What have populists ever done for us?

Apart from the wage rises, the jobs, the tax cuts, the rising living standards…

Hungarian Prime Minister Viktor Orban © ATTILA KISBENEDEK/AFP/Getty Images

The workers have done well under Hungarian leader Viktor Orbn
(Image credit: Hungarian Prime Minister Viktor Orban © ATTILA KISBENEDEK/AFP/Getty Images)

They were duped, manipulated and lied to. Vladimir Putin and a few tax-dodging billionaires hacked their Facebook feeds with fake news. None of them understood that they were voting to make themselves poorer. Wherever "populist" governments have been elected, plenty of commentators have argued that their working-class supporters were in some way tricked with divisive rhetoric, and that they would suffer the most as the economy crashed. But hold on. It turns out that maybe they were just voting with their pockets.

An impressive record

Here in the UK, it has been a similar story since the "populist" vote to leave the EU in 2016. The warnings of a collapse in the economy were even more hysterical than they were for Trump. Very few of those predictions have come true either. But it is what is happening to wages that is really interesting. The latest figures show that in June earnings growth hit an 11-year high of 3.9%, well ahead of inflation at just 2%. The years of stagnant wages are clearly over. With the numbers of jobs hitting record highs as well, workers are doing better than they have for a long time.

As for Poland, unemployment has dropped to a 28-year low and wages are rising at over 7% annually. It is hardly struggling. In Hungary, wages are rising at more than 10% a year.

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In truth, there is no great mystery here. Policies that are labelled populist are often pretty good for working people. A slightly more restrictive immigration policy means the labour market is tighter, especially among the low-skilled, putting upwards pressure on wages. Tax cuts and a drive to deregulate the economy boost productivity, and lift living standards.

Trump, for example, has pushed through major tax cuts and rolled back regulations, and that has led to a rise in the number of small businesses, which is already feeding through to more jobs and higher wages. In Poland, taxes keep being rolled back. This summer, the country proposed a new tax rate specifically targeted at persuading its young people to stay at home rather than move abroad: anyone under 26 will pay no income tax on earnings up to 85,000 zloty (£17,700).

Higher minimum wages help as well. In the UK, we have one of the fastest-rising minimum wages in the world. In the US, Trump has done nothing to stop states increasing mandated salaries, and the House of Representatives just passed legislation to increase the federal minimum wage for the first time since 2009.

Hard rhetoric softened with cash

Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.