The Populist Paradox: Democracy’s Double-Edged Sword
Populism’s rise threatens democratic institutions worldwide, promising economic revival but delivering stagnation and eroding freedoms. This paradox challenges free-market capitalist democracies to address underlying grievances and strengthen institutional resilience.
Across the globe, a rising tide of populism threatens to reshape the political landscape of free-market capitalist democracies. From the Americas to Europe and beyond, populist leaders have surged to power by exploiting economic grievances and promising to champion the cause of the “common people” against corrupt elites. Yet this populist wave carries with it a paradox: while claiming to restore power to the people, populist governments often erode the very democratic institutions they purport to defend.
The Rise of the Populist Tide
Populism’s ascendancy stems from deep-seated economic anxieties that have festered in many Western democracies. Stagnant wages, rising inequality, and the perception that globalisation has benefited elites at the expense of working people have created fertile ground for populist messaging.
Right-wing populists in particular have seized upon these grievances, framing globalisation as the root cause of many citizens’ woes. Their rhetoric resonates powerfully with those who feel left behind by economic changes, even in countries with relatively strong economies. By tapping into this vein of discontent, populist leaders have gained a foothold in the politics of numerous nations, from Donald Trump in the United States to Viktor Orbán in Hungary.
The Populist Playbook
Once in power, populists typically pursue a common set of strategies aimed at consolidating their position and reshaping democratic norms to their advantage. Key elements of the populist playbook include:
- Undermining Checks and Balances
Populist leaders frequently work to weaken institutional constraints on executive power. Over 50% of populist leaders amend or rewrite their countries’ constitutions, often extending term limits or reducing checks on executive authority. This erosion of democratic guardrails opens the door to greater corruption and abuse of power. - Attacking Individual Rights
Under populist rule, fundamental democratic freedoms often come under assault. Research shows that freedom of the press typically falls by 7%, civil liberties by 8%, and political rights by 13% when populists take control. These attacks on core liberties serve to silence dissent and consolidate populist power. - Exploiting Direct Democracy
Populists often leverage referendums and plebiscites to bypass traditional democratic processes and claim a mandate directly from “the people”. While this approach may seem to embody democratic ideals, it can be used to circumvent important institutional checks. - Pursuing Protectionist Policies
Economic nationalism and protectionism are common features of populist governance. By imposing tariffs and rejecting international cooperation, populist leaders appeal to their base in the short term while often harming long-term economic prospects.
The Economic Costs of Populism
Contrary to their promises of economic revival, populist governments frequently inflict significant damage on national economies. Research reveals a stark pattern of underperformance under populist rule:
- GDP Growth Lags
Countries governed by populists witness an average decline in annual GDP growth of approximately one percentage point compared to both their long-term averages and global growth rates. This growth deficit compounds over time, with the cumulative difference exceeding ten percentage points after 15 years of populist governance. - Investment Deterrence
Populist actions can trigger uncertainty and deter investment, leading to rapid economic downturns. The cancellation of Mexico City’s New International Airport in 2018, for instance, resulted in an estimated loss of $68 billion — eight times higher than the official costs of the project’s cancellation. - Long-Term Institutional Damage
By eroding democratic institutions and the rule of law, populist governments undermine the very foundations of economic prosperity. Functioning democratic institutions constrain executive overreach and protect civil society, fostering an environment conducive to investment, innovation, and growth.
The Persistence of Populism
Perhaps most alarmingly, populism exhibits a tendency to entrench itself within political systems. Countries that have experienced populist rule are more likely to see populists return to power in the future. This persistence stems from several factors:
- Political Survival Skills
Populist leaders prove adept at maintaining their grip on power, employing strategies of polarisation, media control, and intimidation of the judiciary and opposition. As a result, populists remain in office for an average of six years, compared to three years for non-populist rulers. - Institutional Erosion
The damage inflicted on democratic institutions during populist rule can create a vicious cycle, making it easier for future populists to gain and maintain power. - Unresolved Grievances
If the underlying economic and social issues that fueled populism’s rise remain unaddressed, the appeal of populist messaging may persist even after a populist government falls.
The Climate Crisis: A Complicating Factor
The looming spectre of climate change adds another layer of complexity to the populist challenge. Climate policies, which often require expert knowledge, global cooperation, and potential short-term economic costs, have become prime targets for populist rhetoric. Populist leaders frequently frame climate action as an elite project that harms ordinary people, exploiting the fact that the costs of climate policies can disproportionately affect those at the bottom of the income distribution.
This “climate populism” poses a significant threat to global efforts to address the climate crisis. By prioritising short-term political gains over long-term environmental sustainability, populist governments risk exacerbating the very economic and social disruptions that fueled their rise to power in the first place.
Charting a Path Forward
Addressing the populist challenge requires a multifaceted approach that tackles both the symptoms and root causes of populist appeal:
- Economic Reform
Policymakers must find ways to address the legitimate economic grievances that fuel populism without resorting to harmful protectionist measures. This could include more equitable trade policies, stronger social safety nets, and investments in education and retraining programmes. - Institutional Resilience
Strengthening democratic institutions and the rule of law is crucial to withstanding populist assaults on checks and balances. This includes protecting judicial independence, safeguarding press freedoms, and maintaining the integrity of electoral systems. - Inclusive Climate Action
Developing climate policies that are both effective and politically palatable is essential. This requires careful consideration of the economic impacts on vulnerable populations and strategies to ensure a just transition to a low-carbon economy. - Civic Education
Fostering a deeper understanding of democratic institutions and processes can help inoculate societies against populist rhetoric that oversimplifies complex issues. - Addressing Inequality
Tackling rising inequality through progressive taxation, improved social services, and policies that promote more equitable economic growth can help alleviate the economic anxieties that populists exploit.
Conclusion: The Stakes of the Populist Challenge
The rise of populism presents a profound challenge to free-market capitalist democracies. While populist leaders claim to champion the interests of ordinary citizens, the evidence suggests that their governance often leads to economic stagnation, democratic erosion, and the exacerbation of social divisions.
The populist paradox lies in the gap between rhetoric and reality. Promises of economic revival and renewed democratic vigour give way to protectionist policies, institutional decay, and the concentration of power in the hands of populist leaders and their allies. This pattern, repeated across diverse political and economic contexts, underscores the systemic nature of the populist threat.
Yet the future is not predetermined. By understanding the economic grievances that fuel populism and working to address them through inclusive, sustainable policies, democracies can chart a course that preserves democratic institutions while delivering more equitable economic outcomes. The challenge is formidable, but the stakes — the health of our democracies and the prosperity of our societies — could not be higher.
The populist moment presents both a crisis and an opportunity. It reveals deep-seated flaws in our current economic and political systems, flaws that must be addressed if we are to build more resilient, inclusive democracies. The path forward requires not a retreat from democratic principles, but a renewed commitment to their fullest realisation — creating societies that truly work for all citizens, not just a privileged few.
Bob Lynn / 23-Nov-2024
