The populist insurgency we are in the process of witnessing in the developed world is nothing short of revolutionary. It involves the rejection of the neoliberal world order that has dominated for decades, of unfettered globalisation, of ‘experts’ and of rent-seeking elites. The potential consequences of the current movement are far-reaching and profound. Understanding the causes will be crucial; as such, in this essay I provide some brief commentary on the common themes that I believe run through these disparate movements. For those seeking a ‘silver bullet’ to kill the beast of populism there are no answers here. Only significant behavioural change, with a greater focus on ‘fairness’ and reducing inequality, can help move away from conditions where ‘the people’ see themselves as being subjugated by ‘the establishment’. As we shall see in this essay, it is fair to say the people are right.
2016 is simultaneously consigned to history and alive and well as I write in 2017. It is consigned to history in that, quite literally, it will be studied in the classrooms of the future as one of the defining years of the twenty-first century. Indeed, the ‘first draft of history’ has already been written, with a huge number of books having been released over the past few months that attempt to understand Brexit, Trump or Populism more broadly.[1] 2016 is alive and well in the Shakespearian, ‘what’s past is prologue’ sense; writing as I am on 21 January, we have experienced a week where the events of 2016 have started to become realised in a way which confirms their significance.
Theresa May was first to the lectern, confirming that Brexit means Brexit; there will be no associate membership, no half-way house – we are leaving the single market and are prepared to trade on WTO rules if necessary, for ‘no deal for Britain is better than a bad deal for Britain’. If EU negotiators are insistent on making an example of us for our insolent show of democracy, then the Treasury have confirmed all options are on the table, including slashing taxes and regulation in order to become a ‘Singapore’ on the shores of Europe. Sovereignty will be restored and once again Britain will be able to make its own rules, negotiate its own trade deals, and control its own borders. In other words, the choice (and voice) of the people on 23 June is being delivered. Unsurprisingly, Brexiteers loved the speech, and those who think voting to leave involves committing a particularly protracted and painful form of ‘Seppuku’ were not very happy.
Then we had the inauguration of Donald Trump on 20 January. Much was made of the importance of a peaceful transition of power, but there was little evidence of this in the arrests of over 200 activists from groups such as DisruptJ20 and Black Lives Matter or, more importantly, in the inauguration address from President Trump. Much like Theresa May’s speech days earlier, the rhetoric in Trump’s speech had an obvious subtext; I will deliver on the promises I have made. There was no evidence of a ‘pivot’ here. Trump repeated his vow – ‘Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs.’ Since the speech Trump has taken immediate steps to deliver on his promises, signing Executive Orders to withdraw from the Trans-Pacific Partnership and to build a wall on the Mexico border. The inauguration speech and Trump’s actions since it, just like the UK government’s actions on Brexit, represent a victory for the populism that had defined 2016. A defeat for the hegemony of neo-liberal ‘Washington Consensus’ thinking that had defined the previous decade and more. It is almost impossible to overstate the political, economic, social and cultural importance of these two speeches.
The ‘Overton window’ is a narrative device that means, broadly, the range of ideas that are acceptable to the public. We can see the Trump campaign as both a reaction to, and a cause of, a shift in the Overton window.
For those who have paid attention to what is not hyperbolically described as the culture ‘war’ in the US and the UK, the fact that the term ‘virtue signalling’ only entered mainstream discourse in 2015 is astounding, given how prevalent it now is. In summary, virtue signalling broadly involves support for socially progressive, ‘right thinking’ views, without any engagement in debate. The phenomenon is the child of social media, where people express shock and anger at things which they know not the first thing about (to take a UK example, what proportion of people who despair of a potential ‘hard Brexit’ could summarise in a sentence what the single market actually is, and how it differs from the customs union?)
The rise of virtue signalling is a result of a significant narrowing in the Overton window over the recent past, a remarkable achievement from ‘progressives’ to ensure that their beliefs are the only ones acceptable in mainstream discourse. Take as one example the issue of immigration; the only ‘acceptable’ view on immigration is that it is entirely beneficial – a dissenting view or even a debate is not permitted. To even raise a counter point (for example, to discuss issues around cultural assimilation of immigrants) makes you a racist. Attempting to raise the fact that boys are increasingly falling further and further behind girls in terms of educational attainment in a debate on gender equality makes you a sexist. Conservative commentators such as Ben Shapiro and Milo Yiannopoulos have been in many cases banned from speaking on college campuses (because of an interesting concept called ‘no platforming’ which has migrated from being applied to literal terrorists to those with right wing views). ‘Safe spaces’ are built where people can protect themselves from dangerous ideas; the left is not even interested in debating anymore, because they have ‘won’ the argument.
