Containing Populism: Stability in a time of upheaval

Pro-democracy campaigners hold yellow umbrellas as they march outside the city's legislature in Hong Kong on June 17, 2015

I have written extensively about the rise of far left and far right movements in the United States (USA) and Europe and their impact on politics in their regions and beyond.

However, if one were to study this phenomenon surgically, one would realise that these movements have been gathering steam and even mainstream acceptance in the aftermath of the 2008 great recession that blighted the entire world economy.

But the root cause is a much deeper malaise and disillusionment with the market economy system and the push for greater free trade in the last four decades that has created an unequal distribution of wealth.

I would like to zero in on two case studies.

First, the north of England that was a heavy stronghold of the pro-European Union (EU) Labour party and the rust-belt states (Illinois, Indiana, Michigan, and Ohio, as well as Pennsylvania) in the USA that were for the past 30 years strongholds of the centre-left Democratic Party.

From an economic standpoint, in the post-war years, the North of England and the rust-belt states of the USA were strongholds of the centre-left and manufacturing hubs.

Unions were strong so was collective bargaining.

The people of these regions lived comfortable lives despite not being high-qualified academically and enjoyed a decent standard of living. They were able to buy houses, take limited holidays, educate their children and save enough for retirement.

However, this started to change from the 1980’s.

Businesses, with efficiency and profit margins on their minds, started to move their manufacturing to other parts of the world, primarily Asia.

Trade liberalisation reduced tariffs and made goods cheaper.

Despite many goods being manufactured overseas, Asian governments started providing many incentives to these Western companies bringing in foreign direct investment to spur domestic economic expansion and this in turn made the goods produced cheaper than they would have been if they were manufactured in Indiana or Yorkshire.

Also, with strong unionisation and a higher standard of living, wages in the UK and USA no longer made manufacturing competitive as it would be in Vietnam or China.

An economic revolution was taking place, the Asian economy was growing led by China and East Asia while the USA and UK’s economies were instead being powered by the services sector and in the latter’s case mainly financial services centred in the City of London.

The USA’s high-tech economy gave us Apple and Microsoft while London emerged as the global financial hub but as this expansion and reorientation took place, the rural areas and outer cities were inadvertently left behind.

Trickle-down economics failed because the rich kept getting richer and they were not willing to share their wealth with the lower income groups in the form of higher taxes especially in the USA.

And the middle-class, the mainstay of the USA and UK economy in the post-World War 2 boom years, suddenly found itself cash strapped and even worse off than those in the lower income groups because they were not entitled to the social safety net that was created for the economically vulnerable.

So, the fear of immigration, trade liberalisation and economic openness suddenly took root and the middle class and lower middle class started to react against the established political order.

When the right wing failed they opted for the left wing and when even that failed, populism and incendiary nationalistic rhetoric gained a foothold.

In Germany, the AFD party tapped into the fear of immigration and the loss of jobs for Germans to immigration was their rallying call. They are now represented in nine German State Parliaments.

The 5 Star Movement in Italy that was anti-EU and establishment may end up being the largest political party in the lower house if elections were held today.

Austria is likely to elect its first far-right President as Norbert Hofer is currently leading in the polls.

The Labour Party in the UK has elected its more far-left leader in decades and a large section of its traditional supporters voted to leave the European Union (Brexit).

The USA has just elected right-wing populist, Donald Trump as its President with Trump winning all the rust-belt states minus Illinois.

So the rise of the far-left and far-right seems to be continuing unabated.

However, I argue that this is an unsustainable trend.

Populist rhetoric may sound good but democratic system of government which its checks and balances anchored on the values of tolerance, equality and the rule of law will never provide for decisions that, inter alia, exclude migrants purely on the basis of their religion, slapping duties on imported goods or denying jobs to non-locals.

All of this will never work even though these far-left and far-right parties continued to say they will enact such policies.

However, the traditional political class must also be ready to accept the blame for the failures of their social and economic policies that have created generations of people working hard but unable to make ends meet.

Many young adults live with their parents because they are unable to afford homes.

Employment does not provide the kind of financial security it once did and many have to work extra jobs.

Drawing from all these experiences, Malaysia too must take the right measures to ensure the populist do not gain power.

The promises of the Pakatan Rakyat leadership in the last election to abolish tolls and make education are patent examples of the politics of populism that we must shun.

It is heartening that Malaysians were not taken in by such promises that are not implementable at the last general election.

The government has also introduced schemes to make homes within the reach of young adults via PR1MA and the MyDeposit scheme.

The middle class are being given tax breaks for the first time since this year and it is testimony of the concerns of the government for the middle income group.

Healthcare remains heavily subsidised to ensure no one falls through the cracks but options are also given to those who wish to pay more for speedier services in order to make healthcare market-friendly and sustainable.

So the lessons politicians can draw is that the time for talking is over but the time for working and implementing has come in a rather unexpected way.

I believe the rise of Trump and other demagogues is not a repudiation of the traditional political class but rather a wake-up call for them to do more and do more they must.

Populism must be contained if we wish to ensure we enjoy continued stability and harmony.

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Ivanpal Singh Grewal

Ivanpal Singh Grewal

Ivanpal Singh Grewal is an Advocate & Solicitor. He was formerly Political Secretary to the Minister of Plantation Industries & Commodities.


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