Politicians are like bad horsemen who are so preoccupied with keeping in the saddle that they can’t bother about where they go.
semper pauper eris, si pauper es, … dantur opes nullis nunc nisi divitibus.9
Inferiors revolt in order that they may be equal, and equals that they may be superior. Such is the state of mind which creates revolutions.
The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum …
POLICIES LEADING TO IGNORED PAIN
Everywhere you look, government policies have encouraged trends that have weakened the standing of the average citizen.
The policies of nearly half a century have generated tremendous pain for the lower and middle classes of Western countries, allowed for dramatic increase of wealth for a few, and weakened the state. The state, having failed to act, has also been drained of its means to act: financially on the domestic front, with discretionary budgets being squeezed by social spending and legally on the international front, with globalization forcing open all borders.
Globalization has ratcheted up the pressure on wages from automation, rapidly enriching the capital-owning elite. Because of free trade, Western workers have been asked, in just a few decades, to compete with the cheapest Asian factories, which have the unfair advantage of operating without regard to the environment, minimum wage, or workers’ rights. Because of lax border control, Western workers have been asked to compete with massive waves of low skill migrants, who have pushed down wages while also competing with Western workers for insufficient public services.
The attraction of a generous welfare system and public services has further encouraged a wave of uneducated newcomers. In Europe, governments have parked these unwelcome and unintegrated migrants in increasingly restless suburban ghettos, where unemployment, drug use, and crime thrive. This has led to an explosion of social costs and the emergence of a shadow economy. It has radicalized both the overwhelmed hosts and the alienated newcomers, leading to extremism, and indeed in some cases to terrorism.
Meanwhile, the structural policies driving inflated costs in health care, education and real estate, have over time severely strained the household budgets of the majority of the population, and the less affluent in particular. The state has abdicated its role in limiting finance and regulating monopolies, inflating the profits of a few to the detriment of the many.
Along the way, the equalizing value of holding citizenship has eroded over time as states have weakened. The vacuum has been filled with pain, alienation and a relative loss of status – a potent recipe for resentment.
As the pain escalated, signs of opposition have been growing. At first, social spending acted like an anesthetic, masking the pain. But this was never sustainable, and the state cannot pretend to afford it anymore.
With social spending off the table, dissenters now had to be intimidated. If they complained, they were blamed for being ignorant and labelled economically illiterate or hopelessly xenophobic. This has backfired, leading the dissenters to become ever more defiant, and indeed sometimes to take deplorable and ill-considered short-cuts.
Behind an apparently lively democratic debate on narrowly defined and ultimately unimportant issues, the intellectual elite ignored the growing malaise while the dissenters tried and failed to build a robust set of policy responses.
MOVING TO THE EDGES
At this point, the pain behind the awakening of the radical majority has become too real, the anger too palpable, to disregard. It has begun to manifest itself in protest votes. The votes have led to repeated wins for parties on the political fringe, even if they did not always translate into actionable political victories.10 Often, as with Brexit, these are votes for half-baked solutions, their real purpose to extend a middle finger at the elites. Electoral successes kept coming, each one making these majorities seem less foolish, or at least less lonely. It has become harder to isolate the populist parties. Time and time again these electoral gains have been dutifully explained away as flukes, the results of unique circumstance. But if all the boats are rising at once, it must be that the tide is coming in.
The dissenters voting for these parties are the losers of globalization: younger, poorer, less educated. Blue-collar voters indeed tend to vote either for strong redistribution – the far left – or for suppression of immigration – the far right. In the United States, for instance, they tend to be either Tea Party voters or Bernie Sanders supporters WSJ Unherd. In the recent French Presidential election, 45% of blue-collar workers voted for Marine Le Pen on the “extreme right” and 25% voted for Mélenchon on the “extreme left.” Among people with incomes above 30,000 euros, only 15% and 16%, respectively, went for those candidates. Similarly, more than half of young people – clubbed into submission by real estate prices, education costs and general lack of prospects – voted for these two extremes. In contrast, centrist parties over-performed with the educated winners of globalization French Ministry of Interior.