It is not merely enough to believe these things – you are regarded with the utmost suspicion if you do not espouse them whenever possible (social media sites are increasingly nothing more than a platform for virtue signalling amongst millennials). Dave Rubin, a formerly left-wing talk show host, has become so disillusioned with the state of ‘his side’ that he has coined the term ‘the regressive left’, highlighting the extent to which the left, as a whole, have acted like a version of Orwell’s thought police. The problem for the progressives, which Trump ruthlessly exploited, is that the majority of Americans don’t actually agree with them. As loud as celebrities and vocal left wing activists shout about how great abortion is (one example being Lena Dunham recently stating she wished she had experienced one), 46% of Americans in 2016 described themselves as ‘Pro-Life’.[2] This silent majority might be mocked in popular culture, dismissed as (insert prefix)ists, and seen as being on the wrong side of history, but they can still vote. This narrowing of the Overton window, this treatment of people with personally reasonable views as ‘personas non gratis’, caused a reaction which was harnessed and embodied by Donald Trump.
Within a year and a half the Donald Trump campaign has caused a huge reversal of the previous shift in the Overton window, with rhetoric on immigration, Islamism, and trade that has not been part of mainstream acceptable political discourse in the United States for many years. Progressives, of course, did not see this coming. In a now-famous video clip, Ann Coulter in June 2015 expressed a belief that Donald Trump had the best chance to win the election of the declared Republican candidates. The remainder of the panel laughed so hard they nearly cried. She then stated she thought Bernie Sanders would be a more effective Democratic nominee than Hillary Clinton given the current political and economic climate – cue more laughter.[3] There is plenty wrong with Ann Coulter, but she spotted early what so many people could not envisage until the results started pouring in. Something, fundamentally, had changed in America that had allowed a brash, scandal-heavy reality TV start to become President of the United States.
Turning to the UK, John Lanchester wrote convincingly in July of the shift in the Overton window that led to the vote to leave the EU, noting how a movement that in 1997 (through the vehicle of the Referendum Party) contested 547 seats and did not get close to winning any of them managed in 2016 to gain more votes than any candidate, party or campaign in British electoral history.[4] There had always been a fringe of the Conservative Party that had firmly believed in leaving the European Union, but it had never been seriously anticipated that we would seek to extract ourselves so permanently from the European Project. Indeed, Cameron only called the referendum (against the advice of George Osborne and Michael Gove) to assuage the Eurosceptic wing of the party and hence to heal divisions that had existed for decades. It was never seriously intended as an exercise in democracy, for it was not envisaged that the referendum could be in danger of being lost. Daniel Hannan recounts the moment he told an aide to Cameron he would be devoting himself to campaigning to leave the EU (rather than just on treaty reform). The aide’s response: ‘good luck with that’[5].
At various points in 2016 the implied odds of either a Trump Presidency or ‘Brexit’ were less than 20% - as the statistically minded of you will note this implies a joint probability of less than 5%. Just about everyone got it wrong. This is not too surprising; the events of 2016 were the result of huge shifts in the Overton Window that can be best represented as a rejection of the status quo (an idea with huge significance, as I will discuss later). There are now indications that the promises made by those who took advantage of this are likely to be, at least in part, delivered. This will cause significant outrage from those on the other side of the debate; for rather than a ‘shift’ in the Overton window it may now be best to describe two windows, separated by a vast chasm (and never the twain shall meet). For those who believed 2016 was the worst year in human history, all I can say is fasten your seatbelts.
Nigel Farage had a particularly good 2016. After seeing the dream he had built his career around achieved, he then found himself invited to Trump Tower to celebrate with the President-Elect, who had achieved ‘Brexit times 5’ with his victory over ‘Crooked Hillary’. Farage was later to have his name floated by Trump himself as a potential Ambassador to the US (much to the surprise of the incumbent, Kim Darroch). Trump and Farage have both drawn comparisons between the Brexit vote and the US Presidential Election, noting the anti-establishment and populist themes of the two campaigns. It is clear that there are common themes, most notably the focus on immigration; Trump promised to build a ‘beautiful wall’ to stop ‘bad hombres’ from Mexico, while Farage unveiled a poster saying Britain was at ‘breaking point’ due to free movement of people in the EU. However, Brexit campaigners including Daniel Hannan and Boris Johnson, alongside sympathetic publications such as the Spectator, have consistently rejected this link. Their view is that contrary to the isolationism and protectionism of the Trump campaign, the Brexit vote was the result of a desire for a global Britain, not shackled by the unelected and non-accountable bureaucracy of the EU. They point to the fact that all surveys since the vote have identified ‘sovereignty’ as the most significant reason for voting Leave, ahead of immigration in second. Indeed, as a Leave voter on political grounds myself, I certainly don’t want to generalise or stereotype people who voted Leave. As it will become apparent, however, I do believe a lot of voters in both elections were influenced by a common theme (hint: it isn’t immigration).
