We’ve already passed peak populism

Today we consider the tide of populism, which is, we are told, sweeping across the globe.

We do some debunking.

We consider, as always, the implications for investors.

And we offer the suggestion that Peak Populism is already behind us.

Hanging out with Tony Blair

I was speaking at a conference earlier in the week with Tony Blair. As you do.

I got there early to watch his talk. Unfortunately, he didn’t stay to watch mine. His loss.

His talk began with a video. Clips of various populist politicians from across Europe were played – Nigel Farage, Marine le Pen, Geert Wilders, Beppe Grillo and the Austrian bloke whose name currently escapes me.

Norbert Hofer – that’s it.

Snippets of the politicians at their most passionate – or ranting (depending on your political persuasion) – were played over scary music. Blair then went to frame Brexit as a populist moment of madness that we will live to regret, and argued it was driven by immigration fears. The main reason people voted Brexit – sovereignty – went unmentioned.

I accept that there is a sweeping tide of political discontent. I’ve been writing about it long enough. But the word populist is now being used to dismiss any political point of view, whether it’s left wing (Corbyn/Grillo) or right (Farage/Le Pen), which goes against the world view of the centre-left.

The key to winning Brexit, as Douglas Carswell outlines in his new book, Rebel (and you can hear Douglas interviewed last week on my podcast) was not to be populist.

It was calculated very early in Leave’s plans that Nigel Farage should be kept out of the limelight. While he is popular with many, he is also unpopular with many, and Brexit’s success lay in winning the hearts, minds and votes of the moderate middle. It was felt that Farage could jeopardise that and so the decision was taken to keep him out of it where possible.

Remain actually wanted Farage to be the central figure for this same very reason. And even now, those who are fighting Brexit are trying to smear it with the anti-Farage brush, and dismiss it as populist and even racist. Almost every article you read opposing it comes accompanied with a picture of Farage.

The reality is that Britain today is anything but populist. We have a Conservative government. The Tories are not some revolutionary new upstarts. They go all the way back, it could be argued, to the English Civil War.

For the most part, Tory MPs are centre-right, with some quite authoritarian, and others more laissez faire and libertarian. Despite most of them voting Remain, they have clearly got the Brexit message – Britain wants to make its own decisions – and are now occupying it. The reason they are occupying it is that Brexit was popular. The party is following the people, not the other way round.

Ukip is the populist party of the right. It doesn’t have as single MP. Even Farage never won a seat. It got annihilated in the council elections and will probably suffer a similar fate in the general election in June. Post Brexit, Ukip’s raison d’etre is not clear and its days could be numbered.

Meanwhile, Jeremy Corbyn has turned Labour into the populist party of the Left and, in doing so, has sealed their electoral destiny. Barring some kind of seismic shift, Labour will be walloped.

The Tories are not wholly innocent of populist policy, of course. As my editor, John Stepek, points out to me this morning, the energy price caps it is proposing are populist – and not really necessary given the Tories cannot lose.

It seems that is part of Theresa May’s agenda to shed the nasty party image and be a one-nation Tory. (If she really wanted to be populist she should find that extra £350m for the NHS.)

But overall, as far as the UK is concerned, populism is dying.

The wave of populism is being swept away

Now look to Europe. In Austria, Norbert Hofer lost to a moderate Alexander van der Bellen. In Holland, Geert Wilders’ Freedom Party won just 13% of the vote. In France, the almost unknown (until a few months ago) Emmanuel Macron, resoundingly defeated Marine Le Pen by 66% to 34% to become president.

If anything, the tide of so-called populism isn’t sweeping across Europe, it is being swept away.

The main exception to all this is of course Donald Trump. Is he a populist? It depends how you define the term, but his electioneering – chants of “build the wall” and “lock her up” – was extremely so.

My finger is not on the American pulse, so forgive me if I’ve got this wrong, but his achievements in the defining first 100 days seem limited. It may all be part of some clever deal-making ploy, of course, but, so far, not much seems to have happened. Either he has moderated, or he has been moderated.

His approval ratings, according to the Five Thirty Eight poll of polls, meanwhile, have gone from 48% in the first week of his presidency to 42%; and, more pertinently, his disapproval ratings have gone from 42% to 52%.

There are all sorts of other factors at play, of course, for his declining popularity, but one of them may simply be a decline in the allure of populism.

Perhaps we will look back at 9 November, 2016, as not only the day Donald Trump was elected 43rd president of the United States, but also as the day populism peaked.