Up to this point, in the traditional framework, the gains made by the “extremes” in parliamentary elections have often been chalked up to “lost” protest votes. Both the left and right have gained seats, but they cancelled each other out. But viewing politics through this left-right prism alone fails to capture the growing number of voters who feel they keep losing no matter whether “left” or “right” wins. It also fails to capture the consequences this will have when the “extreme” parties can no longer be isolated, or when a new form of opposition emerges that channels all sides of the populist rage.
Looking at the experience in France, Emmanuel Macron’s election was the result of the merging of the center left and right, but across a uniform, privileged, social background. Since then, the opposition has tried, and failed, to bridge the left-right divide, that is until the recent appearance of the “gilet jaunes.” This grassroots movement has embodied the unification of the opposition to the elite, but without any formal political leadership or organization. To quote a leading commentator: “The movement of ‘yellow vests’ can be a decisive break. A mobilization emerged from the very base of the country, ignoring political or trade union identities, it achieves, without even caring, a form of social reunification. As a result, Emmanuel Macron’s polarization between ‘progressives’ and ‘populists’ takes on an increasingly visible sociological dimension. With an elite bloc in place and represented primarily by [Macron’s] LREM [party] and a popular bloc in the making, the transformation of the French political order continues and accelerates.”
THE JUNCTION: CURVATURE OF THE POLITICAL DEBATE
The “extremes” are becoming “fatter,” more numerous than the center, with more motivated, irritated voters. The political successes keep coming, be it from the far left, with Podemos in Spain, the Five Star Movement in Italy, Les Insoumis In France, and Bernie Sanders in the U.S., or from the far right, with Viktor Orban in Hungary, the Freedom Party in Austria, the Ligue in Italy, the National Front in France, and Trump in the U.S. Washington Post
At this point, the rising discontent from the edges operates a junction. The edges of the left and right start looking more similar to each other, at least from a sociological point of view. Along a new axis, “globalist” vs. “nationalist,” they are now closer to each other than to the center, rejecting the open world that has been bringing them misery. We no longer have a political debate along one axis, but two, and the increasingly dominant one is no longer the traditional efficiency vs solidarity debate. The political spectrum no longer looks like a spectrum, but like a circle.
This is not entirely new. I recall one week in the mid-’90s when I was pushing a provocative – and I still maintain, correct – proposal that got published in the WSJ: that Belgium should consider some form of default of its large public debt. The national-debt-to-GDP ratio was spiralling out of control, leading the state to levy punitive taxes and abandon investment in its primary functions. I ran into a former right wing Belgian finance minister in the lobby of the Senate in Brussels, and upon hearing me explain the idea, he called me a “communist.” In the office of a left-wing professor I was called a “fascist.” Not long after, I had a laugh about the name-calling with a journalist friend. He, at least, understood the appeal of the idea – and later became one of the most effective finance ministers of the last decades.
In this framework, another transformation happens. The parliamentary system, which had been the most likely to produce centrist governments, suddenly becomes the most likely to produce “populist” governments, as the negotiation between the edges can take place after the election. This explains why, for instance, there was a populist government emerging in Italy, with the Five Star Movement at the far left, and the Ligue at the far right – supposedly the most antagonistic parties in the traditional framework – joining forces. A similar outcome has been produced by Brexit, where the far left and far right came together on a single issue.
Two-round election systems behave differently. The system favors candidates in the extremes of each party, but unlike first-past-the-post parliamentary systems, these two-round systems do not, yet, provide an easy means for opposing extremes to join together in common cause. The results in two-round systems tend to favor, in the second round, the candidate best able to capture the center votes. The presidential election in France was a case in point, with both final candidates claiming to be anti-system, of neither left nor right, but with Le Pen failing to rally the far left “insoumis” while Macron was able to easily capture both the center left and the center right.
With the rise of populism, we are seeing the two extremes, left and right, joining together to express their angst, both calling for the return of an active role for the state. Dissenters, considering themselves somewhat correctly to be victims, are indeed looking for the government to redress the wrongs that have put them in their precarious situation. Dissenters want more state involvement, be it to rebalance income streams, break up monopolies, reinstate the privileges inherent to a national citizenship, ensure the core functions of a state – like justice, police, and borders – or, indeed, to stop immigration, trade and globalization.
