Populism

Over the past few decades, a trend that emphasized centralized control swept the globe. Whether it was the EU and its attempts to control many aspects of decisions made by sovereign European nations or the growth of big intrusive government (B.I.G.) in the USA, or the spread of socialist regimes in countries like Venezuela, the intent has been simple—a small group of elite decision makers in business, finance, and foreign policy would control all important aspects of government. This "system" would act globally to benefit us all. Except it didn't. The elites in media, business, government and politics loved the "system" because: (1) they were the ruling class in charge of it; (2) it served their needs and made many of them rich, and (3) it concentrated power among a small number of men and women who were members of an elite club.

Those who were not members of the elites accepted the meme that all was well, that the "system" worked for their benefit, that it provided stability and prosperity. Until it didn't.

The seeds of the great unraveling began in 2007-2008 when the world economic system collapsed. The cause of the collapse was grossly irresponsible (some would say, outright criminal) behavior by the elites. Elite financial institutions acted in ways that destroyed trillions of dollars in hard-earned individual wealth. Elite governmental regulators looked the other way as millions received mortgages they could not afford or pay off. Financial institutions packaged those shoddy mortgages into even shoddier financial instruments. Elite politicians did nothing. And as a consequence, many individuals were ruined and many small businesses failed. The perpetrators of the collapse were bailed out by the very people—the taxpayers—who suffered the most harm. The elites told us that catastrophe would occur without a bailout, that the world financial system would collapse, that all of us would suffer—but those not in "the club" suffered while the elite players used taxpayer money to survive and prosper.*

Those early seeds laid the roots of mistrust. People began to realize that the smartest kids in the room weren't really very smart at all. Their decisions often went bad, their policies hurt rather than helped the average citizen, their newly found love of politically correct thinking led to cultural upheaval (think: massive Middle Eastern immigration into Europe and its detrimental effects), their blatant grasp for more and more power did far more harm than good.

Bret Stevens writes:

The populist wave now cresting across much of the world is sometimes described as a revolt against globalization: immigrants failing to assimilate the values of their hosts, poorer countries drawing jobs from richer ones, and so on. But the root complaint is not about economics. It’s about justice. Why does the banker get the bailout while the merchant goes bankrupt? Why does the illegal immigrant get to jump the citizenship queue? What right does a foreign judge have to tell us what punishments our criminals deserve? Why do our soldiers risk their lives for the defense of wealthy allies?

Those of us who believe in the liberal international order (now derisively called “globalism”) ought to think about this. There are powerful academic arguments to be made for the superiority of free trade over mercantilism, or of Pax Americana over America First. But liberalism’s champions will continue to lose the argument until we learn to make our case not in the language of what works, but of what’s right.

The old aphorism about pendulum swings seems appropriate at this point. The pendulum swung wildly to provide the elites with centralized control and power. When they failed to exercise these gifts with any semblance of wisdom, the pendulum swung back toward populism.

Sadly, there are no guarantees that this latest swing will lead to wise leadership. It can be argued that there is wisdom in crowds, but it can also be argued that there is chaos in mobs. Things are changing, but it's difficult to determine whether for good or ill.

Footnote:
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* At the time, I was against the bail out. I felt that at least the worst offenders (select banks, and finacial houses) should have been allowed to fail and their executives brought up on criminal charges. The reason was "moral hazard", defined in Wikipedia in the following way: "In economics, moral hazard occurs when one person takes more risks because someone else bears the cost of those risks. A moral hazard may occur where the actions of one party may change to the detriment of another after a financial transaction has taken place."

Because the elites were not made to pay any significant price for their irresponsible actions, they will do it again. In fact, they already are.