So which is correct? Was Brexit a ‘populist’ movement (and what does ‘populist’ even mean)? And how do both of these seismic events relate to the rise of right-wing parties in Northern Europe (the National Front in France and the Freedom Party in Austria for example) and the rise of left-wing parties in Southern Europe (including Syriza in Greece and Podemos in Spain)? On this, I would highly recommend reading ‘The Populist Explosion’ by John Judis. Released in the middle of 2016, it was featured by the New York Times as one of the ‘Six Books to Help Understand Trump's Win’, despite its prediction that Trump would not win the Presidency because his nasty rhetoric would alienate too many of the electorate (what do experts know anyway?). Judis draws from the history of populist movements and figures in the United States to posit two distinct strands of modern populism, having in common the mobilisation of sections of the population against the ruling elites.
The first strand can be (imperfectly) defined as ‘left-wing’ populism, which involves a revolt of the working and middle classes against the ‘elites’ who are either acting in their own self-interest (which I will later discuss as ‘rent-seeking’ behaviour) or taking decisions on their behalf that the people disagree with. Syriza is a great example here – it rose up as a means of protesting against the radical austerity measures imposed by Germany on the Greek population, which contributed to a near-collapse of the Greek economy and youth unemployment of 50%. Syriza was essentially a vehicle for ordinary Greeks to express a view that leaving the Euro may be preferable to the status quo. The second strand can be (again imperfectly) defined as ‘right wing’ populism, which introduces a third element; it involves a revolt of the people against elites because the elites are perceived to be prioritising another group (or groups) over them. The National Front is a great example here, with Marine Le Pen amongst other things arguing that liberal elites in France and the EU are pandering to radical Islam, at the expense of French cultural and national identity. Geert Wilders and the ‘Freedom Party’ are another example, operating with a one-page manifesto that proposes closing mosques, banning the Quran and turning asylum seekers away.[6] It is worth noting that ‘Left’ and ‘Right’ are imperfect descriptors here, as the two do not clearly map across the political spectrum. They are, however, better than useless, and the major parties that have embraced the two types of populism have tended to fit the descriptions relatively closely.
Trump clearly took advantage of this right wing populist sentiment, with proposals on the restriction of Muslim immigrants and a border wall to prevent ‘rapists’ from crossing into America. Indeed, his Inauguration address could not have been more explicit in its populism, noting that ‘we are transferring power from Washington, D.C. and giving it back to the people’. Applying this framework to Brexit is more difficult due to issues around classification; there was undoubtedly a coalition of disparate interests that combined to force a ‘Leave’ vote. However, I think without a doubt the coalition can be seen as populist; it simply combined elements of both left and right wing populism. On the one hand you have the Farage wing of the coalition, focusing on the strain that immigration has put on the NHS and other national services. On the other hand you have people who argued that the EU does not best represent the interests of the people within its constituent nations (given, for example, the draining of sovereignty away from nation states, the neo-liberal policies of the European Central Bank or the cost burden of intensely bureaucratic institutions). Issues with the ‘left’ and ‘right’ classifications appear more than ever here, given the largest proponents of the sovereignty argument were Conservatives, whilst a large proportion of the working class who traditionally would vote for Labour were swayed by the immigration argument. Indeed, turning back to the US, the willingness of a proportion of Bernie Sanders’ supporters to switch to Trump rather than Clinton (or at least not to vote for her) probably cost her the election, and suggests populists define themselves to a much greater extent as being anti-establishment than being ‘left’ or ‘right’ wing.
One aspect of populism we have very limited evidence on is what happens when it is successful. From Huey Long to Ross Perot, the track record in the USA for populist politicians is that they capture the imagination of the population for a brief time, achieve a degree of popularity but ultimately no electoral success. This is largely down to the electoral system, where a moderately popular Independent candidate will always struggle to win a state (Ross Perot won 19% of the popular vote in the 1992 Presidential Election but no electoral college votes). Many have engaged in ‘counterfactual history’ by speculating about what would have happened if Bernie Sanders, the perfect example of a left-wing populist, had won the Democratic ticket. Given his success in harnessing the legacy of ‘Occupy Wall Street’ and other socialist/anti-corporate movements, it is fair to say he would have had a good shot against Trump, but sadly (for his supporters) it was the existing political machinery (in the form of the incredibly partisan Democratic National Committee, which attempted to engineer a Hillary victory at any cost) that stopped him from being successful.
