Editor’s note: In advance of the US presidential election, Columbia Business School held a panel on populism, one of the key topics this election season. This story was published on November 4 and updated on November 17.
Regardless of who they voted for, most people can agree that populist ideology has loomed large in this year’s US presidential election. Defined generally as a political movement by ordinary citizens to regain control of their government from a small circle of powerful elites, populism isn’t going anyway anytime soon — and the most dangerous thing to do would be to assume that it will, say Columbia Business School Dean Glenn Hubbard and Professor Ray Horton, who discussed the topic and its impact on the US political and economic landscape in a debate moderated by George A. Wiegers Fellow Kim Gittleson ’17 on Thursday, November 3.
“This is not historically unique. America has had populism waves repeatedly,” explained Hubbard, noting the examples of Andrew Jackson, seventh president of the United States and outspoken populist (who earned the nickname “King Mob”); William Jennings Bryan, the 1896 and 1900 Democratic presidential nominee who promoted anti-imperialism, anti-elitism, and fighting big banks and trusts; and George Wallace, former governor of Alabama and four-time US presidential candidate (as a Democrat in 1964, 1972, and 1976, and as an independent in 1968) who is oft remembered for his Southern segregationist stances.
“We’ve had populists who’ve tapped into exactly [what’s happening now]: a group of citizens who feel that the ‘other’ — whether the other is somebody who doesn’t look like you, worship like you, come from the same country as you — is taking what you have,” Hubbard continued. “I think what we see now is people genuinely hurting. They have been left behind. You see more and more Americans saying, ‘I don’t think my son or daughter is going to be as well off as I was,’ and I think that leads to real political concern and a view that government doesn’t have their backs. These pressures are only going to grow. [After the election], my guess is that Republican and Democratic elites are going to say, “Now we’ll just go back to business as usual,’ and I think that’s a mistake. The biggest risk is that we pretend it didn’t happen.”
Ray Horton agreed. “It’s absolutely clear that what [President-elect Donald] Trump is harvesting is going to continue going forward,” he said. “The rise of authoritarianism in Europe during the Depression led to Fascism. I wouldn’t argue we’re anywhere close to that [now], but I quite agree that if we don’t begin to address these concerns, they’re going to escalate.”
So what led to these feelings of frustration, lack of opportunity, and unrest in the first place? Hubbard stressed that the slow growth of the US economy is a major factor. “Societies that grow more rapidly, and are inclusive in that growth, are prosperous broadly,” he said, citing The Moral Consequences of Economic Growth, written by one of his former Harvard professors, Benjamin Friedman. “Societies that do not? Societies that see racism, anti-semitism, social unrest: we are headed in that direction.”
Meanwhile, the gradual erosion of the middle class has led to the diminishment of the political center, which has resulted in gridlock in government and a lack of public trust in the system, Horton said. “That center has been whittled down to the point where the tails on the right and the tails on the left are much more numerous,” he said, noting that a Congress controlled by extremes has a hard time passing policies and repealing ineffective ones. “I worry that we’ve lost the capacity to change public policy because of this gridlock.”
Hubbard added that the deterioration of civility in government over the past few decades has also contributed to this standstill, as both sides refuse to work with each other. “The problem is more politicians for whom any agreement seems impossible,” he said. For example, he added, some relief to the current economic and political unrest could come in the form of corporate tax reform and investments in infrastructure and work supports, such as wage subsidies and training. “These things shouldn’t be hard, but it’s going to be a heavy lift [because] civility has so declined,” Hubbard said. “It’s very difficult to have an argument if you’re constantly demonizing the other. We’re not going to solve the country’s problems by screaming at each other. You’d never run a company that way — where you have groups of people not talking together. And yet that’s what we’re doing.”
While to some it may seem like the current populist movement came out of the blue, Hubbard says we shouldn’t be surprised by it. The public outrage over government bailouts of large banks following the 2008 financial crisis was “an early canary in the coal mine,” he said. “A lot of people were saying, ‘How on Earth is it possible that people could make colossal financial errors and get bailed out by the state, and average people are forced out of their homes and jobs?’ That’s a legitimate question. We needed to talk more about trade, and more about work support, or the rug would get pulled out from under us. And indeed it did.”
Given these deep-seated issues, it’s safe to say either candidate would have faced significant challenges upon entering the Oval Office in January 2017. In addition to a stymied Congress and angry rhetoric that isn’t going away, each had his or her own personal hurdles: Democratic nominee Hillary Clinton had been dogged by the ongoing federal investigation into her use of a private e-mail server, while Donald Trump had been engaged in incessant infighting with his party, potentially alienating political allies.
For the optimistic voter, however, both Hubbard and Horton said there were some paths forward now that the election is over. Horton argued that we first must get big money out of politics. That’s because another factor contributing to the government gridlock is “the way in which the government system is interacting with ... wealthier people representing more substantial institutions,” he said. “[It’s] crony capitalism: a bunch of businesspeople going down to Washington and cutting a deal with public officials. I’d like to see businesspeople foreswear dipping into their piggybanks to [influence policy]. It gets back to my strong feelings about the corrosive effects of money on political decision making.”
Hubbard said there were some concrete steps that policy makers could take to help move things in a positive direction, namely the corporate tax reform policies and investments in infrastructure and work support mentioned earlier. But the private sector — businesspeople — can and should contribute, too, he stressed, acknowledging Horton’s reservations. “If we wait for politicians to provide all the leadership here, we’ll wait till the cows come home,” Hubbard joked. “It requires you. Businesspeople have to stand up and say we have a place in this, and we have a dog in the fight on trade, on immigration, on America’s role in the world.”