But there is a problem. The state, heavily in debt after decades of paying for pain-killing social support measures, directed by an elite raised under globalization’s dogma, has lost both the means and the will to act this way.
THE NEW DEBATE
Recent elections in the Western world continue to reflect this shift. The traditional left-right debate over distribution versus efficiency is increasingly replaced by a nationalist versus internationalist paradigm. The latter school is best represented by French President Emmanuel Macron, who described himself as “ni de droite, ni de gauche” (neither conservative nor liberal). It wants to maintain the internationalist status quo while acknowledging its excesses and reforming it from within. The genius of Macron is that he recognized the disaffection towards the system and was able to brand himself as somehow “anti-system.” Yet he was running – and was elected – to save the system by reforming it, while his nationalist opponents had vowed to dismantle it.
The nationalist school wishes to withdraw from established international agreements and an international economic competition they believe they are losing. It aims to hamper trade and immigration and reestablish a “strong state,” though ideas about what else this strong state should do vary somewhat from nation to nation and party to party. In any case, more often than not, they have been prevented from implementing the very policies they were elected to carry out. The best example is probably given by the new ruling coalition in Italy. The new government had initially threatened to withdraw from the Euro, then entered into conflict with Europe by refusing more illegal migrants entry to its territory. It has subsequently blamed Maastricht criteria for constraining its investment budget. Yet, not only did it quickly refrain from challenging the Euro, but it was quickly forced to accept the budget constraints imposed by Brussels.
It is hard to exaggerate the political convulsion this new opposition is creating,11 as the two new sides of the debate continue to ignore each other rather than listen to each other. In the U.S., politically motivated legal skirmishes and hostile media coverage have been constant since the Trump election. The result is a country creeping closer to a non-functioning state and further from the normal political rhythm and balance of a democratically elected government and its opposition. Similarly, in Europe, the squabbling between the European Commission and democratically elected Polish, Hungarian, and more recently, Italian, governments has highlighted the inability of the populist and establishment camps to work together. Brexit, and the fragmentation of British politics, provide yet another illustration.
Unsurprisingly, this has increasingly affected how people perceive democracy as a viable form of government. A 2017 survey revealed that 61 percent of French voters believed that democracy does not work well in France, that only 9 percent trust political parties and 24 percent trust the media. At the opposite end of the spectrum, the army and the police garner close to 75 percent support. Pause a moment to consider this. These are stark numbers from the land of “liberté, égalité, fraternité.” The French social contract, as Rousseau would have put it, is broken. This striking lack of confidence in the current system, the abuses perpetrated by the privileged, the consequent rejection of the elite, the accumulation of unresolved issues, and the country’s economic weakness all suggest forthcoming political convulsions. There will be more violent confrontations between the two sides while the system heads to a deadlock. One thing has already changed dramatically. The dissenters, the populists, now know they can be – and in many places already are – a majority. The new majority may well continue to be called names or be mocked for the incoherence of its policies, but they do not care. They no longer fear being looked down upon, so they will no longer be so easy to ignore.
As the economic cycle unfolds, the next recession is looming. In truth, little has been done since the last recession to address the fundamental issues that are creating so much pain for the lower and middle classes. We have not, as a society, made the effort to understand the issues, and indeed some of the problems have gotten worse. Populist governments have sometimes been elected, here and there, but their governance has been largely chaotic and ineffective. In part this is because their policies are poorly considered and implemented. In part it is because they have been systematically stymied by the establishment, a problem that has caused some populists to complain of “deep state” sabotage.
Yet the anger is still rising. Meanwhile, the next recession will catch us unprepared. Economically, we no longer have the means to absorb the next big shock. Politically, there are no parties that have formulated a new policy mix right for these times. Intellectually, we have neither listened to the points of the dissenters nor come up with a set of rational policies to respond. What we need to do, urgently, is to find a set of measures that can release these pent-up social pressures. To make these measures into coherent policies will be a task best left to the political parties, which can meld them into their own platforms in their own ways, so long as the goal remains the same.