We are living in another such era of profound change and uncertainty. I got a taste of the complexity when I interviewed former chair of the Federal Reserve Janet L. Yellen on a Kansas City stage recently. In town to receive the Truman Medal for Economic Policy, Yellen sketched a few of the cross-currents that are unsettling lives in the United States and beyond. A jumble of forces — from globalism to smartphones to fertility rates — are somehow combining to hollow out the middle class. Rising inequality, Yellen suggested, is the defining economic fact of our era.
Entire careers will be devoted in coming generations to explaining these disruptions. There are books to be written on myriad factors: the globalized workforce, the rise of automation, the acceleration of shipping, the science of supply-chain management. Other tomes will examine the cultural changes that have resulted in smaller families. Advanced societies are rapidly aging, with all that aging entails: stagnating consumption, rising medical costs, slower productivity gains. Scholars will chronicle the shift from a hardware to a software economy, which uncouples economic activity from natural resources and allows wealth to pile up in a few favored locales.
In economic terms, Yellen observed, the developed world seems to be entering a long period of low growth. Despite massive budget deficits that any Keynesian would expect to goose gross domestic product, future expansion of the U.S. economy is projected to average less than 2 percent per year. This is a big deal: Growing the pie, as opposed to slicing it up, has been the key to creating America’s middle class. Slow growth is surely a contributing cause of its decline.
The outlook is even more troubled for Europe and Japan, limping along like economic zombies. And where low growth threatens the opportunity to advance — the essence of middle-class society — divisions open up along educational, religious, generational and geographical lines. Such complexity is loam for the seeds of poisonous populism.
Just as the United States isn’t alone in confronting the problems of a low-growth future, President Trump’s America isn’t the only home to a populist resurgence. Blaming immigrants and refugees for the economic disruption of the middle class is as popular in Berlin, Brest and Brighton as it is in Bethlehem, Pa. (to name just one buckle on the tool belt of stymied workers). And scapegoating global elites is as essential to Brexit as it is to Trumpism.
So what’s the antidote? Complexity feeds populism; simplicity tends to cure it. The wave of populism that swept the United States in the 1920s faded on contact with moral clarity and national purpose. Twin crises — the Great Depression and World War II — sharply focused the minds of most Americans on clear and present dangers.
But that’s some harsh medicine. Populism can also be cured through competent, responsible leadership. The rise of today’s populism cannot be blamed on demagogues alone. A measure of responsibility belongs to an entire generation of political leaders, thought leaders and cultural leaders who blithely celebrated disruption and change without enough concern for the wreckage. “Move fast and break things” was Facebook founder Mark Zuckerberg’s motto, but it captured a spirit widely shared by elites. In their excitement and haste, they lost touch with those whose social contracts and hopes for the future were part of what was broken.
Unfortunately, instead of an infusion of leadership, we appear to be in for more of the same. Populism is ascendant on the left as well as the right. For example, Democrat Elizabeth Warren — despite her plethora of plans — offers a strikingly simplistic explanation of the complex forces afoot. “Washington works for the wealthy and the well-connected,” she told journalist Ezra Klein. “It totally is corruption.” While it’s true enough that money buys influence, corruption is not the whole story, not by a long shot. Yet Warren’s audiences eat it up. She may or may not be her party’s presidential nominee next year, but this blame game is winning hands down.
Regardless of where populism rises on the political spectrum, it is inevitably fated to fail. Simple prescriptions prove inadequate to a complex world. We can shut out the immigrants — or if you prefer, we can tax the billionaires. What we can’t do is stem the tides of change. Sooner or later, they demand our attention.