political-challenge-populism | Capital Group

The Political Challenge of Populism (VIDEO)

Matt Miller, policy and communications advisor for Capital Group, reflects on the origins of
the populist movement in U.S. and maps out the political challenges ahead.


January 2017

Featuring: Matt Miller

Matt Miller
Capital Group Policy and Communications Advisor
30 years of industry experience

“I think one way to read the kind of voter rebellion — especially of the white working class that embraced Trump as the change that they wanted to see — is that the middle class is not going to go down without a fight.”

Will McKenna: In some ways, you could think about the election as the latest in a series of populist movements’ having some success. Obviously, we had Brexit last summer, [which] had similar characteristics. Is this a broader global phenomenon? How should we be thinking about populism broadly?
Matt Miller: The big picture is that what we're seeing with Brexit — what we're seeing with the stunning upset — is that, in a world where we are integrating several billion lower income workers from around the world into the global economic system, that has come to pose enormous stresses for workers in wealthier nations. And while, from a global point of view — kind of a divine point of view, if you will — it's a great thing for humanity that hundreds of millions of people are rising out of poverty in places like China, India and elsewhere, that's coming at an inevitable cost to the economic trajectory and expectations of workers across the Western world who had a certain view of what their economic life was, and what economic life would be for their children.
And that's an enormous political challenge for advanced Western societies. What the Trump vote reflects is President Obama's tragedy, if you want to think about this way. Barack Obama would say, “Wow. I walked into the biggest financial crisis in 50 years. We avoided a second Great Depression. We've got unemployment from 10% or above down to 5% or even below by the end of my term. And we avoided the worst and we're in better shape than when I walked in.”
Will McKenna: Right.
A formula for tremendous discontent
Matt Miller: All that is true. However, these major global forces of both globalization, plus rapid technological change — which is changing the nature of work and changing the nature of jobs and who can work in what jobs and what the pay is for those jobs — those are just much bigger than the outer boundaries of what Barack Obama could affect in his eight years in office. And so when you have a situation where wages are stagnant or declining for tens of millions of Americans’ families, and the cost of the key ingredients of middle-class life — health care, college education, housing — are rising in a way that is greater than what income is, that's a formula for tremendous discontent. And Donald Trump doesn't have a miracle answer for all that; nobody does. But I think one way to read the kind of voter rebellion — especially of the white working class that embraced Trump as the change that they wanted to see — is that the middle class is not going to go down without a fight.
And there's something moving and poignant about that. And I think the most empathetic cast you can put on the populist surgings we're seeing across the Western world is that, yes, people are upset by immigration; yes, people are upset by demographic change; yes, people — certain segments of the population — feel disoriented by the changes they're seeing in society. And yes, there's a small percentage — what I think is a small percentage — that are motivated by racism or nativism or xenophobia, but I don't think that's the biggest force at work.
A crisis for both political parties
It is that economic changes that have led tens of millions of folks to feel frustrated and angry, [so they] are not happy with a political class that says, “You know, this is just kind of inevitable. Maybe we can buffer the edges at the margins.” They want a leader and a voice who's going to say, “No —
Will McKenna: Actually fight back.
Matt Miller: “— we’re going to fight back against these trends. “ It's a striking moment — and what creates a crisis for both political parties. Republicans are thrilled right now because they see a path to legislation, etc.; Democrats are in the deepest psychological meltdown that we've seen in decades. But neither party has any good set of answers to these major forces I'm describing. And it's not clear; there aren't any geniuses out there who have the "answer." There may be different ways to bolster economic security. Obama tried to do that with Obamacare, at least giving some measure of health security to 20 million more people; that's now arguably at risk in Republican Washington.
But the question of how to help folks who are buffeted by these forces, and the fighting spirit that this group of affected Americans — and we see it in Europe also — feel in the wake of the economic threat that they see to what they thought was rightly their place in the world —
Will McKenna: Right.
Matt Miller: — is going to define our politics for decades.

This communication is strictly for the confidential use of the recipient, solely for the purpose for which it is provided, and may not be disclosed or circulated to, or relied upon by third parties. Past results are not predictive of future results.
This information is neither an offer nor a solicitation to buy or sell any securities or to provide any investment service. Statements attributed to an individual represent the opinions of that individual as of the date published and may not necessarily reflect the view of Capital Group or its affiliates. While Capital Group uses reasonable efforts to obtain information from sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information. The information provided in this communication is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.
This communication has been prepared by Capital International, Inc., a member of Capital Group, a company incorporated in California, United States of America. The liability of members is limited.
In Australia, this communication is issued by Capital Group Investment Management Limited (ACN 164 174 501 AFSL No. 443 118), a member of Capital Group, located at Level 18, 56 Pitt Street, Sydney NSW 2000 Australia.
All Capital Group trademarks are owned by The Capital Group Companies, Inc. or an affiliated company in the US, Australia and other countries. All other company and product names mentioned are the trademarks or registered trademarks of their respective companies. © 2016 Capital Group. All rights reserved.