In Europe, the National Front has been a force in French politics for decades, but again has fallen short of any real power due in part to the two-round system that has allowed moderates on the left and right to combine and keep out Jean-Marie and subsequently Marine Le Pen. Similarly, Wilders in Holland may be denied power even if the Freedom Party wins the most seats, because the electoral system essentially guarantees coalitions, and so far no party has said they will consider uniting with him. Whether these checks and balances are ‘anti-democratic’ is outside the scope of this essay, but they clearly restrict the success of popular ideas that come from outside mainstream thinking.
One example of populist success is that of Alexis Tsipras and Syriza, but this is not a hopeful template for populists; elected on a wave of anti-EU sentiment, Tsipras held a referendum on the bailout terms put forward by the ECB (which involved severe austerity measures). The Greek people voted ‘No’ to the terms, which was generally implied to mean the Greeks did not think continued membership of the Eurozone was worth implementing the measures. The ECB stared Tsipras down, emphasising the potential economic turmoil from leaving the Eurozone, and eventually the measures were agreed. Tsipras won on a populist platform, but backed down when faced with the consequences of implementing the will of the people. Sometimes the EU don’t even need to be involved in repressing the success of populist views – part of the success of Wilders in Holland is driven by the fact the Dutch held referendums in 2005 and 2016 on European treaties; both resulted in ‘no’ votes and both were completely ignored by the government. This means our very limited data set of successful populist movements points in one direction – no real impact on the status quo. This fits the image that many understandably have when confronted with populist policies (e.g. a cap on earnings, which Jeremy Corbyn apparently endorses); that of rhetoric which could not and would not be implemented even if those who espouse them gain power.
So what has changed? Clearly with Trump his success came partially as a result of a weak and divided Republican primary field, and once he won the Republican nomination he had both a guaranteed level of support from the Republican base and an opponent who was the perfect example of the ‘establishment’ he was trying to break down. He now has a mandate from the people and Republican control over the legislature (and most likely soon the Judiciary) with which to flex his muscles. With Brexit this is even simpler – decision making power was taken directly out of the hands of the legislature and placed into the hands of the people through a referendum. Those who campaigned for and won the referendum (Hannan, Carswell, Farage et al) didn’t create the populist movement, but they were astute enough to recognise and ride the wave, turning the referendum into an open goal for the Leave campaign. Clearly, however, the results in the UK and US are not simply the result of chance. Whatever caused the results is significant, and as previously highlighted it is looking increasingly likely that Theresa May and Donald Trump will take significant action to address this. Indeed, even the ‘failed populist’ Alexis Tsipras seems to have been emboldened by recent events, insisting in January 2017 there will be ‘not one more Euro’ of austerity accepted. Understanding this movement, and its implications, may be the most important challenge facing us at this time.
What has driven the recent sustained success of populist movements from across the political spectrum, when most past attempts at populism have been flashes in the pan? Can we really take common lessons from campaigns and politicians as disparate as Bernie Sanders and Marine Le Pen?
There is a scene in The Matrix which has permeated popular culture ever since the film was released in 1999. Once Morpheus has revealed to Neo that his version of reality is simulated, he offers him two pills; the Blue Pill, which would cause Neo to wake up in his bed and not remember that his life is a lie, and the Red Pill, where he would wake up and face reality, whatever that may involve. Many have focused on the Red Pill, using it at a narrative device for scenarios where people realise a painful truth / embrace a new paradigm. The crux of the film is that Neo chooses to keep his eyes open rather than go back to having them shut – he takes the Red Pill. It is a positive move, albeit one that a lot of characters later admit they wish they hadn’t made given the implications.
Back to reality, and people in the UK, US and Europe have increasingly been choosing the Red Pill. But unlike in The Matrix, what people are choosing is largely undefined. As the Remain campaign liked to point out, there was no ‘Brexit government’ in waiting that was able to implement official Vote Leave policies (indeed, the new Prime Minister campaigned for Remain, albeit lukewarmly). There was no manifesto - no clarity on what ‘Brexit’ meant in practice; there were threats of emergency budgets and a crash in markets and everyone being poorer and yet…people chose this profound uncertainty over the current relationship with the EU. In the US, people chose to elect a man with no political experience and no consistency in policies, over someone with decades of experience who had been preparing for the role since the early 1990s. There was no evidence that Trump would actually implement any of his policies – indeed, many attempting to explain his success note his supporters took him ‘seriously, but not literally’.