Populism will rise again if political discontent grows. Of course it will. And few have identified the role monetary policy has had to play in all of this. Zero interest rates and quantitative easing led to the asset price inflation. That rubbed wealth inequality into the faces of the masses. They grew, quite rightly, discontent.

There is a clear relationship between monetary policy and populism. Few get that, of course, but it doesn’t mean it isn’t so. If the economy booms and the playing field is deemed to be reasonably level, populism will die. If it doesn’t, it will rear its head again. For now, populism sleeps.

How does this affect you as investors? For me the most glaring change is that we’ll see less of the politically-driven volatility we saw so much of last year. Indeed current volatility is already low. Things will get volatile, of course they will, they always do, but it will not necessarily be politically orientated.

In all, I’m bullish on Britain – on our currency and on our economy. For now.

  • Horiboyable .

    “And we offer the suggestion that Peak Populism is already behind us”
    You have not seen anything yet. We are only at the gates of hell. Wait till the economy turns down hard, there will be collapse and chaos.

    Populism = the sign that we should all be taking note of. The Macron win will destroy the EUEuro. 100% this gig is over, it is just a natter of time now (2 years) max but I think sooner.

    • Andrew Crow

      Horiboyable – I think you may be suffering from wishful thinking. The EU has a much better chance of surviving with Britain out of the frame and both the French and Germans know that. It is actually in their interests to get us out as smoothly (and quickly) as possible. Much of the current posturing is no more than electioneering rhetoric. If the French had been ready to kick over the European traces they would have voted Le Pen.

      • Horiboyable .

        The laws of mathematics apply to us all. You are making the same mistakes most EU politicians make of trying to fix an economic problem with a political solution. When politicians apply this mono group think to an economic issue, there can only be a one result with 100% certainty; they will take us to the crash and burn stage. Be prepared for interest rates to reach eye watering amounts and for property prices to collapse, pension funds collapsing and wide spread jobs loses. Money debasement has never worked, not even once, the Roman Empire tried and many nation in between. Country defaults have started and the dominos will start slow at first and then very quickly. Remember the whole of Europe defaulted on their sovereign bonds back in 1932 and it is about to happen again. Your trust in the state is seriously misguided.

        • Andrew Crow

          I don’t rule-out the potential for the sort of collapse you envisage. Plenty of small things could trigger the economic avalanche. Very easily. From Canada to Turkey and many points between and all around.
          There’s a lot of political vested interest in keeping it afloat (‘whatever it takes’ said Mario Draghi)) and the 2008 debacle showed how far politicians and central banks were prepared to go to maintain their asset values. They were prepared to throw Lehman to the wolves as a sacrifice, but the rest of the flock is grazing peacefully since.
          My trust in the (deep) state it is that it will look after its own interests. I have no illusions that it cares a toss for you or me.
          And I have few illusions that the politicians we elect have much influence on outcomes.
          On the streets the battle lines are so-called Christendom versus Islam. These are cultural/secular banners rather than truly religious issues. But the battle royal is between gold and some form of virtual currency. Bitcoin is a preliminary skirmish and doing very well for the moment, but it won’t be allowed to go too far because states (deep or conventional) don’t control it.
          I suspect that neither the US nor Europe can afford to go for gold whereas China and Russia (North Korea, Iran, Turkey and others) probably can. Such a move will split the economic world in half.
          Military might will not keep the US empire intact any more than it saved the Romans. It was climate change that brought down the Roman empire by disease from within and overwhelming pressure of moving populations on the periphery.
          Interesting times.

          • Horiboyable .

            Very good points. Empires always collapse through corruption. The Roman state simply kept raising taxes until its citizens simply walked away from their homes and I believe it happened very quickly too, over about 8 years. What worries me is what comes afterwards. The collapse of the Roman Empire took us into the dark ages and feudalism which lasted until the Renaissance.

            • Andrew Crow

              Civilisation has likely never been as vulnerable to collapse as Western (so-called) civilisation is today. Most of us have not the faintest idea how to run the kinds of services which are essential to our lifestyle.
              Cyber-induced power cuts would put us into Dark Ages mode almost immediately. Lights going out, as we call it, would be metaphorical aswell as literal as all of our communications infrastructure halted. Hardly anything would work. Even gas central heating doesn’t work without a mains electricity supply. The ATMs wouldn’t work. There would be wholesale looting within days – so many people rely on freezers for their larder stocks. No one would know what was happening elsewhere because there would be no television or radio; the internet would be out, telecoms across the board would be dead. Any co-ordinated government response would be difficult to maintain and totally outnumbered.
              The US empire would collapse in eight days never mind eight years.
              There is no mileage in this for the powerful. The current power brokers rely totally on all this infrastructure so they must do what it takes to keep it afloat.

