One of the hallmarks of the post-Great-recession period is potent populism. People-power rocked the world when it overthrew a rock-solid partial autocracy in Tunisia, then ricocheted across North Africa and the Arab world with arresting speed. It didn’t stop there; populism washed into the West with the prominent ‘Occupy’ movements, and if anything, has since gained momentum. Populist movements are now a credible threat in elections and in certain cases have birthed a new breed of brash national leaders that are posing a serious challenge to conventional wisdom. Where is it likely to go from here?
The human survival instinct is a powerful force. Threaten life or livelihood with an outsized recession or major structural change, and normally docile people can and do mobilize in surprising ways – and in today’s hyper-techno-communication world, with surprising speed. The dashed hopes of a fruit vendor in Tunis led to self-immolation, galvanizing a nation into a protest movement that toppled an authoritarian regime in days – and mobilized millions in the region, and ultimately around the world, to make their voices heard.
The degree of radical response varied nation to nation, and was likely proportionate to the relative lack of civil liberty. Human behaviour strongly suggests that the likelihood of protest is inversely related to the opportunity cost of doing so. At a very basic level, if you have no job, you’re not happy, and have time on your hands; why not protest? If it’s worse, and you are going hungry, well, at least in prison you get fed. And, in the desperate case where all hope is lost, tragically, life itself seems to lose its value – as seen in the Tunis case.
There are many possible measures to predict populist uprisings. From the economy’s point of view, the unemployment rate is key. Worldwide, it spiked in 2009, but then, a dilemma: since then, unemployment rates have consistently dropped, and in both the US and EU are now at or near all-time lows. Yet populism seemed to gain momentum. Why? Well, from the unemployment perspective, adjust the rate to account for those who in frustration have left the labour market altogether, and the picture sharpens: sluggish growth for most of the past decade has cast aside millions in the developed word. These, and those who love them, are key among those keeping populist fires burning.
In the US, labour force participation is a revealing measure. It is still far lower than would be expected at this point in the growth cycle. What it reveals is an estimate of displaced workers, peaking at roughly 6 million, or 3.9 per cent of the labour force.
Measures in the EU are a bit different. Underemployment, measured by reluctant part-time workers, mushroomed by 3 million persons across the EU through 2013. By the same time, there were 2 million additional workers available but not seeking work – presumably discouraged by the lack of opportunity. Together, these amounted to 2.1 per cent of the European labour force.
Canada did not see the same shifts as the domestic economy was relatively much stronger than elsewhere in the OECD. As such, we got a much milder touch of the malady.
Where is this all headed? Thankfully, US labour force participation is experiencing a turnaround. Tight labour conditions are finally bringing over a million millennials back into the work force. Mid-career workers displaced by the aftermath of the Great Recession are also flooding back into the market. Europe is seeing similar action. Improved job conditions have shrunk the ranks of underemployed part-time workers by 2 million since early 2014, and there are 1.5 million fewer persons available but not seeking work. By these measures, populism is losing a lot of lift. But after years of going the other way, it still has a lot of momentum – and as the Great Depression taught us, conditions can improve, but the disaffected have long memories.
