It is hard to find a defense of populism in conventional media. The steady slide away from solid property rights in Europe (including the United Kingdom) and the United States since 1990 has been generally applauded, and its opponents demonized. Yet an economy without property rights is being shown year by year to make citizens poorer in country after country, however warm and fuzzy it makes the intellectual left feel. With both major parties in most European jurisdictions committed to property rights destruction in one form or another, only a populist reorientation of politics can return government to its proper primary function: of protecting, not eroding the property of the people.
The original U.S. populism of the 1880s and 1890s was an economically incoherent but deeply felt protest against the bizarre U.S. economic policies of that era. The high tariffs and restrictive monetary policy of the post-Civil War period raised real prices, as domestic producers of many basic goods were able to charge far more than the international price, protected by the high tariff wall – thus inevitably penalizing farmers, whose output prices were determined by the world market, since the United States was a farm product exporter.
Had the U.S. restricted immigration as well as imports (as, logically, it should have done) this would have been counterbalanced by a Nirvana for industrial workers, as wages rose sharply to meet the high demand for labor, financed by the high product prices. This would have been accompanied by a corresponding surge in opportunities for impoverished farmers to fill labor shortages in the industrial cities. However, with free immigration it merely encouraged an ever-increasing flood of immigrants from Europe, keeping wages low and leaving farmers with no way of bettering their lot. With cheap labor and high product prices, it also produced a Gilded Age of conspicuous consumption by over-compensated billionaires, producing inexpressibly vulgar mansions in Newport, Rhode Island and deep despair among the proletariat, impoverished by artificially high prices without any compensating increase in wages. The Populists’ solutions were mostly nonsense, but their economic diagnosis was correct.
The Populists in the United States arose because both main parties, the Republicans and the Democrats under Grover Cleveland, failed to support the justified demands of a substantial section of the population: those impoverished by the high tariff/high immigration policy. Hence the Populist uprising resulted from a failure in conventional politics and eventually gained a high degree of success, forcing both parties to move towards its demands, in particular by limiting immigration, leading eventually to the Immigration Act of 1924 and the subsequent working man’s Nirvana.
In today’s world, there is again much need for populists, albeit primarily in Britain and the European Union, because again a set of policies pursued by a consensus of the major conventional parties and the EU bureaucracy has severely damaged the living standards of much of the population. (In the longer term, the United States may also need a populist uprising, but at present it has two admirable populist candidates, one in each major party, President Trump and Robert F. Kennedy, Jr. Until the primary process in both parties has played out, populist energies can be trammeled into supporting them within the existing political structure.)
The most important betrayal of working people has been through immigration, especially illegal immigration. Right-of-center politicians frequently promise a reduction in immigration at election time, but then do nothing whatever to achieve that desirable goal. A combination of junior civil servants trained in leftist universities and a powerful and unscrupulous cheap labor lobby ensure that no effective measures are ever taken against illegal immigration, while loophole after loophole are opened in the laws theoretically controlling legal immigration. As for the left, it sees a massive stream of impoverished immigrants as a permanent boost to its electoral position. Ordinary people, impoverished by the excess supply of labor and the taxes required to deal with the illegal component thereof, thus seek populist alternatives to the conventional parties that have failed them. The success last week of the Alternative fűr Deutschland in winning overall control of the Sonneberg district council is merely the first harbinger of this; with the AfD currently running at 18-20% in German opinion polls, further electoral earthquakes are in prospect.
The Covid-19 lockdowns and mask mandates were another fortunately temporary example of the political system oppressing working-class people. Lockdowns were little hardship to the public sector and those with stable middle class occupations; they were able to work remotely from their comfortable homes, possibly taking the opportunity to move out of the big cities to more salubrious neighborhoods.
Working-class people had no such opportunity; having jobs that required physical contact or personal service they could not simply absent themselves without suffering unemployment. For those with children, the public sector teachers’ unions then added insult to injury by closing the public schools for as much as two years, thereby adding childcare problems and, more important, doing massive long-term damage to the academic achievements of children who had fewer intellectual resources at home than the well-stocked libraries of the middle class.
A rapidly increasing betrayal of ordinary people, with ever-worsening effects on working-class living standards, is the complex of policies derived by fanatics to address the potential but minor problem of climate change. To those not afflicted with a quasi-religious belief in this dogma, it is increasingly becoming apparent that, when mixed with other policies adopted for environmental reasons, its economic damage to their living standards is far more severe than the effect of any temperature increase short of the Earth warming up like a meatball in a wok.
The effects of this are most apparent in Germany, since the 1950s an economic example of good management to the rest of Europe that is now becoming a dreadful warning of the ill-effects of environmental fanaticism. Much of the damage now apparent was inflicted by the neo-Communist Angela Merkel, for whom the combination of her dour Protestant religious upbringing and her happy youth as a party leader in the East German Komsomol left her utterly unfit to lead a nominally Christian Democrat party.
Merkel’s fanaticism on immigration from 2015 on has inflicted a grievous and long-lasting blow on the living standards and living environment of ordinary German people, but she had already caused much more long-term damage by her hysterical 2011 decision to close all Germany’s nuclear power stations by 2023. That was combined with her decision to subject Germany to Russia’s economic whims (and those of Russia’s adversaries) by constructing the Nordstream II gas pipeline – now unlikely to supply any gas for the next several years – a decision against which the wise President Trump warned her in 2018, to much uncalled-for derision by the Western media. Merkel’s idiotic policies have already produced German electricity costs double those in other EU countries and are likely to produce massive power outages next winter, shutting down the battered remains of German heavy industry and freezing her unfortunate compatriots left without heating in the icy Pomeranian winter. German liberals will be lucky if that appalling infliction of poverty and suffering on the German populace produces only a surge in support for the populist AfD, and not a full-blown revival of the Third Reich!
The same bureaucratic sadism is apparent in the rest of the EU and in Brexit Britain, whose Brexit is rapidly being undermined by the regulation-crazy civil service and the dour two-faced unelected prime minister Squishy Rishi Sunak. (The Labour government that seems almost inevitable next year will NOT be an improvement; with such a choice the populist fringe is indeed the wise alternative.) Banning fracking, potentially a major and abundant source of natural gas, is just one state-inflicted folly, but worse will arrive as the state imposes ineffectual and expensive new technologies in pursuit of the elusive Net Zero. Heat pumps are unable to cope with even the clammy British winter, while electric automobiles, being twice the weight of conventional ones, will break up the roads at twice the speed, an additional cost and environmental degradation (asphalt is made from the messiest fractions of hydrocarbon distillation) not included in Whitehall’s fallacious Soviet-style calculations. Add to this Sadiq Khan’s iniquitous ULEZ charges on automobiles in central London, which Russian oligarchs will easily afford but will hit commercial travelers, taxi drivers and deliverymen hard, and the green levies to be imposed from 1 July, which will add another £170 to household energy bills (couldn’t they at least abolish the TV License fee to compensate for this?) and the direct costs of Whitehall greenery on ordinary people are both increasing and increasingly apparent.
The conventional parties in Europe have failed; partly because of the influence of the EU they have become a bureaucratic socialist Uniparty, prone to every fashionable intellectual fad, that imposes the same expensive and economically damaging policies whatever election results arise. In Europe in particular, a populist uprising is needed, which will restore the inviolability of private property, and the obligation of governments to govern in the interests of their people.
(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)