Tired of Winning? The Economics Of Populism In Power

Among all of the phrases Donald Trump uttered during his campaign, held up by supporters and mocked by detractors alike, few have been as enduring of a meme as “tired of winning.” In a May 2016 speech delivered at a rally in Billings Montana, Trump promised a fawning crowd of supprters that “We’re going to win so much, you’re going to be sick and tired of winning.” To his base, this was a bold declaration of purpose, that America would go back to the roaringly prosperous days gone by imagined by Trump’s (mostly older and whiter) supporters who packed his rallies and thrilled to the line and others like it. To his opponents, it was yet another sign of his crude, nonsensical bluster, a sign that he was not serious and certainly not to be trusted with the power of government. Over the past several years, Trump has been far from the only world leader to make similar promises. Although nativism and fear of immigration have been hallmarks of populist leaders such as Trump, Italy’s Matteo Salvini, the United Kingdom’s Boris Johnson, and others, just as crucial to their appeal was a promise to return economic security and prosperity, which in their minds has been withered away by, depending on the country, free trade agreements like NAFTA and international institutions such as the European Union. The key question now that they have been in power is, what have they done about this? Looking at the economic track record of the populists in these countries, one finds a variety of approaches, some more deregulatory and pro-free market, others more interventionist and statist, but in general, one finds a record of failure and promises unfulfilled, yet another sign that their demagoguery is a poor balm over much deeper and more complex societal issues.

Central to the idea of “winning” promised by Trump was the idea that he would “bring the jobs back”- the hardscrabble, blue-collar manufacturing jobs that had been the backbone of America in the mid-20th century before being gradually outsourced to China, India, and elsewhere around the globe beginning in the 1970s. The roots of Trump’s ongoing trade war with China lie in his provocative (as always) campaign declaration that “China is raping us”, and his then-Chief Strategist Steve Bannon, in his brief time in the White House, took steps to ramp up a similarly hostile stance towards India. While the latter has been put on the back burner (though trade negotiations with India persist, largely out of the media spotlight), the China trade war has become one of Trump’s signature policy initiatives. Even during the campaign, Trump accused China of using currency manipulation to undermine American manufacturing by artificially lowering the yuan, when in fact the opposite was true of China’s monetary policy. Although Bannon may be gone, Trump’s chief China hawk, Peter Navarro (author of the book Death by China, which was turned into a documentary film narrated by Martin Sheen), remains in the White House, and if anything his influence in the administration has increased as time goes on. From Trump’s first months in office to today, the U.S. and China have been at loggerheads, with each side escalating tariffs on the other’s goods. Despite attempts at negotiation, this standoff has yet to be resolved.

So, has Trump’s tough stance on China done anything for the hard-working middle Americans that he purports to want to help? So far, the answer is a definite no. If anything, the opposite is the case- existing American manufacturers depend on overseas customers, including in China, as markets for their products, and Trump’s tariffs have eaten into their bottom lines. In a cruel twist of irony, the negative impacts on Trump’s trade policy have mostly been in some of the states that were most critical in delivering him victory in the 2016 election- Ohio, Michigan, Pennsylvania. Similar adverse effects of the trade war have been felt in the agricultural sector , again with the pain of Trump’s policy falling disproportionately on his own supporters. Though much of his core base has yet to desert him due to this inconvenient fact, the results in the 2018 midterms in the aforementioned states- where Democrats mostly ran the table in congressional and gubernatorial elections- should be a cautionary note for the President, although one he will almost certainly not heed in time.

In general, Trump and his supporters have touted record levels of economic growth as a sign of all the “winning” that America is enjoying under his watch. In February, his White House issued a gloating press release touting 3 percent GDP growth for 2018, the first time such a level of growth has been achieved in over a decade. Subsequent data from the Department of Commerce and other government agencies undercut this claim- although GDP has grown, it was only by 2.5 percent. Furthermore, the positive unemployment numbers touted by his administration have been criticized as misleading, technically correct but not actually indicative of the economic reality facing most Americans. In an interview with Fast Company, private equity investor Leo Hindery outlines his idea of “real unemployment,” meaning people who are in fact part of the workforce, but their job does not pay them enough to afford an unexpected expense of $400. The cynicism on display by the Trump administration is apparent- or, shall we say, more apparent than usual. In 2016, candidate Trump criticized then-President Barack Obama for touting economic growth that did not improve the lives of the average American. In 2019, President Trump does what he accused Obama of doing and then some. At this rate, I doubt that Trump’s brand of “winning” will be able to brand itself as real victory for anyone for much longer.

