The Rise of Global Populism
The FT's Gideon Rachman has some interesting conjectures about the long-term effects of the financial crisis:
The market for ideas – like the market for shares – always overshoots. Ideas become fashionable and get pushed to their logical conclusion and beyond, as their backers succumb to “irrational exuberance”. Then comes the crash.
What we are experiencing now is the bust that has followed the 30-year bull run in conservative ideas that began with the Thatcher-Reagan revolution of 1979-80.
Rachman's main point is that, deregulation, economic liberalism, and a faith in home ownership have fallen rapidly out of favor now because they'd been pushed to their extremes. They'll probably bounce back someday soon, once some other collection of more interventionist ideas runs its course. He notes similar trends in thinking over military intervention and democracy promotion, both ideas that gained force over a period of more than two decades but then rapidly hit a wall and now seem discredited.
Rachman expects support for more regulation to be the overriding consensus, and that will almost certainly be partly true. But there are many possible flavors of interventionism, and one to look out for is much older than the regulatory state: good old-fashioned populism.
The concept is vague, but generally recognizable in an anger at some broad "elite" and big business, a nationalist or protectionist economic approach, a preference for the rural or small town over the big city, and a concern with immigration. Populism manifests itself in different ways in different countries, and has incarnations on both the right and the left. More an instinct than a coherent ideology, populism often relies on an emotional appeal to masses that feel disenfranchised and cheated by forces that they don't understand.
Populist rhetoric is obvious in the turn that both US presidential campaigns have taken. Conservative populism is evident in French President Sarkozy's rhetoric, in a recent win by ultra-nationalist parties in Austria, and in the approach of new Japanese Prime Minister Taro Aso. Left-wing populism has animated recent massive protests in South Korea and Latin American governments from Argentina to Venezuela and Bolivia. In China, populist impulses can be seen both in the nationalist rhetoric that filled the Chinese Internet in the months leading up to the Olympics.
It remains to be seen if these disparate political impulses coalesce around a common set of beliefs that drives global policies, as did deregulation and faith in the markets. But if they do, there is a real danger that these ideas will overshoot in a much more dangerous way - such impulses led to the shutdown of world trade in the 1930s through increasingly competitive trade barriers, and lay behind the rise of virulently nationalist ideologies in German, Italy, and Japan.
