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30 June 2016

The failure of globalisation to deliver equal levels of prosperity is leading to a rise in populism around the world, writes Simon Reich. Will Asia-Pacific be next?

It’ll be some time until we accurately understand the consequences of the results of the British referendum on membership of the European Union. Meanwhile, we will be long on conjecture and short on facts. The roiling of financial markets, talk of expediting British withdrawal from officials in Brussels, and resurgent demands for referenda on devolution from Scotland were all, in hindsight, predictable responses. So is the current talk of crisis – and the rush to describe the result as an historical watershed.

Yet the successful campaign to withdraw Britain from the EU, albeit by a slim majority, was built on themes that have resonated throughout Europe and North America for quite some time, and now echo, however faintly, in parts of the Asia-Pacific. It is the rise of populism in response to the failure of globalisation to deliver prosperity with at least some modicum of equanimity. The cosmopolitan values of elites, technocrats and “experts” are being summarily rejected on both sides of the Atlantic in favour of soundbite solutions and the politics of blaming minorities, foreigners and the greed of the wealthy.

The origins, of course, can be traced to the promise of policymakers in the immediate aftermath of the Cold War – a promise that globalisation would deliver widespread development and growth through a combination of privatisation, deregulation, liberalisation and regionalism. The widespread misery caused by simultaneous economic and political reforms in Russia and Eastern Europe in the 1990s was described as a short-term expedient – an inevitably painful midwife on the road to modernity.

In fact, events in that region gave us all a precursor of the global trends to come. The populist backlash was symbolised by Vladimir Putin’s elevation to unquestionable political leadership, shrouded in a nationalist blanket. But it was also personified by the democratic election of a far-right-wing government in Hungary, a lurch to the right in Poland despite its enviable economic record, and the subsequent growth of comparable movements in even wealthier countries such as Austria, France and even, latterly, Germany.

More on this: Brexit serves as a warning to ASEAN | Mathew Davies

This populist trend moved beyond Europe’s shores to the United States. It was reflected in the respective growth of the Tea Party on the right and – more modestly – the Occupy Wall Street protests on the left in the aftermath of the Great Recession of 2008. Both have now blossomed into their full-blown representative versions, personified by Donald Trump’s and Bernie Sander’s respective presidential campaigns.

While Sander’s candidacy is formally dead, his refusal to formally end his campaign for the White House is reflective of his belief that his progressive platform can morph into a movement that will fundamentally alter some of the key precepts of the Democratic Party. I should note, however, that there is an alternative, more pragmatic interpretation of Sander’s behaviour: that he is hanging around in case Hillary Clinton’s candidacy stumbles in the face of a potential FBI investigation into her use of emails while Secretary of State.

Proponents of populism on the left and the right differ, of course, in some critical respects. But what they share is a disdain for what they regard as inauthentic politicians whose promises have not materialised.

In Trump’s case, like many right-wing European populists, this is closely tied to a set of identifiable issues including a disgruntlement with current immigration laws, the inadequacy of border controls, and a desire for both the restitution of law and order as well as what his supporters regard as traditional cultural values. The left shares the same disdain. But from the US to the countries of the Southern Mediterranean the focus of the left’s ire is on bankers.

But whether the variant leans to the left or the right, prescription is shared on both sides: a modicum of political isolationism coupled with a retreat from regionalism and economic integration. For both sets of supporters, the cosmopolitan promises of globalisation have failed them and should be abandoned.

This shift towards either progressivism or nativism has not been as evident in the Asia-Pacific region – so far. This may be in large part because of three factors. First, high growth rates over the last three decades have both allowed millions to escape extreme poverty and enlarged the middle class in many countries of the region. In effect, the promises of a modified form of globalisation has delivered. Second, the region largely escaped the most pernicious effects of the 2008 global financial crisis, in many cases as a result of an intensive flow of Chinese investment capital. And third, many regional governments have swiftly and repressively responded to any signs of popular discontent. But, nonetheless, the embryonic signals are there, best reflected in Rodrigo Duterte’s recent election in the Philippines and Xi Jingpin’s consolidation of power in China.

It would be ironic if, decades after we were confidently told that Asian countries would bow to the forces of liberal democratic capitalism, the opposite were the case: the governments of the west elected authoritarian leaders commonly associated with Asia.

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Reich, Simon. 2017. "Western Populism, Eastern Leadership - Policy Forum". Policy Forum.