So people have not been actively choosing the Red Pill, for there has been no real clarity on what that means. Rather, we can see it as a profound rejection of the Blue Pill, which represents the status quo/the establishment. Anyone with any background in psychology or behavioural economics will know that human minds are not programmed to work like that; we exhibit ‘status quo bias’, which in lay terms can be translated as the fear of the unknown. Any departure from this behaviour is extremely noteworthy. One potential framework to explain it might be that of ‘loss aversion’, a phenomenon explored by Daniel Kahneman and Amos Tversky as part of their work on ‘Prospect Theory’. Experiments have shown that if you offer someone £50 or a coin toss to win £110 they will largely choose the £50 (i.e. ‘a bird in the hand is worth two in the bush’). However, offer someone a £50 loss or a coin toss to lose £110 and they will choose to gamble. This experiment violates the assumption of rationality in economic behaviour (as from an expected value perspective you should gamble in the first scenario and take the certain loss in the second). This proves that people are loss averse – they hate losing – and they take any opportunity to avoid that situation even if their choice may make things worse.
A further example would be the ‘Endowment’ affect, which has proven that people value owning something more than they would pay for it; a perfect example is the stock market, where people hold on to winning stocks even though they would never buy them at those inflated prices. Logically, you would expect people to ‘value’ the status quo of the UK’s membership of the EU more than they would ‘pay’ for it. In other words, if people voted to leave the EU we can be fairly sure that if the vote had been to join the EU on the UK’s current terms, the ’no’ vote ought in theory to have been a landslide (illustrating just how profound the disenchantment with the EU project had become).
Applying this framework to the current environment assumes that people at present believe their lives and situation to be a ‘loss’, and that they therefore have nothing to lose from flipping a coin and seeing what happens outside the EU, or with Donald Trump as President.[7] And, basically, they’re right.
Left of centre economists such as Joseph Stiglitz and Thomas Piketty have done much to popularise the idea of ‘Rent-seeking’ behaviour in economies and markets. This theory posits that, while undeniably forces such as industrialisation and globalisation have been hugely beneficial at a macro level (and indeed have helped to lift many in the emerging world out of poverty), they have resulted in increased inequality due largely to individuals and companies engaging in selfish economic behaviour (rent-seeking). In lay terms, this concept represents attempting to maximise ownership of the total economic ‘pie’ rather than concentrating on increasing the value of the total pie (or indeed ensuring a fair distribution of its slices). Rent-seeking as a concept is a distant, more cynical cousin of ‘trickle-down economics’, which many on the right of centre defend (i.e. through the lens that making the richest richer is the quickest way to make the poor a bit richer as well). A very common example of rent-seeking behaviour would be a pharmaceutical company taking advantage of patent law to monopolise production of a life-saving drug (allowing them to increase prices).
I’m no socialist. I’m not in favour of big government regulating every area of business and commerce. I understand companies have a duty to shareholders to maximise their return on capital. However, this concept of rent-seeking is important because it is representative of how the entire system has been progressively managed more and more for the benefit of the few rather than the majority. During and after the Global Financial Crisis the US and UK governments really did use taxpayers money that could otherwise have been used on healthcare or education to recapitalise (bail out) banks, who in turn really did use that money to pay bonuses (or even in the case of PNC Financial Services Group, to purchase a rival within hours of receiving the money)[8]. Bankers who had committed fraudulent activity really didn’t go to jail, or even lose their jobs (Goldman Sachs received a string of fines for defrauding investors in their mortgage-backed securities, and yet Lloyd Blankfein, on whose watch it happened, remains CEO).[9] While the average taxpayer suffered due to the financial crisis they did not reap the benefit of the recovery; this was essentially all captured by asset owners (those with portfolios of shares and their own houses). Indeed, the share of GDP in America going to the labour force hit historic lows in 2014, and the share going to the top 0.1% has soared, and approaches 100% of all the recovery in total income since the lows of 2009.[10] The justifiable anger at the rent-seeking behaviour of bankers fed directly into the ‘Occupy Wall Street’ movement, which was a direct antecedent of the Bernie Sanders campaign that may well have been successful had the system not been rigged against it.
Charles Moore summarised this perfectly in the Spectator, writing that ‘the elites have constructed a world order which serves their interests, not those of their subject populations.’ He cites examples such as ‘transitional payments’ to departing European Commissioners (Mandelson reportedly was awarded £1m).[11] Another, microeconomic example is how companies globally have been allowed to systematically dismantle Defined Benefit pension provision over the past two decades because of issues of affordability (with a much better use of cash being spiralling pay for senior executives, dividend payments to wealthy shareholders or corporate acquisitions as ‘empire building’, naturally), ensuring that the Millennials starting their careers today will not be able to afford to retire. In a world where people in power see their economies and companies in narrowly financial terms (for example when setting minimum wage policies, benefit levels, or analysing profit and loss), and where there are few effective checks and balances against selfish or corrupt behaviour, the potential is rife for individuals to be forgotten or mistreated.
