Trump win will be a ‘populist crisis’
Historian Ferguson warns it’s bad for business
THERE isn’t much on the political stage to inspire confidence, and this week’s US presidential election may be the nadir.
Central to the decay of the body politic is the 2008 financial crisis that set off the rise of populism.
Add stagnant or declining economic performance to rising immigration, inequality, perceptions of corruption, a demagogue in Donald Trump and you have a recipe for a populist crisis, said British historian Niall Ferguson, who will be a guest speaker at the Discovery Leadership Summit on November 14.
Populists appeal to cultural conservatism. “This is why so many people see elements of racism in the Trump campaign — generally anything that is hostile to progressive values,” Ferguson said in an interview with Business Times from Stanford, California.
Since the financial crisis, the world has seen its fair share of populist domination. In the US, the most unlikely presidential candidate, Trump, has risen on a wave of despondency and ridden a populist ticket, much to the dismay of the global community.
“This year has proved to be the year of the populist, not only in the US but also in the UK where Brexit was a result of populist victory,” said Ferguson, who is based at Harvard.
British voters, motivated in part by the perception that immigration had muddied their prospects, voted in June to leave the EU.
This led to the pound falling about 18% to the dollar, reaching lows last seen in 1985. A troubled rand strengthened by more than 20% against sterling after the Brexit vote.
Ferguson said the populist backlash was also a backlash against globalisation.
Some of the world’s biggest financial services firms are making plans to leave London and move elsewhere in the EU.
The threat of a Trump pres- idency means that doing busi- ness has been nothing short of precarious and international trade figures show this.
Global economic growth is still sluggish when compared with pre-crisis levels. Developed markets are feeling the pressure of the low interest-rate environment. Measures like quantitative easing have taken centre stage as central banks fight to revive ailing economies.
World trade recovered from its post-crisis lows to reach a peak in 2011.
“I don’t think we’re going to get back to the 2006 economy and I don’t think we’re going to get back to the peak commodity prices of 2010, 2011 and 2012,” said Ferguson.
During those years, commodity prices were boosted by rapid fixed-investment spending in China, boosting the prospects of commodity-exporting countries like South Africa.
In 2011, 31.5% of China’s com- modity imports were from sub- Saharan Africa. In 2015, imports fell by 40% compared with the previous year.
People needed to adjust their expectations downwards, said Ferguson.
“Phrases like ‘the new normal’ captured the simple point that the world after the financial crisis was fundamentally altered and wasn’t going to go back to its old ways any time soon,” he said.
In South Africa, the rise of populism has not been as explicit as in the US, although the emergence of leaders like Julius Malema, who is outspoken and fearless, has ushered in a new age of democracy.
The local elections in August demonstrated that democracy is functioning, and South Africans can be heartened by the fact that there was no dispute over their fairness.
Ferguson believes one-party rule is unhealthy for any democracy. The career of President Jacob Zuma illustrated why this was so, he said.
“South Africa needs a strong and effective opposition. Without that, democracy is inevitably undermined by the temptations that one party’s monopoly on power creates,” he said.
This is, perhaps, shown by unsuccessful attempts by opposition parties to unseat Zuma, who has been mired in scandal. The scandals range from Zuma’s connections with fraudster Schabir Shaik to Nkandla, and, most recently, state-capture allegations.
The release of the state-capture report by the public protector’s office dealt a severe blow to the president, which has left people wondering whether this is the straw that will break the camel’s back.
For the international community, who fell in love with Nelson Mandela’s message of reconciliation and forgiveness, the Zuma presidency has been a bitter pill.
“One has these romantic notions — a Cry Freedom syndrome — that a lot of people in the UK and elsewhere had, and having to come to terms with the reality of the Zuma era hasn’t been easy,” said Ferguson.
The president, who was preparing for a trip to Zimbabwe at the time of the report’s release, has not defended himself against the evidence presented in the public protector’s investigation of alleged state capture.
South Africans should be proud that the judicial system has remained independent and the media ungagged — proof of a working democracy. A functional democracy was not just about votes, said Ferguson.
“It’s also about laws. It’s about the constitution and courts, the free press which provides another check on abuse of power.”