              • sodit

                That is why thermo-nuclear weapons are becoming an irrelevance. They’re a 20th century weapon. Back then a big bang was needed to hit one’s target and to stop economic activity. The shops and offices in London which hadn’t been demolished continued to work throughout the Blitz.
                Today, in a world of precision guided weapons, all one has to do is destroy the electricity sub-stations and most economic activity would cease with the failure of the power supply. Shop tills would stop working and offices would be unable to function.
                Strangely, the anti-nuclear protesters never seem to wheel out this argument when decrying nuclear weapons.

                • Andrew Crow

                  Statistics are peculiar things – bear with; me I’ll get to the point – If you learn to swim you actually increase rather than decrease your chance of death by drowning. You are much more likely to be messing about in water. Gun ownership increases your chances of dying from gunshot wounds.
                  Possessing nuclear armaments by the same token is a very bad defensive ploy; because a) you become a target to take out and b) there is increased likelihood of accidental discharge.
                  The US puts great faith in the nuclear deterrent because they are highly vulnerable. They have soft city targets – look at the effect the Twin Towers destruction had on the collective American psyche. Alas for the Americans they can not reply in kind because no nation on earth has as much soft, high value target material. The US judges pain by its own standards and naively assumes their standards are common.
                  We Brits maintain a nuclear deterrent because we have a national ego problem.
                  The military is always gearing up to fight the last war and the politicians are always gearing up for the next election.
                  Laugh or cry. ‘Twas ever thus.

                  • marylyn ford

                    I think we keep them around, in case anyone who decided to nuke us would know it would be the last thing they did.

                • marylyn ford

                  Surely, it is much easier to hack into the controls from wherever you are?

            • marylyn ford

              I vaguely remember something similar happened here when interest rates went crazy.

        • marylyn ford

          If interest rates go up that much, pension funds will revive, not collapse.

    • CortexUK

      The economy turned down hard in 2007/8, harder than at any time since the late 1920s. The resulting populism fizzled out. Which is one of the points of the article.

      • Horiboyable .

        BREXIT and Trump are merely signs of a change in the cycle. Even France is an indicator, an outsider was voted in after decades of the two main parties. They have rejected the status quo and want change. They will not get change with Macron and so there will be an increase of rioting on the streets of Paris that the BBC rarely reports on because the BBC is nothing more than a governmental mouth piece interested in the status quo because their jobs depend on it.

  • quark

    If Tony Blair thinks immigration was to blame for Brexit, then he has to take the blame for the mass immigration of East Europeans. I am surprised nobody has pointed this out. However, the EU debate was based on the idea of taking back control. The last minute immigration poster by UKIP – which appalled me – was a last minute act of populism because they thought they were going to lose the vote. It seems to have worked. Currently Corbyn is attempting left wing populism in the belief he can shore up his core vote. So there is no guarantee the Mrs May will get the majority she needs because populist rhetoric can be very powerful from Left or Right. Basically, in my view, populism is effective because it appeals to the emotions of the electorate and often common sense is left behind in the ballot box. Don’t knock it. Let’s see where it gets Corbyn before we lay populism to rest.

    • Horiboyable .

      Corbyn was finished when he started. NO one can take that 1970’s throw back seriously. Still trying to play the class war card in 2017!!! Good luck with that.

    • Argus

      Do you think Eastern European cultures are incompatible with your way of diversion? You might be right if judged on the likelihood of their most popular name given to new-born boys being some form of Mohammad. Just send those Eastern Europeans (they are all of the Christian culture) back – some of their countries are demographically bleeding. You imported a lot of human capital which is needed back home.

      • quark

        I think you misunderstood me. Tony Blair and Gordon Brown had the option of phasing East European migration to the UK, but declined to do so. This is well known. Even Angela Merkel said we had that option but didn’t take it The result was that the sudden influx was resented, for a variety of reasons, particularly in the east of England an area which had a considerable bearing on the referendum result. That was Tony Blair’s doing. So he can hardly complain that the result was Brexit. By the way, we didn’t import this human capital, it came to us freely. That is the consequence of free movement of people in a community of diverse economies. And I couldn’t care less about a persons religion frankly.

        • Argus

          O.K., I misunderstood you. Sorry for my fuss, shame on me.

