April 19, 2016
The Washington Post had a major article telling readers, “why populist uprisings could end a half-century of greater economic ties.” The piece notes the rise of populist sentiment in both Europe and the United States. In the former case it is turning against immigration and also the European Union. In the case of the United States, populist sentiment is directed against trade agreements and immigration (also efforts to cut Social Security and Medicare.)
The piece doesn’t give elites the credit they deserve for this backlash to their efforts to construct a system that serves their interest. In both Europe and the United States, elites have pushed policies of fiscal austerity that have the effect of keeping millions of people out of work and depressing the wages of tens of millions more by reducing their bargaining power. Overwhelmingly, the people who are victims of this austerity policy are less educated workers. There are few doctors and dentists thrown out of work by policies to reduce budget deficits. (It is worth noting that in the United States the Federal Reserve Board seems prepared to raise interest rates to throw workers out of work, if they start to get enough bargaining power to make up the ground they lost in the downturn.)
The elites have also structured economic integration to redistribute income upward. This is especially notable in the United States, where protections for doctors, dentists, and other highly paid professionals have been largely left in place, while trade agreements have sought to put U.S. manufacturing workers in direct competition with their low-paid counterparts in the developing world. The predicted and actual effect of this pattern of trade is to increase inequality.
Both Europe and the United States have used trade deals to make patent and copyright protection longer and stronger. The intent of this policy is also to redistribute income upward. They have also put in place extra-judicial mechanisms to provide special protection to businesses that they do not enjoy under national law.
In other words, populists are revolting against policies that are designed to redistribute income from the bulk of the population to the elites. The elites have tried to imply that such policies are necessary for integration. This is not true. It is just as easy to design policies that promote integration that benefit people equally, but elites in Europe and the United States have little interest in integration on these terms.
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