While selfish behaviour in economies is disappointing, it can also be expected to an extent (indeed, the famous ‘rational economic man’ is a selfish profit maximiser. Rather than selfish behaviour, by far the most disgraceful manifestation of this rent-seeking phenomenon must surely be the impact of the lobbying industry and the importance of fund-raising in politics. Although corporatism in Europe is rife (Daniel Hannan provides the example of how the change in EU regulation to favour diesel cars over petrol cars for ‘environmental reasons’ was entirely driven by the automobile industry, and the ‘science’ backing it was nonsense), this is one area where the US does truly lead the way. This is due in no small part due to the ruling of the Supreme Court in ‘Citizens United v. FEC’ in 2010, which ruled that restricting political donations from corporations is an infringement of free speech (as Jeremy Grantham has noted, this is surely not what the founding fathers envisaged when they thought of free speech). Since then the importance of money in politics has increased drastically; total outside spending on the 2008 Presidential Election campaign was c. $338m, but this figure had ballooned by 2016 to c. $1.7bn. The extent to which the views of ordinary people are marginalised has been proved by a Princeton University study; if a bill is favoured by the public it has a 32% chance of passing through Congress; if not favoured this figure falls to 30%. Not a staggering change, but surely in the right direction? This pales in comparison when you consider the other result of the study; when favoured by the richest 10% of Americans bills passed Congress at a 65% rate, and when opposed by the richest 10% the passing rate was essentially nil.[12] Money, it seems, talks.
The anger that has been directed towards bankers and the ‘elites’ is largely deserved. Other aspects of the anger (e.g. that directed against immigrants) are not deserved. But Trump was successful in part because he was able to harness all aspects of the anger coursing through society by using broad brush claims such as his promise to ‘Drain the Swamp’ (in my opinion the most effective piece of rhetoric of the campaign) and ‘Make America Great Again’. The result of the election should have been perfectly obvious to anyone who saw the initial results of a Reuters/Ipsos poll on the night before the election, when the odds of a Trump Presidency were 5/1. This poll asked for a yes or no answer to the following question: ‘America needs a strong leader to take the country back from the rich and powerful.’ The result? An astonishing 75% of 9000 polled answered ‘yes’. It was all over for Hillary at that point, or more accurately, it was all over for her when she became the poster-girl for the rent-seeking rich and powerful, and her opponent promised to ‘lock her up’.
Returning to specific and evident trends, and starting to look forward to the implications for 2017 and beyond, we can see common factors in the ‘Blue Pills’ that people have been rejecting. Largely, these factors relate to a particular worldview that has been completely dominant for the past few decades, and is now facing an existential threat.
When I was a History student (for my sins) I dealt a lot with concepts of determinism. This broadly involved theories that highlighted the presence and importance of external forces that drove progress in a certain direction. In my final year I primarily researched the English Reformation, and one argument in particular I liked to refute was the idea that Protestantism was ‘inevitably’ going to become the dominant religion in England, because it is a purer form of religion (it had very little to do with Henry VIII’s libido, or Mary I’s early death, apparently). Inevitably, those historians who proposed this view were themselves Protestants.
One infamous example of misplaced determinism that is more relevant to the current situation is Francis Fukuyama’s 1992 neoconservative treatise ‘The End of History and the Last Man’; this argued that liberal democracy had proven since the French Revolution to be the best form of government, and as such it had inevitably ‘won’ the Cold War argument and would remain in place indefinitely. While ‘events’ would continue, there would be no seismic change and thus ‘history’ had to a certain extent reached a stasis. Fukuyama clearly had not anticipated (amongst other things) the rise of Islamism, which has provided the main challenge to the Western way of life since then.
A doctrine with close links to Fukuyama’s beloved liberal democracy that had, until very recently, been venerated in this way is neoliberalism. This doctrine, evident in the United States since the Second World War but accelerated on both sides of the Atlantic under Thatcher and Reagan, broadly encompasses a strong focus on laissez-faire economics, expressed through privatisation, deregulation, low taxes and free trade agreements. Over the recent past this economic framework has been essentially unchallenged under both centre-left (Clinton, Blair) and centre-right (Cameron, Bush) administrations. In essence, this economic framework had ‘won’ the argument, and changes in ruling parties did not affect its dominance. While there were no doubt positive implications of this (from an economic perspective taxes and tariffs are ‘inefficient’), there were also negative connotations, with financial de-regulation in the 1990s (primarily the repeal of the Glass-Steagall Act, which separated commercial and investment banking activity, in 1999) a primary cause of the securitisation boom which led to the Global Financial Crisis.
