Advertisement

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

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.

Advertisement - Article continues below

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.

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

Advertisement
Advertisement

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
The charts that matter: gold finally sets a new record high 
Global Economy

The charts that matter: gold finally sets a new record high 

As gold surges past its previous high, John Stepek looks at how it's affected the charts that matter most to the global economy.
1 Aug 2020
Gold bugs' dreams are coming true – but we could still see a V-shaped recovery
Gold

Gold bugs' dreams are coming true – but we could still see a V-shaped recovery

John and Merryn talk about how it's perfectly reasonable to expect a V-shaped recovery and to continue holding gold as well. Plus, inflation, staycati…
30 Jul 2020
How the dearth of babies will affect the global economy
Global Economy

How the dearth of babies will affect the global economy

The world’s population is going to peak before the century is out and then enter into a big decline, putting serious pressure on economic growth, acco…
25 Jul 2020

Most Popular

BP has slashed its dividend – and markets love it
Income investing

BP has slashed its dividend – and markets love it

BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders …
4 Aug 2020
Listed companies are dying out, and that could have serious consequences
Stockmarkets

Listed companies are dying out, and that could have serious consequences

Private equity is taking over from public stockmarkets as the biggest provider of capital to companies. That’s bad for investors and bad for society a…
3 Aug 2020
Can the recent rally in sterling continue?
Sponsored

Can the recent rally in sterling continue?

A "double top"  – a very recognisable pattern – is forming in in the US dollar. Dominic Frisby explains what it is, and what it could tell us about st…
3 Aug 2020