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Roula Khalaf, Editor of the FT, picks her favorite stories in this week’s newsletter.
Except for the weary travelers, who celebrated the Millennium on January 1 2001 and not 2000, we are almost at the end of our century. What are the surprises so far? What would people have found hard to believe 25 years ago? That Russia, which struggled to pay its pensioners at that time, became a revanchist army. That Islamic terrorism will announce itself on a September morning as a force that will last our lifetime, and then fail to do so.
Here’s another one. The US would surpass Europe in economic growth, and they wouldn’t be happy about it. If people are ultimately going to vote on what they’ve experienced – a common thing – America will have to have more stable politics than Europe, including Britain. In fact, it has an equal amount of anti-establishment populism, if not more.
Odd. Perhaps what voters do is to compare their economic experience with that of their parents, and not with their contemporaries in other countries. The data that matters is longitudinal, then, not latitudinal. But that doesn’t stop the economic-and-political argument from looking too strong. Consider Ireland or Poland. Every nation has seen the rise of non-major parties in recent decades. And everyone has done this despite the fact that they are gaining weight inexplicably.
In the 1980s, Sinn Féin won 1 or 2 percent vote in Irish general elections. In the teeth, this rose to 6. Although it did not pass, the party got 19 percent in last month’s elections. At the same time, Ireland’s economy grew dramatically, from the poorest in Europe to the richest, from a place of immigration to a place of concentration. How does an economist calculate this? What is the explanation of material things here?
Let me expect one thing: that natural enrichment can hide, or cause other problems. Rising housing costs for young people, to take one example. But this is too many cherries. In every economy, there are always class problems that can be mentioned. If the economic determination is high, it must be false. It should be considered that Ireland, despite being badly damaged in 2008, is richer than it was a few generations ago, and less glorious because of the political system that managed most of the success.
Some points must be met. Donald Trump was elected at a very high price (2024). But also at a very low price (2016). Populists thrive in free markets with high income inequality (in the US). Also in the people’s democracy (France). In Britain in 2016, disenfranchised young people voted to remain as Remain while wealthy older people voted for an end to Leave. Greece, which has suffered from economic problems for the past decade, and an excuse to look at the border, has the most populous prime minister in the world. Italy, which has been changed a little, has a lot of people. Not only is there no reliable connection between economic activity and political decisions, there is not even a perfect utility line.
If it’s not just the economy, then what are the voters? Migration, mostly. But even this is not difficult. Why has populism not started in Australia for immigrants? (There, perhaps, economics explains a lot.) The strength of the hard right in France seems to be disproportionate to the growth of the foreign-born population there, which is not unusual by western European standards.
Another explanation for the phenomenon is “hedonic adjustment”. As money goes up, so do expectations. Voters are quick to attack. In other words, finance is a choice, but not in the way you might think.
In any case, the story of the US in this century should be a rebuke to those who see politics as part of the economy. Of course, it’s possible to grow fast, build the world’s most powerful companies from the ground up – and have Tulsi Gabbard ready to take on a major government role. Economic determinism is comforting because there is a textbook answer to every problem: grow your way out of it. Invest. This was Joe Biden-ism. Rather, it is more about western liberalism. There’s a common sense to it, but also a ponderousness. Conservatives have been quick to assume that alien forces beyond physical interests are at work in the world, and they know it well.
It’s hard to write this piece without making the mistake of being skeptical of growth, it’s worth quoting Robert Kennedy’s high school quote about all the things GDP doesn’t measure. (“Our power marriages”) Simply put, I am active in development. I want 20mn Londoners, not 10mn. But the story of growth must be good in itself, that many things for many people are very important, that love for the pre-industrial world is difficult. The argument is no that growth leads to healthy politics. If the evidence supported this fact, then he is now ignorant.
In fact, the causal relationship between economic activity and political outcomes has been disrupted in both directions. It is not that a country can have a lot of wealth that has no benefit to its politics, it can support terrible politics without destroying the economy. At this time of year, we are asked to think about all the things that money can’t buy. To “love” and “class”, increase public hygiene.
