Modern Monetary Madness

By John Mauldin

The Trump era could last 30 years

But the populist movement is going to need more than electoral success

Gideon Rachman




How long is this going to last? Ever since the twin political upheavals of 2016 — Britain’s vote for Brexit and America’s election of Donald Trump — analysts have argued about whether this a temporary aberration, or the beginning of a new era.

It is still early days. But it already seems likely that future historians will look upon the events of 2016 as marking the beginning of a new cycle in international history. The bad news for anguished liberals is that these cycles can last quite a long time — 30 years seems to be about average.

In the years since “Brexit-and-Trump”, a global populist movement has gathered momentum.

The fact that Mr Trump is despised by much of the western establishment and media can obscure this point. But the US president has many admirers, some of them running governments around the world.

Jair Bolsonaro, the new president of Brazil, Latin America’s largest country, is an avowed Trump fan. In the Middle East, the Saudi and Israeli governments much prefer Mr Trump to Barack Obama, his predecessor. His fan club also extends into Europe. The governments of Poland and Hungary are closer ideologically to the Trump White House than to the European Commission in Brussels. Matteo Salvini, the deputy prime minister of Italy (and the country’s most powerful man), also sees Mr Trump as a role model.

The horror show of Brexit means that there are few other European populist parties currently campaigning to leave the EU. But the anti-establishment impulse that gave rise to the Brexit vote is still gathering strength in Europe. It has found expression in diverse forms, from the gilets jaunes movement in France to the rise of the Alternative for Germany party, which is now the official opposition in the German parliament.

Past precedent suggests that if a “populist era” takes hold, it might last as long as three decades. All efforts at historical periodisation are slightly artificial. But it is possible to identify two distinct eras in postwar western politics, both of which lasted roughly 30 years. The period from 1945-1975, known as les trente glorieuses in France, was identified with a period of strong economic growth across the west, alongside the construction of welfare states and Keynesian demand-management — all played out against the international backdrop of the cold war.

By the mid-1970s, this model had run into trouble in the Anglo-American world, with Britain suffering from “stagflation” and President Jimmy Carter diagnosing a national “malaise” in the US. A new era (often termed “neoliberal” by its critics) began in 1979 with the election of Margaret Thatcher in Britain, followed by Ronald Reagan in the US in 1980.

In retrospect, this was also part of a global shift. In 1978, Deng Xiaoping came to power in China and initiated a policy of market-based “reform and opening-up”. The communist bloc in Europe also began to crack with the formation of the Solidarity trade union in Poland in September 1980. The foundations of a globalised capitalist economy were emerging.

This “neoliberal era” also lasted roughly 30 years until it was discredited by the global financial crisis of 2008. As with the end of the trente glorieuses, it took a few years of uncertainty before a new ideological movement emerged. But that happened in 2016, with Mr Trump’s election and Brexit.

But why should cycles in modern history last for roughly 30 years? One possible explanation is that the successful ideologies and the political movements they spawn go through a cycle of emulation followed by overshoot.

If new movements or politicians develop an aura of success, they find imitators around the world. That sense of ideological momentum then creates a demand for the original ideas behind the movement to be pushed further and faster. And that leads to the over-reach phase of the cycle. An example of ideological over-reach is the way in which the Reaganite demand for lower taxes and less red tape eventually led to the excessive deregulation of finance, culminating in the financial crisis.

The fact that populist and nationalist parties around the world are already taking their cue from Mr Trump suggests that the cycle of emulation is already well under way. It is now standard practice for politicians, such as Viktor Orban in Hungary, as well as Messrs Salvini and Bolsonaro, to imitate the Trump playbook — condemning “globalism”, accusing the media of spreading fake news, mocking the “politically correct”, and scorning international organisations that attempt to deal with problems such as climate change or the resettlement of refugees.

The rapid spread of this new political style could be just the beginning of a new era that lasts decades. But there is one major qualification to this idea, that distressed liberals should hang on to. If the period of emulation and intensification is to last, the populist movement needs more than electoral success. It also needs to point to results in the real world. The trente glorieuses were deemed glorious because living standards were visibly rising across the west. In the same way, the Reagan-Thatcher era was solidified by renewed economic growth and victory in the cold war.

By contrast, Brexit is in deep trouble and the Trump administration is floundering. Unless populists can deliver tangible results, their new era could yet die in its infancy.

Bad News Is Good News for Stocks Again

Stocks are up around the world, even as economic data has disappointed and earnings forecasts have been cut

By Mike Bird

Is the “Populist” Tide Retreating?

Strong support for immigration and globalization in the US sits uneasily with the view that “populism” is a problem. In fact, the term remains vague and explains too little – particularly now, when support for the political forces it attempts to describe seems to be on the wane.