Across the Atlantic Ocean, 2018 saw the rise of the first Trumpian figure to get into power on the continent of Europe. The 2018 Italian general elections resulted in an uneasy power-sharing arrangement between the ideologically heterogeneous, but nominally left-wing populist Five Star Movement and the right-wing Lega party, led by Matteo Salvini. Salvini, who quickly became infamous for cracking down on refugee and migrant entry into Italy, had rebranded the Lega party, previously a purely regional party advocating for the separation of northern Italy from the rest of the country, into a national electoral contender. Although migration is undoubtedly Salvini’s primary focus, especially considering that the power-sharing agreement gave him direct authority over those matters as Interior Minister, Salvini had ambitions to reshape Italy in the economic realm as well.

A left-wing activist in his youth, Salvini’s economic policies became more heterodox as he approached power. While criticizing economic globalization and its supposed consequences for Italy, Salvini also distinguished himself as an anti-tax crusader. Back when Lega was called Lega Nord and was a purely separatist party, one of its main contentions for wanting to ditch southern Italy was that the rich, industrialized north’s taxes subsidized the poorer, more agricultural South. He took this type of rhetoric national along with his party. One of his signature fiscal proposals was scrapping Italy’s existing tax regime and replacing it with a flat tax that he contends would boost economic growth. Meanwhile, Salvini’s left-populist coalition parters in Five Star had their own signature proposal- a universal basic income for all Italians. Taken together, these two programs could not have been more perfectly designed to blow a hole in Italy’s budget, already in poor shape even before Lega and Five Star came to power.

Even before these policies were fully implemented, the coalition’s fiscal recklessness triggered a showdown with the European Union. The EU maintains standards regulating the level of debt that its member countries are permitted to carry, and Italy’s proposed budget for 2018 took it well into breach. The coalition initially seemed to acquiesce to the EU’s demands in December of 2018, only to ramp back up in the spring of 2019. In response, the EU prepared a series of retaliatory measures, but undeterred, the coalition pressed by launching their basic income plan in June of 2019. As it turns out, the EU was bluffing, and the coalition had called them on it- the very next month, Brussels shelved its plan to fine Italy 3 billion euros and impose other sanctions. Populism had, in fact, won in Italy, until it didn’t. Salvini exited the coalition in August hoping to force new elections, and Five Star formed a new one with the center-left Democratic Party. Salvini remains the single most popular politician in Italy, and when new elections do occur, he may well return to power. But for now, he is out in the cold.

And in the meantime, what has he actually done to improve the lives of Italians? The citizens’ income may yet have some positive impacts on the country’s poverty rate, but that is yet to be seen, and it was his erstwhile coalition partners’ policy, not his. Italy’s already high youth unemployment rate reached the second highest levels in the Eurozone this year. And as for Salvini’s tax plans? All they have seemingly accomplished in Italy so far is make it easier for wealthy foreigners to buy villas.

Salvini’s Lega had long run on a Euroskeptic platform, advocating for Italy to separate for the EU and the Euro. However, even as he feuded with Brussels, Salvini never seemed to seriously pursue an “Italexit” as an option, repeatedly insisting that Italy had no plans to ditch the Euro. Salvini preferred the approach of taking over the EU from the inside, forming a voting bloc in the European parliament with other right-populist leaders such as Marine Le Pen’s National Rally. Besides, if the EU couldn’t actually touch Salvini, why not use it for his own ends? If he returns to power, Salvini can enjoy the perks of EU membership, but without any of the pain and headaches that leaving it would add to his agenda. Pain that the third populist we will review seems determined to incur, no matter what the cost.

