. Old technology jobs give way to new ones and blame can be easily transferred by populists onto other factors, such as “free trade.” At least trade can be regulated, markets opened and facilitated. Technology not so much: as much or more steel is being produced and exported in the US now as ten years ago, but with technologies that need much less labor. More energy needs are being met by cleaner fuels and methods, not by coal. Food is being produced at astronomical rates with many less farmers. These are not jobs that are coming back from China, Mexico or any other place. Secretary Clinton, in an often misquoted statement, addressed the need to recognize this impact of technological disruption on the labor force in a Town Hall in West Virginia: 

“I'm the only candidate which has a policy about how to bring economic opportunity using clean renewable energy as the key into coal country. Because we're going to put a lot of coal miners and coal companies out of business, right, Tim? And we're going to make it clear that we don't want to forget those people. Those people labored in those mines for generations, losing their health, often losing their lives to turn on our lights and power our factories. Now we've got to move away from coal and all the other fossil fuels, but I don't want to move away from the people who did the best they could to produce the energy that we relied on.”

It is emblematic of populist cluelessness (or cynicism) that Donald Trump gave his anti-trade tirade in a scrap aluminum plant—a recycling plant. Recycling metal was one of the original disruptors, diminishing the need for mining and processing raw ore. It “killed” jobs, and as those workers that took over the jobs of other workers from a technological past cheered Trump on, you can be sure they have enjoyed the estimated thousands of dollars a year saved by each US consumer as a benefit of lowered trade barriers. The US International Trade Commission 2016 report on the Economic Impact of Trade estimates that U.S. consumers have saved as much as $13.4 billion in 2014 from tariff reductions associated with trade agreements. Furthermore it states that U.S. consumers who are either middle income (income between $40,000 and $69,000) or lower income (income less than $40,000) benefit disproportionately from the savings associated with the tariff reductions. Yes, they get cheaper TVs and toasters.
 

The benefits of trade are diluted and invisible, while job losses created by globalization and technological disruption are as visible as a shuttered factory down the street. Early in the Obama administration a lesson was learned. The president in 2009, and at the urging of workers’ unions imposed a tariff beginning at 35% and expiring after three years on tires from China. In his State of the Union Address of 2012 he said “over one thousand Americans are working today because we stopped a surge of Chinese tires.” However Americans, according to analysts from the Peterson Institute of Economics, paid $1.1 Billion more in tires over that period than otherwise would have been the case (about $800,000 per job “saved”), moneys that could have been used in other sectors of the economy producing jobs. China in turn, slapped retaliatory tariffs on US chicken parts, which cost American poultry exporters an estimated $1B in lost sales. Overall that line in the State of the Union address cost the US economy more than $2B. But a closed tire factory is visible and its unemployed workers are real. And they are voters. And they have unions. 
 

Global commerce will force changes and all stakeholders and grievances need to be recognized and addressed. Ignoring the problem and putting up a tariff wall will not solve the problem nor rescue lost labor. The best way to manage these relentless forces of change is by recognizing them and planning for them, just like you do for hurricanes. Social nets need to be secured, transitional paths designed and equal opportunity ensured to foster innovation and entrepreneurship in the new business environment. As Neil Irwin in the NYT pointed out recently, in Pittsburgh (home to the Pittsburgh Steelers) 5,100 steel mill jobs have been lost since 1990 but 66,000 new jobs in health care have come to the area. Yet, Irwin does not say... those iron workers, were they left twisting in the wind? Many if not most of them are unlikely to have transitioned to the health care sector. Until a satisfactory answer is given to those displaced workers, populist speech such as that of Trump will be music to their ears. To Trump’s own personal economic advantage.

Perhaps David Brooks is right when he says that the political issues of the day can be pictured as having shifted from arguments about size of government to arguments about size of walls. Walls for commerce and walls for immigration. The economic and identity anxieties of a globalized economy are being tapped into both by sincere and by cynical populist politicians appealing to the gut and the heart rather than the mind. Appeals that may be so misleading as to make a small but sufficient percentage of ill-informed voters vote for the word “Leave” in the belief that it means foreigners and other undesirables will be forced to leave and go back to where they came from, not that “Leave” will structurally change their own nation’s geopolitical standing. The term "swing voter" has decidedly now been irrevocably stained. As a wise man once said, you only have to fool some of the people all of the time in order to maintain political life and viability.
 

United States International Trade Commission: Economic Impact of Trade Agreements Implemented Under Trade Authorities Procedures, 2016 Report