While few of ‘the people’ have engaged in the debate over neoliberalism from a theoretical perspective, plenty have felt its effect through the impact of globalisation. Globalisation has been seen for decades as an inevitable, and welcome, result of technological advances. This has been implemented through the ever-increasing power and remit of supranational organisations such as the International Monetary Fund, as well as the development of trading blocs such as the European Single Market. The spiritual home of the neoliberals is Davos, where the World Economic Forum takes place on an annual basis. Samuel Huntington originally coined the term ‘Davos Man’ for the group of elites responsible for the maintenance of this worldview, noting “they have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations”[13].
As many are now noting, the inevitable rise of the Davos Men to the seat of power has been halted, and the concept of determinism has, once again, been made to look foolish. This is not simply a result of rent-seeking; there is a fundamental focus in neoliberalism on economic outcomes that prioritise the grand scale over the small scale, and as such do incredible damage to a huge number of people. An example is the concept of ‘comparative advantage’ which is used to justify completely free trade. If China is efficient at making toys and Europe is efficient at making cars, the most beneficial economic outcome for both parties is for China to focus on making toys and Europe to focus on making cars. Fine – but what about low skilled workers in factories in the UK who were employed by the toy industry? Inevitably the answer given to that question is theoretical – ‘they can retrain’ rather than a practical solution. A huge number of people who voted for Brexit or Trump are from industries that have been rendered irrelevant by globalisation (American manufacturing, or UK coal mining for example). The theoretical solutions put forward by economic theory haven’t helped them; there are a huge number of ‘career unemployed’ who have been unable or unwilling to retrain after their job became redundant. As such, they’ve decided to roll the dice.
Nothing (or almost nothing) is inevitable. A nuanced point, but one that is important to make, is that the success of the current populist wave tearing down the walls of neoliberalism and globalisation is not itself inevitable in any sense. Trump and Brexit might not have happened for any number of different reasons (indeed the fact both have done remains astonishing): a million votes changed in either case and we would be telling a different story. But even if that were true, the broad themes that have been traced here would not be any less relevant. Ideas can be good or bad, or a mixture of both; sometimes good ideas prevail and sometimes bad ideas prevail – due to the subjective nature of good and bad as well as fundamental uncertainty in this world, these tend to even themselves out. But a significant reaction against a trend, or combination of trends, that advantages the elites over the people is the closest thing to ‘inevitable’ that I can think of over the long term.
So far I have attempted to argue that we are at a turning point; a ruling class of elite ‘Davos Men’ who engaged (or permitted others to engage) in rent-seeking, profit maximising behaviour have grown complacent over the past two decades, believing their neoliberal worldview to be an example of the inevitable march of history. In this behaviour they have neglected and mistreated the people who are the driving force behind their economies and companies, and allowed resentment to grow to the point where people are prepared to roll the dice and leap into the unknown rather than remain with the status quo.
But why have people rejected the Blue Pill? Surely there must be a more scientific reason than people simply having a feeling that the system is rigged against them (although it is) and that a variety of people are taking advantage of them (although they are). Almost inevitably it comes down to money in people’s pockets. Allowing real incomes of a large proportion of the populations of developed markets to stagnate will be seen in the post-mortem as the primary cause of death for the neoliberal worldview. For the fact is that research by the McKinsey Global Institute found that between 65% and 70% of people in 25 advanced countries saw no increase in their real earnings between 2005 and 2014.[14] This is during a period where executive pay continued to rise; indeed an EPI study noted that the pay of CEOs rose by 54% between 2009 and 2014, while worker compensation did not rise at all.[15] The Global Financial Crisis affected just about everyone in one way or another, and yet the US government stepped in to recapitalise banks rather than to stop home repossessions. The stock market boom that has followed since 2009 has primarily benefitted the wealthy (i.e. those with savings and/or significant pension provision). Meanwhile, the extraordinary monetary policy implemented by central banks has helped some (home owners) whilst ensuring that a whole generation cannot afford to get on the property ladder. The current generation of working age people will be the first generation in hundreds of years to be worse off (in real terms) than their parents.
The McKinsey survey referenced above primarily focused on six countries; France, Italy, The Netherlands, Sweden, the UK and the US. The French may find it difficult to prevent Marine Le Pen from becoming President in 2017, and even if they do the successful challenger will likely be from the right, adopting some of her policies. The Italians have toppled their Prime Minister through a referendum which was ostensibly designed to implement sensible constitutional reform, and the Five Star Movement, led by a comedian, has the greatest popular support. In the Netherlands, the far-right Freedom Party are leading in the polls ahead of elections in March 2017. Far-right parties enjoy increasing support in Sweden, as well as neighbouring Denmark, both traditionally liberal countries. The UK voted to leave the European Union. The US voted a reality TV star into the most powerful office in the World. Some narratives can explain several of these populist movements (free movement of people in the EU, for example). But none can unite them all apart from cold, hard cash (or lack of it) – ‘it’s the economy, stupid’.
