The rise of populism is better understood as a resurgence of humanity's innate "groupish" and tribal instincts. This regression is amplified by a modern cocktail of social media, rapid migration, and weakening political institutions, making it a deeper cultural and psychological phenomenon than just an economic one.
The personal saving rate has dropped dramatically to 3.5%, fueled by the stock market wealth effect. This is historically low and below equilibrium, suggesting that consumers cannot continue to fuel economic growth by saving less and the current spending pace is unsustainable.
Analysis of President Trump's actions regarding Greenland reveals a pattern: he follows through on threats unless he receives significant pushback. The most effective pushback appears to be a negative financial market reaction, which has repeatedly caused him to de-escalate.
The US action in Venezuela is self-defeating even if the goal is oil. The resulting political instability and lack of legal guarantees mean no private oil major will make the tens of billions of dollars in investments needed to restore production to previous levels, capping output far below its potential.
Traditional center-left parties are losing influence because they lack a coherent agenda to address the modern drivers of voter discontent. Their continued focus on narrow economic solutions is ineffective against the powerful cultural, identity-based, and technological forces that are actually shaping politics and fueling populism.
The "London Consensus" posits that traditional economic policy fails by ignoring people's attachment to "place." Citizens are reluctant to relocate for jobs due to community ties, leading to left-behind regions. Policy should therefore focus on strengthening local communities, not just chasing abstract national GDP growth.
The common belief that rising inequality fuels right-wing populism is empirically weak, argues LSE Dean Andres Velasco. Populism has surged in egalitarian countries like Sweden and Germany, and in places like Chile where inequality was falling, suggesting other cultural and political factors are more significant drivers.
The European Union's most potent weapon against coercive US policy is not unified government action, which is slow and difficult. Instead, its true leverage lies in the ability of its large financial institutions, like pension funds, to signal moves that create market volatility and directly influence the White House.