China’s Finance Minister Lou Jiwei, speaking on behalf of the G20, has identified “voter-luring populism” as one of the largest threats to the economy.
Without mentioning Donald Trump or Brexit directly, it is clear that Jiwei had these and other right-wing populist trends in the developed world in mind. The concern is that the global economy is in danger of descending into nationalism, protectionism and the erection of tariff barriers that will undo much of the development of the last three decades.
Where the G20 goes wrong is to assume that politicians like Trump, Grillo and Farage, and parties like UKIP and the Five Star Movement are the cause of the problem. Indeed, the fact that right-wing populism has been growing for several years across the developed world, together with the fact that mainstream politicians have proved incapable of halting them, tells us that something much more fundamental is going on.
What the G20 misses is that the benefits of globalisation have not been spread evenly. Inequality has been allowed to grow to obscene levels, and this trend has accelerated since the crash of 2008. It is the growing group of people at the bottom of the heap, whose incomes have been going backward since the 1970s who have turned in desperation to politicians like Trump and parties like UKIP. Moreover, the dismissal of their concerns as either racism or stupidity has served only to drive an even deeper wedge between them and the mainstream political parties.
In normal times, there is simply no way that a misanthropist sociopath like Donald Trump should have been able to get anywhere near the Republican nomination, let alone the keys to the White House. Yet even with the publication of the appalling video evidence of Trump’s misogyny, he is still in the running. And this tells us that there is something fundamentally rotten at the heart of that once great country.
In similar vein, a vote for Brexit would have been inconceivable in the years before 2008. There is now every likelihood that Marine LePen will be on the final ballot for the French presidency next year; indeed, it would not be a surprise if she won. Similarly, Angela Merkel’s chances of remaining Chancellor in next year’s German elections are fading with each new media report on migration into the EU. If the Italian banks fail, Beppe Grillo’s Five Star Movement could be in power faster than anyone would want in normal times.
But, of course, these are not ordinary times. And the real reason for the growth of right-wing populism comes not from the disenfranchised precariat at the very base of the income ladder, but from growing middle class disillusion with the current arrangements. The old narrative of social mobility and social solidarity has been allowed to break down. In the old days, you worked hard at school and college; you got a degree or a qualification which acted as a passport to a decent career; you saved to buy a house; and you put money into a pension. That narrative no longer works. For most graduates a degree buys access to a mediocre job and sufficient debt to prevent you ever getting on the housing ladder. The average UK graduate income in 2008 was £24,000; in 2016 it is still £24,000. The pensions industry is in crisis to the point that – with negative interest rates – only a fool would put money into a pension if there was another, shorter-term savings vehicle available. In the UK and the USA, it is the working class in the ex-industrial regions that stand accused of responsibility for Brexit and Trump. While it is undoubtedly true that this section of the population tipped the result in favour of Brexit, and may well give Donald Trump the presidency, this is to entirely ignore the broad swathe of disgruntled middle class voters without who, such an outcome would be impossible.
The sad truth behind the rise of right-wing populism is that it is a response to an economy that is now undermining that part of the population that has traditionally provided the stable base for a society at ease with itself. As that stable base has been more or less deliberately dissolved since 2008, the traditional centrist and social democratic politics has been unable to respond. The result is the dangerous political vacuum that the G20 is warning of. But that warning mistakes the symptom for the cause. And more business as usual on the economic front is going to result in ever more volatility in politics.