Populists make empty promises. They exploit people’s discontent, raise expectations but cannot deliver solutions. They claim to represent the “will of the people”. Yet they spread lies and accuse leaders of other parties, particularly progressive ones, to be the root cause of all the problems people face. Populists thrive on divisiveness and partisanship in both America and Europe. And it is happening in the world’s oldest democracies, places that should have been inured to the populists’ siren songs.
Two recent cases are emblematic of what is going on.
Case # 1: The United States
Consider America. Trump constantly attacks the “failing New York Times” for spreading “fake news”:
“Former @NYTimes editor Jill Abramson rips paper’s ‘unmistakably anti-Trump’ bias.”
Ms. Abramson is 100% correct. Horrible and totally dishonest reporting on almost everything they write. Hence the term Fake News, Enemy of the People, and Opposition Party!
— Donald J. Trump (@realDonaldTrump) January 5, 2019
He flatly overlooks the fact that the New York Times has never been more successful, with extraordinary financial results and a fast-growing audience – Forbes estimates NYT’s online subscriber base to be its biggest value driver, and forecast this growth to pick up in the coming years and reach 4.5 million by 2022. A remarkable performance at a time of great difficulty for the industry battered by digital publications and online news.
But Trump, like all populists, has an Achilles’ heel: He can’t deliver on his promises. And he never will. Because his promises are nonsensical, none of them can resolve the problems they are meant to address.
What is happening now with his promised border wall is only the start. He incautiously caused the shutdown of government, sending home 800,000 government employees without pay. And he is doubling down on his mistake, with false accusations at the Democrats when everyone knows that the Democrats have nothing to do with it.
Trump, and he alone, is the cause of the mess. And if the shutdown lasts a year or more as Trump says he’s ready to do, don’t go ask all those employees sitting at home how happy they are with him or what they think of his MAGA policies.
But what about employment and Trump’s promise to create more blue-collar jobs to revive the rust belt? The just published employment data was fantastic, almost double what economists had predicted, shattering Wall Street forecasts of doom: 312,000 jobs were created in December, bringing total employment gains in 2018 to a three-year high of 2.64 million. The Labor Department adjusted its figures for October, raising them from 237,000 to 274,000 and for November, from 155,000 to 176,000.
Cherry on the cake: the average wage rose 11 cents, or 0.4%, to $27.48 an hour. OK, 0.4% doesn’t sound like a big deal, but it’s an average and it means some people did get ahead. And if the employment rate crept up to 3.9 percent from a 49 year low of 3.7 percent, that’s a small creep and it was because more people, attracted by a booming economy, entered the workforce.
So has Trump delivered on his promise? First, it’s too soon to tell. The impact of whatever Trump did will take some years to show up. No political measure is ever instantly translated into measurable economic effects.
Second, we need to remember that Trump in his first two years has only really achieved two things:
(1) deregulation of the environment, paralyzing the Environmental Protection Agency – a boon for the fuel and coal industry and steel; and
(2) an unprecedented tax break for Big Business and the One Percent – at the expense of the middle class and the lower blue-collar working class.
Both measures will need time to impact the economy in full, but we already see early signs that can tell us which way things will be going.
The expected early burst due to Trump’s tax break is much like a wave of fresh funding currently translating into higher overall employment and attracting new people in the labor market. Problem: It is not going into every nook and cranny in the economy, as the Republicans expected.
There is a good reason for this shortcoming. A considerable amount of the funding freed from the tax is not going into new investment, but instead going into stock buybacks to please shareholders. For now, that makes Wall Street and the One Percent very happy. But every cent and dollar going into stock buybacks means it is not going into Main Street and jobs for blue-collar workers.
The amounts diverted into stock buybacks is extensive: By end 2018, it is estimated that of the announced 1.1 trillion in buybacks, a record amount, already $800 billion have actually been purchased. Record buybacks are usually a sign that CFOs believe their stock is undervalued. But not all buybacks have happy outcomes. Consider the case of Apple that was recently badly hit by dropping sales for its smartphones in China:
Then there’s another problem: Robotization. This had nothing to do with Trump’s policies. The trend to automation started a long time before Trump reached the White House. Except for one thing, he should have foreseen the problem.
A good leader sees farther than his voting base. He should have understood that jobs in the coal and steel/aluminum industries that existed twenty years ago are no longer there because of automation. For example, Austria boasts of an almost entirely automated steel plant: It only needs 14 people to run.
The same is true for the United States, as a Brookings article abundantly documents. The last time employment peaked in the coal industry was in the 1920s. Already, by 1980, it was plunging – from 785,000 in 1920 to 242,000. And by 2015, it had lost 59% of its workforce compared to 1980 – most of the loss due not to trade but to automation.
