Populists are bad for our economic health, yet they’re still a hard habit to break

They are annoyingly good at politics but terrible at economics – GDP and living standards plummet in countries led by them

Torsten Bell
Sun 17 Sep 2023 

Global politics might not feel quite as grim as it did a few years back, but there’s still a lot of populism around: about a quarter of countries are led by populists. Silvio Berlusconi may be dead, but Giorgia Meloni is running the show in Italy. Donald Trump wants back into the White House (it’s cosier than jail), and are we really confident that arch-centrist Emmanuel Macron in France won’t be followed by Marine Le Pen? Even the pope is worried about a libertarian former sex-coach taking power in Argentina.

I raise this because it should encourage anti-populists to focus on addressing the bad economic outcomes that help drive populism. If you need further encouragement, it should come from recognising the scale of bad economic outcomes that follow populists actually coming to power.

Fascinating/depressing German research tracked 51 populist presidents/prime ministers from 1900-2020 in 60 countries. They are defined as those whose central argument is one of the “true people” v “dishonest” elites, and the bad news is their number has been on the rise for three decades. Worse, once they get into office they tend to stay for twice as long as non-populists. They are annoyingly good at politics, but very bad at economics. The researchers find that having a populist leader hits a country’s GDP per capita and living standards by about 10% over 15 years as the economy turns inward, institutions are undermined and risks are taken with macroeconomic policy. And there’s a specific warning for the likes of the US: once you’ve had one in power, populist leaders repeat on you (Argentina and Ecuador have had on-off populist leaders for decades). So populists are like cigarettes. It’s not the first one that does you in, but getting addicted to them that kills you.

Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org