        • marylyn ford

          He never complained, he boasted that the people deserved it because he despises working class culture.

    • sodit

      If he thinks that immigration was the problem, then he’s deluded. Immigration was only the straw which broke the camel’s back.
      The EU is unprecedentedly unpopular in member states across the continent. This is because it imposes laws and regulations which are contrary to the customs and traditions of the people’s of Europe. It’s possibly trying to be fair, and find the common medium between all the different peoples, but the diverse and vibrant peoples of Europe want to live their lives in accordance with their idiosyncratic customs and traditions. They don’t want to have to live by a different set of rules. This is at the root of the discontent. Immigration was only the spark which caused the public to do something about it, rather than just grumble.

    • marylyn ford

      Tony the traitor should have been locked up. He smells money (as if he hasn’t got enough) from the EU. But I think all the candidates most likely to win are remainers, so leavers will have no one to vote for in any party.

  • DiverPhil

    I wonder about populism re-emerging especially when it becomes evident what we are signing up for in brexit and what we are going to have to pay and loose, as well as giving the EU 27 a solidarity of action from the silliness up to date. With their improving economies no wonder the powers that be do not want another vote when the full impact of our voting for our own sovereignty nonsense its all about the money!

  • Ben Stubbens

    Trump is the 45th POTUS. George W Bush was 43.

  • Ralph Clark

    I would have thought that the strong linkage between “Brexit” and “Populism” ensures that the latter will never be too far away from the thoughts of politicians for some time to come. If populism makes politicians more accountable then that is surely a good thing isn’t it? The EU calls itself democratic and in theory it certainly is but in practice that is quite obviously a questionable claim. With that in mind it will be very interesting to see if the latest trend in the EU is truly an indication of a peak in populism, or if it is actually a rejection of the current alternative options available to the public.

    • marylyn ford

      It is a gravy train for another layer of expensive, useless, politicians

  • Andrew Crow

    Centre-left world view? I don’t think so. More centre right-ish which is where Blair firmly sits. I don’t suppose Blair was ‘populist? Pillock! (Not you Dominic; Anthony Aloysius Blair)

    Left and right seem to be increasingly useless terms in political discourse. ( Mind you since you could barely get a cigarette paper between the iniquities of HItler and Stalin this is not a new problem).

    Personally I deeply resent the abuse of the word ‘populism’ in its current derogatory sense. Democracy is by definition populist – government of the people by the people and for the people. That’s it. That is what it means.

    Words matter and the ‘Deep state’ types who really run the show control much of the debate by subtly controlling the parameters of what can be said. Beware of ‘weasel words’. Lazy news media types use them all the time to pretend they are in touch with the latest trends; in reality they are just echoing the banalities the powerful would have us believe are eternal truth.

    To enter a debate about who is or is not ‘populist’ in the current political scrummage is tantamount to having to answer the old lawyers question “Have you stopped beating your wife?”

    Electable or not Jeremy Corbyn belongs in the Labour Party. That way we know what we’re voting for (or against). Many of the rest of the Parliamentary Labour Party are in the wrong place and do no more than muddy the waters. Corbyn’s error was to think he could somehow lead a ‘broad church’ of heretics.

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  • MK22

    To describe the current (and immediately previous) governments as centre right is like saying the continentals drive on the left, but nearer the centre of the road than we do. Everything the government has done over the past 7 years have been right wing extremism, tax cuts for the rich, privatising the NHS, increasing the cost of tertiary education, kicking the poor and needy. I know that the MSM tell us that Corbyn is unelectable and useless, but remember, they are DESPERATE to keep the far right in power. Strangely, the bankers and financiers are also desperate the keep the right in power. Which means the rest of us should be panic-stricken that that is what they will achieve. It wasn’t the NHS, the poor, the needy, the shop floor workers, nor me, that caused the last financial crisis and they won’t cause the next one either. But they are the people who are suffering and will suffer as a result. You can listen to the lies and vote for May if you want. Just don’t come crying to me after the death warrant on the UK is executed!

    • CortexUK

      Haha. Thanks, that was hilarious. I needed that.

      Oh, you were serious…

      • MK22

        I’m glad I have brightened your day.Let’s hope the election doesn’t blight everyone’s days……

        • sodit

          If the current opinion polls are correct, it won’t.