The change from pit mining to surface mining (using explosives and considerably less labor) accelerated the move. Capital intensive highly productive technologies are already in use everywhere and it is expected that over the next 10 to 15 years, their deployment will be ramped up.
But Trump didn’t see that coming. He is not interested in either automation or the opportunities opened up by Artificial Intelligence.
As a result of his tax cut, jobs in the steel, aluminum and coal industries have rebounded, sure, but only modestly. Not enough to change the equation in the rust belt. Moreover, Big Business hasn’t changed its modus operandi, as the recent decision of General Motors to close down plants in the U.S. and send 45,000 people home shows.
Bottom line, Trump is only interested in easy-to-sell slogans, not in resolving difficult problems.
Case # 2: Europe
Consider the European Union, and take a close look at one of its best-grounded, most emblematic democracies: Italy. The country where after the disaster of World War II, a particularly representative democracy was set up with a carefully crafted Constitution, intended to avoid the dictatorship of the majority and give equal representation to all citizens, excluding none.
Once again, Matteo Salvini, the rising star of populism in Europe, is in the news in Italy. He is both Minister of the Interior and one of the two Vice Premiers (along with Luigi Di Maio, the leader of the anti-establishment 5 Star Movement). A clever and dangerous politician, he is the new face of his party, the Lega that he has cleverly transformed from a Northern Italian secessionist party calling for independence from Rome, to a populist national party, winning voters in Southern Italy. That is quite an accomplishment if you consider that his party once upon a time, when it was still in the hands of its founder Umberto Bossi (jailed in 2017 for embezzlement of funds), was filled with people who despised southern Italians, calling them “terroni” (mud people).
What has brought Salvini in the news is his new “security decree”, an anti-immigrant measure that has closed Italy’s borders to refugees and was adopted by Parliament on 28 November. Over the year-end holidays, Italian ports were closed to the ship Sea Watch with 49 asylum seekers onboard. The ship was then ping-ponged between Italy and Malta. The Netherlands after announcing it would accept some refugees if others did too, recanted. Malta continued to refuse entrance.
Meanwhile, in Italy, several mayors of big cities, led by Palermo’s Mayor Leoluca Orlando and quickly followed by Naples and Florence, have said they would welcome the refugees. Salvini roared that they were acting illegally and should obey government orders. He asked for their resignation.
The tragic show exasperated the Pope, who on January 6 called on the EU leaders to grant asylum to the refugees now stranded in Maltese waters.
The row has now escalated into a major legal mess, with questions raised about the constitutionality of Salvini’s anti-immigrant decree that does not recognize international law (the Geneva Conventions and the right to asylum).
The basis for questioning the constitutionality of Salvini’s decree – something even the President of the Italian Republic did in a letter to Prime Minister Giuseppe Conte, dated 4 October 2018 – lies in the fact that the Italian Constitution (article 10) requires that the country respects international treaties that it has entered into – in this case, the 1949 Geneva Conventions and its protocols (1977 and 2005) protecting people “not taking part in hostilities and those who are no longer doing so”.
Beyond the legal spat, we need to recognize that the immigrant question is exceedingly complex. The smugglers who provide boats to migrants to cross the Mediterranean are jackals, out to make money. It’s a fragile balancing act between shutting down the human trafficking and saving lives:
As this video from the BBC shows, now that the Italian authorities have cracked down on them, burning the boats after refugee lives have been saved, the smugglers provide migrants with poor quality skiffs. As migrants find themselves tightly packed onboard ships that take water, their lives are further endangered.
In fact, many Italians criticize Salvini’s approach to the immigrant question, saying that by tightening borders and security measures, he has only succeeded in driving them further underground, raising the level of clandestine operations.
In any case, Salvini is far from realizing his promise of expelling 100 immigrants per day – up to a total of 600,000 persons. An impossible task. All he has achieved is to close Italian ports to asylum seekers, at an absurd, inhuman cost. None of the rest has been done.
Expulsions are not the answer. What is required is a humane policy of integration of those migrants who are valid and willing, and expulsion of those who are not.
An Italian solution does exist but it has never been considered by Salvini: the so-called “Riace model” first invented and tried by Domenico Lucano, the mayor of Riace, a small town in Southern Italy. Salvini got him arrested on what are likely to be trumped up charges. But even if the charges prove true, this changes nothing to the value of the Riace model.
Started in the late 1990s, the model worked successfully for 20 years. All that was needed was to scale it up and extend it to the whole country. Problem solved. Go tell Salvini.
This is why populists are dangerous. All you get are broken promises.
Related article: The False Migrant Crisis and the Real One
