The sullen revolution.

Discontent in western democracies feeds the surge in right-wing populism. But why? And why now?

In more traditional times, social and political shifts of the magnitude now being seen across the developed world would have been recognised as revolution. But this is not a typical revolution: the savage pent-up anger, the bloody riots, the fighting between rival armies, are missing. In their place is a sullen, unfocussed antipathy to the people in charge and the way things are.

The revolutionaries of the past had a vision of what could be built when the current structures were torn down. This sullen revolution, and those seeking to benefit, have no such vision.

The surge in the fortunes of right-wing populist parties coincides exactly with the fallout from the pandemic and its attendant recession. Inflation, largely the result of poorly targeted stimulus programs, washed through global markets. Asset prices – particularly housing became even less affordable as cashed-up investors moved in, taking advantage of over-generous tax regimes. Central banks tried to tame inflation by raising interest rates, sending housing costs skywards.

But there’s a paradox here. Those disruptions have largely passed. If we’re not quite back to normal times, we’re not far away. Perceptions are at variance with reality: hundreds of millions of people still feel as if nothing has changed.

And so, three to five years ago, far-right populist parties in over a dozen western democracies overtook their more established rivals to become favourites to take government at the next opportunity. In Britain, France, Germany, Italy, Sweden, Switzerland, Poland, Austria, Romania, Bulgaria and Czechia, far-right, Eurosceptic and anti-migration populists lead the polls. Surveys in Australia show One Nation poised to become the official opposition.

In each case, these insurgencies have not only replaced the established conservative groupings but threaten to obliterate them. And – unless we forget – Donald Trump is already in the White House, having taken sole ownership of the established Republican Party. Surely, something momentous must have happened in the real world to spark this massive change. Or has it?

On the available evidence, there is no cogent explanation for these extraordinary developments: not in the economy, in inequality, living costs or even housing. The only conclusion possible is that hundreds of millions of people suddenly believe they are doing worse than ever not because they are, but because they are told they are. And that benefits no one but the populist politicians and those who finance them.

The biggest issues

There are three aspects now commonly identified as crises: the cost of living, housing and immigration. None of these has in fact changed very much but perceptions of them have. Survey results in Australia are typical of those in many other countries. The sense of sudden crisis took off during the pandemic disruptions and, though normal life has resumed, the perception is that it has not.

Similar patterns can be seen in other developed countries. Anxiety about the cost of living – inflation rising faster than incomes – now outpaces the long-standing concern about jobs and job security.

Again, despite the continuing concern, inflation rates have largely returned to their long-term average. Media discussion of the issue, though, remains high – and it’s that, rather than reality, that seems to be driving the pervading angst. It has provided an opportunity for those not in government to promise they would fix it, even though most of these trends are outside the power of national governments to control.

When people are optimistic about their economic futures, they are more likely to spend. Flagging consumer confidence – and we have that now – can create a feedback loop in which pessimism drives lower spending, and which in turn drives further pessimism.

Unemployment – despite rising during the GFC and the pandemic – has fallen over the course of the present century in most countries, though it’s still a long way above the 2% levels seen for decades after World War 2. Unemployment rates below 4% are now seen by worried central banks as a warning sign of an overheating economy.

Youth unemployment, as ever, is a more severe and intractable problem. Young people graduating from university can no longer assume good jobs and comfortable lives wait for them. But that’s not particularly new. Apart from the ubiquitous spike during the pandemic recession, youth unemployment is today a little less of a problem than it was a decade ago. Again, this goes nowhere towards explaining the rise of right-wing populism.

Actually, we’re doing okay

National economies – at least in the aggregate – are doing well. GDP growth continues and, although it is no more equally distributed than it ever was, nothing much has changed.

Generally, people in most developed countries – despite the growth in inflation – are better off than they were even a decade ago.

Around 2015, the proportion of national income going to the bottom half of society stabilised. It may not be getting any better, but it’s stopped getting worse. And that stability means that the bottom 50% are experiencing real increases in income that have eluded them for decades. That’s particularly true in Britain.

A pervasive sense of grievance

Despite that improving prosperity, Britain is one of the more pessimistic of all western nations. A poll found 77% of respondents agreed that “Britain is broken and neither major party is able to fix it.” That sentiment has been growing for the past decade.