People have, for the most part, not been rejecting the Blue Pill because they are stupid. People have, for the most part, not been rejecting the Blue Pill because they are racist. The primary reason why a lot of people have been rejecting the Blue Pill is because in an age of prosperity, they are poor. And now, it seems, some politicians are being clever enough to start listening to them.
2016 is over, thank God! Or at least that is the sentiment it would appear we are all meant to show. Twitter user @theweirdworld seemed to capture the zeitgeist by proclaiming, ‘2016 is like a montage of news footage you see in the beginning of a post-apocalyptic movie explaining how the world was ruined’. Much of the content in this essay may seem as alarmist as that Tweet. However, it seems a strange choice from the (apparently) perverse, twisted Director of 2016 to include in his post-apocalyptic montage (amongst other things) a significant rise in life expectancy in certain areas of Africa due to advances in HIV medication, or global poverty falling once again to its lowest level ever. You may, accurately, think I have little sympathy for the hysterical overreaction to the events of the year, but at the same time I have highlighted in this essay their profound significance. What particularly bothers me, I guess, is that the people expressing such dismay are broadly the elites (or at the very least the aspirational middle classes, who have no great cause for concern). Whether events like these are significant or not, they are not going to hurt the celebrity singers who boycotted Trump’s inauguration, or George Soros (billionaire), or George Osborne (currently writing a book about how awful this ‘age of unreason’ whilst earning hundreds of thousands of pounds as a circuit speaker and advisor to asset management firm BlackRock).
“It is of course the very people who voted for this nonsense who will bear the brunt of the consequences”. That was intended to be read in a condescending voice, evoking images of the people who have prated it so many times, but I would be lying if I said it didn’t concern me in part. This primarily relates to the US, where there is a concern that Trump is merely an opportunist who will do nothing to help the people who elected him (indeed, the question of whether Bernie Sanders would have been a ‘better’ populist candidate will most likely not be going away any time soon as the Trump Presidency unfolds). The success of movements that harness justified anger and direct it at an innocent third party (broadly the ‘right wing’ populist movements) is clearly worrying and does indeed have echoes within twentieth century history.
But maybe the rise of populism won’t hurt the people. Indeed, even Stuart Rose, the Chairman of ‘Britain Stronger in Europe’ noted that if we left the EU wages for workers would likely rise (due to a decrease in supply). This impact on the average worker may turn out to be dwarfed by other negative connotations of Brexit. But maybe it won’t. If Donald Trump truly does ‘Drain the Swamp’ in Washington D.C., radically reducing the power and influence of lobbyists and corporate interests, shouldn’t we be happy? If the success of populist movements results in a much needed look in the mirror for the ‘elites’ which results in a greater focus on (for example) inequality, surely we will look at this period as the defusing of a bomb that, if unchecked, could result in full scale revolution.
The attitudes of the liberal, metropolitan elites (a group of which, I guess, I am a member) regarding the political upheaval of 2016 indicate an incredible level of paternalism and snobbery towards those who made the ‘wrong’ democratic choice. This attempt to stake claim to the ‘truth’ in political issues that are demonstrably not black and white is dangerous. Linking back to the idea of ‘virtue signalling’ and the ‘regressive left’, this attitude mirrors the cultural and social superiority that, for example, those with liberal attitudes towards sexuality now claim (hence the outrage when a baker doesn’t want to bake a cake for a gay marriage, or someone doesn’t virtue signal over their despair when people make transsexuals use the wrong bathroom). This ‘groupthink’ is alarming, and leaves us woefully unprepared to react to the unexpected. We should do better.
There is no ‘silver bullet’ to stop the current wave of populism. And that isn’t necessarily a bad thing. Populist movements should be listened to, because they are inherently representative of what people think and feel and should be considered part of ‘checks and balances’ on the actions and power of the elites in society. While there may not be a silver bullet, there is still an obvious path to take for those in power. Stop fearing the views of the people and start representing them. Embrace and trust in democracy. And for those not in power, all I can suggest is don’t demonise those who don’t share your world view. Be open and encourage debate of ideas rather than ‘groupthink’. If you see a knowledge gap then educate, don’t condescend. If you decry the views of the ‘deplorables’ you won’t shame them into changing their opinions; instead, the bifurcation of society will deepen, the Overton Windows will drift further apart, and one day you may find yourself facing them across the barricades.