    • quark

      Well, there we have a populist discourse for you. Tax cuts for the rich? You are wrong there. The evidence suggests otherwise. Privatising the NHS. Where’s the evidence? Kicking the poor and needy? How? Have you never heard of tax credits? Housing benefit? Council tax benefit, minimum wage? Lifting of the tax threshold? Bankers and financiers, a bunch of rogues I concede, but to what purpose is your rant against them? To stir the emotions and add fire to your rhetoric, that’s all. Populism. Unfortunately for us all,
      and despite getting away scot free from the crisis they created, they also provide much needed tax revenue to pay for all those tax credits. Perhaps, like Mr Corbyn, you admire the Venezualen model. Well good luck with that. Emotional populism is no substitute for properly considered facts and analysis.

      • MK22

        Sorry, Quark, I didn’t have time for a rant, far too busy in the depths of the Pensions Industry atm, that was just brief comment….

    • marylyn ford

      Overpopulation has eaten the welfare state. You can not have people on a small island, paying into something that the world and his wife turns up and uses.

      • Andrew Crow

        Simplistic and wrong I think. It’s not the world and his wife that have eaten the welfare state it’s a demographic shift that politicians have known for a generation was going to be a problem and have steadfastly refused to address. The old age pension was designed for a working class that retired at 65 and was dead in five to ten years.
        The NHS is a victim of its own success.
        The DWP is still operating as if this were the nineteen sixties and we live in a manufacturing economy.
        If you believe Britain is overpopulated you should fly over it sometime from Newcastle to Exeter as I did once. This is not a crowded island. It’s just an appallingly badly managed nation.

        • marylyn ford

          The population can no longer feed itself, and could barely do so with a far smaller population in WW2. I know there appear to be large tracts of open land, but it is no longer enough to sustain the current population, on even the most basic level.

        • Cynic_Rick

          If it’s a net importer of food, which it very much is, then it’s overpopulated.

          Utilising agricultural land for expanding the population further exacerbates the problem.

          Oh! Marylyn’s beaten me to it!

          • Andrew Crow

            Nonsense. By the same token if your nation is a net exporter of manufactured goods you are making too much stuff.

            Adam Smith was writing about this sort of thing a very long time ago and a lot of economists have done since and still do. You can’t look at population size in isolation. And you certainly can’t look out of your window and conclude we are overpopulated because your front street is busy.

            You will know when Britain is overpopulated because there will be net emigration. Populations move about this planet as they always have done in search of a better opportunity. If they didn’t we’d all be still living in the Great Rift Valley (if the archaeo-anthropologist are right about our origins.

            • Cynic_Rick

              But we’re a massive net importer of manufactured goods; compounding the situation of being a massive net importer of food.

              It’s because of such considerations as growing debt to the ROW and to stripping of UK assets by foreign investors that we presently stay afloat; a totally unsustainable situation.

              You state: “You will know when Britain is overpopulated because there will be net emigration.”

              I would put it differently: “You will know when enough of the occupants of Britain have woken up to being slowly but surely reduced to the Lowest Common Denominator because there will then be net emigration”.

  • CortexUK

    Macron was not unknown, even outside of France. He was the Minister of Finance between 2014 and 2016. Every Frenchmen and many a European observer of politics, business and economics knew exactly who he was before the election.

  • oca2073

    I think populism is dying because of the us. Other countries are looking at America and saying ugh we dont want to be like them/trump. A lot of it is simply the distaste one country has for another country’s nationalism (especially if it’s a big important country) which is singlehandedly suppressing its own nationalist instincts.

  • sodit

    No one had heard the word “populism” used until well after the referendum. If it had been a significant factor, then we’d have heard it beforehand.
    It is just a label that the losers of that referendum have dragged out of the lexicon to try and disparage their opponents, while they were fighting a rear-guard action to stop Parliament implementing the expressed wish of a majority of the voting public.
    The reason why Mr. Wilders and Ms. Le Pen didn’t win their elections is because they’re considered too extreme to be trusted with running a government. Similarly UKIP don’t win seats in Parliament, they’re not trusted with everyday minutiae. Thank goodness Mr. Cameron gave us the opportunity to vote on a single issue. Had he not, the UK would likely now still be expecting increasingly authoritarian rule rather than having determined to abandon it and embrace full (if flawed) parliamentary democracy.

    • marylyn ford

      We are not out yet, and nearly all candidates on all sides are remainers.

  • crazydave789

    we haven’t even come close to peak populism. what is happening is a drive to hide it as far as possible to prevent more from joining.

    so we will end up with more situations like brexit and trump where the smug were unprepared for the outcome.

    • marylyn ford

      I do hope you are right!