Joseph S. Nye




STANFORD – The dysfunctional politics of Brexit in the United Kingdom, and the midterm election reaction against President Donald Trump in the United States, are generating second thoughts about the populist tide sweeping the world’s democracies in recent years. In fact, second thoughts are long overdue.

Populism is an ambiguous term applied to many different types of political parties and movements, but its common denominator is resentment of powerful elites. In the 2016 presidential election, both major US political parties experienced populist reactions to globalization and trade agreements. Some observers even attributed Trump’s election to the populist reaction to the liberal international order of the past seven decades. But that analysis is too simple. The outcome was over-determined by many factors, and foreign policy was not the main one.

Populism is not new, and it is as American as apple pie. Some populist reactions – for example, Andrew Jackson’s presidency in the 1830s or the Progressive Era at the beginning of the twentieth century – have led to democracy-strengthening reforms. Others, such as the anti-immigrant, anti-Catholic Know-Nothing Party in the 1850s or Senator Joe McCarthy and Governor George Wallace in the 1950s and 1960s, have emphasized xenophobia and exclusion. The recent wave of American populism includes both strands.

The roots of populist reactions are both economic and cultural, and are the subject of important social science research. Pippa Norris of Harvard and Ronald Inglehart of the University of Michigan have found that cultural factors long antedating the 2016 election were very important. Voters who lost jobs to foreign competition tended to support Trump, but so did groups like older white males who lost status in the culture wars that date back to the 1970s and involved changing values related to race, gender, and sexual preference. Alan Abramowitz of Emory University has shown that racial resentment was the single strongest predictor for Trump among Republican primary voters.

But economic and cultural explanations are not mutually exclusive. Trump explicitly connected these issues by arguing that illegal immigrants were taking jobs from American citizens. The symbolism of building a wall along America’s southern border was a useful slogan for uniting his electoral base around these issues. That is why he finds the idea hard to give up.

Even if there had been no economic globalization or liberal international order, and even if there had been no great recession after 2008, domestic cultural and demographic changes in the US would have created some degree of populism. America saw this in the 1920s and 1930s. Fifteen million immigrants had come to the US in the first 20 years of the century, leaving many Americans with an uneasy fear of being overwhelmed. In the early 1920s, the Ku Klux Klan had a resurgence and pushed for the National Origins Act of 1924 to “prevent the Nordic race from being swamped,” and “preserve the older, more homogeneous America they revered.”

Similarly, Donald Trump’s election in 2016 reflected rather than caused the deep racial, ideological, and cultural schisms that had been developing in reaction to the civil rights and women’s liberation movements of the 1960s and 1970s. Populism is likely to continue in the US as jobs are lost to robotics as much as to trade, and cultural change continues to be divisive.

The lesson for policy elites who support globalization and an open economy is that they will have to pay more attention to issues of economic inequality as well as adjustment assistance for those disrupted by change, both domestic and foreign. Attitudes toward immigration improve as the economy improves, but it remains an emotional cultural issue. In mid-2010, when the effects of the Great Recession were at their peak, a Pew survey found that 39% of US adults believed immigrants were strengthening the country, and 50% viewed them as a burden. By 2015, 51% said that immigrants strengthen the country, while 41% said they were a burden. Immigration is a source of America’s comparative advantage, but political leaders will have to show that they can manage national borders – both physical and cultural – if they are to fend off nativist attacks, particularly in times and places of economic stress.

Still, one should not read too much about long-term trends in American public opinion into the heated rhetoric of the 2016 election or Trump’s brilliant use of social media to manipulate the news agenda with cultural wedge issues. While Trump won the Electoral College, he fell three million short in the popular vote. According to a September 2016 poll, 65% of Americans thought that globalization is mostly good for the US, despite their concerns about jobs. While polls are always susceptible to framing by altering the wording and order of questions, the label “isolationism” is not an accurate description of current American attitudes.

Since 1974, the Chicago Council on Global Affairs has asked Americans annually if the US should take an active part in, or stay out of, world affairs. Over that period, roughly a third of the public has been consistently isolationist, harkening back to the nineteenth-century tradition. That number reached 41% in 2014, but, contrary to popular myth, 2016 was not a high point of post-1945 isolationism. At the time of the election, 64% of the respondents said they favored active involvement in world affairs, and that number rose to 70% in the 2018 poll, the highest recorded level since 2002 (which had been reached in the aftermath of the 9/11 terrorist attacks).

Strong support for immigration and globalization in the US sits uneasily with the view that “populism” is a problem. The term remains vague and explains too little – particularly now, when support for the political forces it attempts to describe seems to be on the wane.


Joseph S. Nye, Jr., is a professor at Harvard University and author of Is the American Century Over? and the forthcoming Do Morals Matter? Presidents and Foreign Policy from FDR to Trump.

Remembering to Forget World War II

People tend to compare every modern conflict to Hitler and the Nazis. They shouldn’t.

By Jacob L. Shapiro

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