Populism, and its close cousin ultra-nationalism, are on the rise worldwide, but in differing guises. Both ideologies gain more traction during times of arduous national and individual economic stress. In America few politicians relish being tagged as populist, while in South America it is a badge of honor. Telltale signs of a nation’s changing political environment usually include grand plans serving the greater good while minimizing institutions, creating a para-military or militia, arbitrarily making all natural and other resources the property of government while simultaneously diminishing private property rights or identifying a specific scapegoat as the root cause of a nation’s problems.
Populism as defined by the dictionary is “a political strategy based on a calculated appeal to the interests or prejudices of ordinary people.” It is further described as marshaling “anti-establishment and anti-intellectual forces”, which oddly, in today’s world, seduces even the intelligentsia and fringe parts of the establishment. True republic constitutional democracies represent only about 11% of the countries in the United Nations. Most of the other member countries follow paths that foster the prejudices of ordinary people, hampering any kind of social, political or economic progress.
How a populist rises and stays in power is not a great mystery. It’s a combination of good rhetoric, salesmanship, ripe economic factors and an often frustrated or ignorant electorate. A good orator rarely needs to be a good economist but must be adept at exploiting the herd’s prejudices. The Holocaust represented an extreme example of contrived hysteria. One group’s misfortunes can easily be played by a skilled populist as the fault of another group that is not suffering at all.
Dividing an electorate between the haves and those with less, or those who have nothing at all, is a winning formula because of the numbers game: If a national leader claims the economic pie is finite then reducing one portion in favor of another holds great appeal. All economists believe that a nation’s economic pie is expandable with growth, which fosters opportunity, resulting in a larger pie for everyone’s participation.
Venezuela is the poster child for populism, and coincidentally boasts one of the world’s highest inflation rates, the continent’s highest murder and kidnapping rate, a continual breakdown of civil services, a compromsed court system and a national oil company, PDVSA, that has taken corruption and inefficiency to new levels.
Here in Argentina the current president, Cristina Kirchner, must be closely monitoring Hugo Chavez’s playbook. She has baffled all of her critics and risen far beyond her level of assumed incompetence. She has proven her tenacity by intimidating the opposition through fear of retribution, and although a number of her economic mandates border on insanity, she has convinced a fully literate nation that she is leading Argentina to prosperity. Raging inflation is denied by the government while currency controls cause the local dollar black market to flourish. Price controls, restrictive import tariffs, high taxes on the most productive industries and subsidies are the norm, which lead to shortages and an alternative cash market for goods and services. Cover ups for government corruption and attempts at controlling the media are becoming a daily occurrence.
In spite of all the government’s antics, the president remains popular because she speaks with deep sympathy for the under-privileged while ignoring the damage she has done to them through her economic policies. The president can convince a cheering crowd that Argentina’s growth is on par with China’s, while reputable economists credit almost all growth to the burgeoning amount of pesos printed on a daily basis.
The president’s recent nationalization of the majority shares of a previously privatized oil company, YPF, was met with huge acceptance in Argentina. This decision has further alienated the international business community and damaged Argentina’s chances for significant foreign investment. Cristina may follow in the footsteps of her party’s namesake, Juan Peron, when in 1973 he ordered YPF, then a national company, to immediately hire an additional 20,000 workers only to discover production went down and corruption increased.
This week’s ideas from Cristina Kirchner vary in scope and reach. She has floated the prospect of amending the constitution, ending term limits and giving herself and her party an opportunity to pillage indefinitely. If her election to an additional term seems doubtful, she has suggested that the voting age be reduced to 16, and that foreign residents after two years in Argentina may also vote in the national election–an easy group to sway with prejudice. This week’s news is baffling with talk from a representative in the president’s office of a new law ending gated communities and disallowing fences or barriers that might divide the rich from the poor. A version of “eminent domain” without recourse.
In the United States the populist thrust has worked hard to create a negative pathology about the wealthy or those assumed to be wealthy. The upcoming election in the United States should be about salient issues such as promoting private employment, better access to higher education, controlling the national debt, reducing the deficit and putting health and retirement issues on firm footing. If the United States electorate becomes too distracted, we may be tracing the footsteps of our neighbors in South America.
Musings of an Occasional Rancher 