In fact, most British households across all age groups – over 80% on average – are doing reasonably well.

Although the majority of people are doing somewhat better than they were a few years ago, their perceptions of hardship may be driven by the understanding that the distribution of income and wealth is becoming ever more uneven and unfair. This is illustrated by comparing income growth among the top 10% and the top 1%. So far this century, the top 1% are ahead of their (somewhat) poorer compatriots by 22% in Britain, 30% in the US and 35% in Australia.

In the United States, the awareness of galloping inequality was already fuelling economic pessimism. But it soared with the accession of Donald Trump to the presidency in 2017 and kept going.

Despite the gloom, the OECD reports that real wages are growing again after the post-pandemic inflationary surge.

“Real wages are now growing in virtually all OECD countries but remain below the levels seen in early 2021 – just before the post-pandemic inflation surge – in half of them … with an average across countries of 2.5%.”

The greatest threat to this recovery is Donald Trump: “Looking ahead, the wage recovery could be jeopardised, as geopolitical uncertainties and hikes in tariff rates may significantly weaken labour markets while exerting further upward pressure on inflation.”

Over the past 30 years, house prices across the OECD (adjusted for inflation) have risen by 76% but rents have gone up by only 8%. The surprisingly low figure for rents is most likely due to two factors: rental agreements can take a long time to expire and be re-negotiated; and many rental properties are public social housing or are rent-controlled.

Populist right-wingers have had immense success in linking housing costs to immigration. It’s such an easy line to sell that the facts have become obscured. In Australia, which has not experienced mass migration or any large-scale breach of its borders, more than half of people believe there are too many migrants. And that concern has gone from 37% in 2014 to 53% now.

Women and the young are less likely to fall for this massive political distraction. Even so, 40% of the youngest voters hold this view.

The facts don’t seem to matter. Umbers slumped during the pandemic’s travel restrictions and then rose, as delayed migration caught up. It’s now almost back to the long-term average.

In Britain, migration fell prior to Brexit in 2021 and then rebounded strongly, but temporarily, as large numbers of people returned home because they had lost residency entitlements in Europe. The right-wing populist leader, Nigel Farage, made political capital both times: first by promoting Brexit, then by campaigning against the migration surge that Brexit caused.

In the US, net monthly migration fell more sharply during the pandemic than in many other countries and rebounded less strongly. But you wouldn’t know that from the media discussion.

Which wins? Big lies or plain truth?

Joseph Goebbels knew about lies. “Make the lie big, make it simple, keep saying it, and eventually they will believe it,” he said.

That’s the playbook of today’s right and far-right populists. The big lie this time is not about Jews or the master race. It’s about something much more ordinary: are you really doing it tough, as you are constantly being told? Or are things really not all that bad?

There’s not much appetite for the second. Perversely, there’s a kind of satisfaction in being told we’re deprived. We was robbed! But who by?

And there’s the rub. It’s easy to blame the outsider: migrants, the poor, those who don’t speak good English, people with dark skin. None of those groups have the power to cheat the large majority of any country out of established wealth and position. But they’re soft targets, without much access to media and politics, unable to answer back.

We-was-robbed is the first of two big lies. The second is that Donald Trump, Marine le Pen, Pauline Hanson or Nigel Farage can make things better.

Genuine reform is extraordinarily difficult. Any change produces winners and losers; the losers complain bitterly and effectively and the winners stay mostly silent. Reform involves complex change that is hard to explain and easy to misrepresent. Few in the electorate understand the detail and are therefore unable to tell the difference between truth and lie.

A good example is the recent federal budget in Australia, which changed a taxation system which so favoured investors that millions of ordinary people were locked out of owning their own homes, and transforming shelter from basic human right into just another asset class. It transferred billions of dollars every year from wage-earners to the owners of capital.

It was a good budget. It will, in time, go a long way to redressing these wrongs. But the outcry from financiers and the investment class was deafening. The government’s poll numbers fell sharply, as the populist One Nation party surged into the front and its leader, Pauline Hanson, now closing in on the preferred Prime Minister rating.

It seems almost inevitable that within the next couple of years, populist parties will form government in some western democracies. But they lack both experience in government administration and the capacity to address policy issues that are simultaneously complex, obscure and critical.

If you want to know what it will be like, just look at the United States today.