Beware the promises of populists

Amid global uncertainty, correcting populist policies is essential for growth

- AJAY CHHIBBER

Economic populism is a political approach that frames economic issues as a conflict between the common people and a corrupt or out-of-touch elite, quite often with a strong dose of nationalism railing against globalisation.

Populism is back in fashion, this time in the United States, Hungary, and in several countries in the Global South. Populist parties have also made huge gains in Europe, including in its heartland, France and Germany.

In the United Kingdom — which left the European Union — a period of populist and incompetent governments under Boris Johnson and the hapless Liz Truss turned the electorate away from the Conservative Party. Rishi Sunak tried to restore confidence in the Conservatives but lost badly to the Labour Party. In Poland, a 10-year period of populist government ended with the election of a more liberal Donald Tusk. But Donald Trump, despite a chaotic first term from 2016-2020 and a mismanaged pandemic that led to his election loss in 2020, is back in power in the US, while Viktor Orban, another right-wing populist, remains strong in Hungary.

The world has seen waves of populism before. In a study published in the American Economic Review in 2023, Funke et al‘ examined periods of populist government across the world from 1900 to 2020. The share of populist governments rose in the 1930s — with the rise of Hitler and Mussolini in Europe — and again in the 1950s, mostly in Latin America. Populism rises and eventually wanes. Populism of the 1930s eventually led to World War IL. A second wave of populism has now swept the world since the collapse of the Soviet Union. The study shows that the share of independent countries with populist governments rose from under 5 per cent in 1991 to over 25 per cent by 2019, and is now closer to 30 per cent.