Boris Johnson is the most aesthetically Trumpian out of any of the populist leaders- the resemblance between the two men is obvious. Ironically, he began his career in Trump’s least favorite profession- journalism- before beginning a political career that would see two tenures in parliament interrupted by a stretch as Mayor of London. One of the most prominent backers of the Vote Leave campaign in the Brexit referendum of 2016, when Leave shocked the world by winning it seemed as if his path to Number 10 Downing Street would be clear. But due to key supporters abandoning his bid at a key moment, he was forced to play second fiddle to Theresa May as her Foreign Secretary. After muddling along in that position for three years- highlights including reciting a Rudyard Kipling poem glorifying British colonialism during a diplomatic visit to former British colony Myanmar, May’s long-awaited resignation finally cleared the way for him. Sweeping away all rivals in the Conservative Party leadership contest, Johnson came into his Premiership with a political battle on his hands almost instantly.

The issue that will define Johnson’s time in office has been and surely will be just how, exactly, Britain will leave the EU. Theresa May spent her entire tenure fruitlessly attempting to negotiate a deal with the EU that could satisfy the many complex logistical issues Brexit would present, particularly the Irish border question. Since both the UK (including northern Ireland) and the Republic of Ireland are EU members, there is no passport control, effectively no border, between the two nations, which has facilitated an unprecedented period of peace in the area since the historic Good Friday Agreement of 1998. A no-deal Brexit, and subsequent reintroduction of a hard border between northern and southern Ireland, has caused some to fear a renewal of tensions between Protestant and Catholic Irish- northern Ireland voted overwhelmingly to remain in the EU as a result of this concern.

The immediate impacts of a no-deal Brexit would be highly negative for the British economy; according to the OECD, it would cost the UK almost three percent of its projected economic growth. But, say, for the sake of argument, that the UK passed through the initial shock of leaving Europe relatively unscathed. Once freed from the EU’s grasping shackles, what plans do Boris and his fellow hard Brexiteers have to bring back jobs, stability and quality of life to the areas of Britain that have lost out in the era of free trade and globalization? That would be the non-London areas of England, particularly the North, whose votes were the deciding margin in the Brexit referendum just as states like Ohio, Michigan, and Pennsylvania were for Trump. What do Boris and co. propose in order to make these parts of England great again?

Why, more free trade deals of course? The Brexiteers have proposed, as replacements for the EU, at turns free trade agreements with the United States, as well as the Commonwealth. Both have been roundly panned by both economists in the U.S. as well as leaders in Commonwealth member Australia. Furthermore, Johnson’s government has a so-called “secret plan” in place for economic growth post-Brexit, which includes slashing taxes and gutting regulations. If a free trade deal with the U.S. won’t work to turn the U.K. around, why not just import Reaganomics wholesale? The mind boggles at the pointlessness of it all, and in the meantime, nobody in Manchester, Liverpool, or anywhere else in the U.K. will be any better off for any of it. If those in the U.K. who advocate for a second EU referendum want to ensure victory, they might do worse than to simply let Boris win and carry out that plan.

All three of these men and the political movements they represent would not have gotten anywhere if they had not struck at a chord of real problems facing large swathes of their countries’ populations. We all saw just how well putting Trump supporters in the “basket of deplorables” served Hillary Clinton, and similar claims have been made about supporters of Brexit, Italian populist movements, and others. But the far more damning indictment is that they are selling their own people a bill of goods, promoting economic policies that in almost every respect will do the exact opposite of what they promise. So far, all three leaders, whether it be through force of personality, the scapegoating of immigrants, or just plain good old fashioned lying, have maintained, even grown in the case of Salvini especially, their core of fanatically devoted supporters. Many of them may stay loyal to the end, bitter though it may be. But none of them are “winning” a better life, better job prospects, better anything except the satisfaction of enraging the elites they feel have looked down on them for so long. But that doesn’t put food on the table, and one hopes that sooner or later, enough will realize that the last people to win in this state of affairs is them.