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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 relatively 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 45th 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.
This article was originally published by MoneyWeek and can be read here.