June 14, 2021

Populism: Economic Causes, Consequences, and Solutions

Georgetown University joins with prominent research and policy institutions to lead the Global Economic Challenges (GEC) Network, bringing together leading scholars with policymakers to discuss the most important and pressing economic problems of the twenty-first century. In the June 2021 workshop sponsored by the GEC Network, Université Libre de Bruxelles (Solvay), and the Center for Economic Policy Research (CEPR), experts examined the global rise in populism.

The four panelists converse on Zoom
The four panelists converse on Zoom

A series of economic crises combined with the ongoing COVID-19 pandemic and widening social and political divisions have generated significant dissatisfaction with the performance of many national governments. "This has enabled populists to exploit social and economic divisions to exert influence,” said panel moderator Shéhérazade Semsar-de Boisséson, CEO of Politico Europe and advisory board member for Georgetown’s Master of Science in Foreign Service program. Semsar-de Boisséson opened the workshop, welcoming professors, researchers, and experts to explore the causes and consequences of populism’s recent rise and identify possible solutions.

Populist Backlash

Professor Sergei Guriev, scientific director of Science Po’s master and doctoral degree programs in economics, emphasized the novelty of the rise in populism in the twenty-first century.

No matter how you measure it—share of populists in government, vote share of populist parties, number of seats in parliament, however you look—all researchers agree that the rise of populism is quite unprecedented.

Guriev outlined long-term factors that have contributed to the rise, including globalization, automation, and cultural shifts. The long-term trends were exacerbated by short-term factors, such as the 2008 economic crisis, growing social media usage, and the rapid expansion of mobile broadband internet access.

Together, these events created a perfect storm for a rapid rise in populist government figures, especially through social media.

Dani Rodrik, Ford Foundation Professor of International Political Economy at the Harvard Kennedy School, spoke to the historical and current relationship between populism and globalization.

“As international markets get integrated, you have… a process of domestic economic and social disintegration,” said Rodrik, tying in examples from the first wave of American populism in the late nineteenth century.

“That [disintegration], as a fundamental source of populist backlash, has been a theme throughout history. In that way, I think the populist backlash against globalization perhaps should not have been a surprise.”

Rodrik also cautioned against disregarding populism altogether. Ethnonationalism and authoritarianism are dangerous ideas, but the populist framework was still created to serve the people.

Many of the ideas in populism which relate to reforming our economic system so that it works better for ordinary people may very well be worth listening to.

Sergei Guriev speaks via Zoom
Sergei Guriev speaks via Zoom

Populism and the COVID-19 Pandemic

Antonio Spilimbergo, deputy director of the Research Department at the International Monetary Fund (IMF), described the anticipated consequences of populism during the COVID-19 crisis and compared them with the actual outcomes.

When the pandemic began, “there was a sense that this was a moment of reckoning,” Spilimbergo remarked. He outlined numerous reasons why many thought populists were especially bad at handling crises but juxtaposed these expectations with the tangible consequences.

According to Spilimbergo, the apparent lack of evidence indicating that populist regimes faced worse outcomes during the COVID-19 pandemic stems from both objective measures and from populists’ ability to control public narratives and shape rhetoric. IMF research also shows that it is unlikely to have an immediate backlash during periods of distress, said Spilimbergo.

The effects of populist regimes’ COVID-19 pandemic responses may not be felt right now but will shape important challenges later.