2---Populists don’t improve economic performance---their own evidence. [LS Reads Blue]

The recent rise of populism has many potential causes, both cultural and economic. Growing evidence suggests that labor market disruptions due to globalization and technological progress as well as the crisis-driven spikes in unemployment have played a major role in the rise of populism in advanced economies. However, there is no evidence showing that populist policy agendas have a realistic shot at addressing such problems. Instead, standard progressive proposals such as stronger counter-cyclical fiscal policies to stabilize employment during recessions, fighting tax avoidance, strengthening social safety nets, and active labor market policies should be enacted.

Motivation

The recent rise of populism in advanced economies—particularly after the 2016 Brexit referendum and the 2016 US presidential election—has become a major challenge for liberal democracies. The populist tide has been explained by both economic and non-economic factors, including: cultural backlash against globalization, liberalism, and immigration; increased unemployment due to the recent financial crisis; and vulnerability of jobs to automation, outsourcing, and import competition. This article argues that the economic factors—the loss of jobs due to globalization and automation and the unemployment spike during the recent crisis—have played a major role. The inability of mainstream political parties to deliver shared prosperity has undermined public trust and provided ample opportunities for populist discourse. The rise of populism may therefore be justified by some as a corrective measure against the recent failures of traditional parties’ socio-economic policies. However, there is no evidence that populists have been able to improve economic performance once in power.