Global Economic Growth and the Rise of Populism
Return to Political Economy Book Summaries  4/18/19  Please share!
Thanks to
Experts: Mark Blyth, Adam Tooze, Francis Fukuyama, Steve LeVine,

1. Neoliberal's Caused Financial Collapse

2. Democracy Failures Caused Latest Popularism

3. Understanding Right and Left Populism

4. Populism is a Reset Mechanism

See Trump's New Political Era?

U.S. Russia, China: Rivals, Adversaries, Enemies?


Financial Meltdown 2008 Structural Causes

Lack of Bank Regulation

High Leverage

Short-Term Reserves Were in Euros When Dollar Were Required

Academic Economist Under Estimated Economic Effects of Financial Market

Winners and Losers

Macro Economics

Winners and Loses #1

Debtors Can't or Won't Pay
Deflation Kills Wage Growth
Real Debt Value Increases

Government Helped Top and Bottom Creating Middle Income Envy

Creditors Lost Real Value of Debt Up But Some Don't Pay

Winners and Loses #2

Return on Capital-R Greater Than Economic Growth Rate-G.

Top 1% received 90% of Income Gains  
Since 2012, (70% of that 90%)
went to Top 1/10 of 1%.


World's Very Poor Benefited

Middle Income Stagnate: Poor Get Government Help!  Middle Class Ignored.

Part 1 Neoliberal's Caused Financial Collapse

1. Neoliberal Economic Orthodoxies Wrong
A. Finance does affect real economy.

B. Finance system can falter.

C. Markets Need Regulation.

D. Many economist wrong because of
politics. see Fake News Warning 7

2. Real Economy Trade Imbalances did not cause

A. The earlier Dotcom Bubble Crash
did not cause a banking crises because investors took the loss.

B. World trade imbalances, the Balance of Financial Terror were not the root cause the crash.

1. U.S. negative trade balance, as many predicted, did not cause assets and a dollar crash.
a. As of 6/18 both have appreciated.

b. See The New Financial Geopolitics:
        Post-Cold War Geopolitics in a World of ‘Long and Low.’
96 min

2. Loans to Greece from Germany's trade surpluses were not the problem
as France and the Benelux nations controlled the transatlantic dollar flows
needed for international trade and to maintain Exorbitant Dollar Privilege.
a. France runs a small negative trade balance.
b. South Korea currency tanked even
though she had a positive trade balance
and ample dollar reserves

C. South Korea and the WEST could not get dollars needed
to fund substantial daily borrowing needs for international commerce.

3. Almost all banks were very highly leveraged
with substantial short term $
borrowing used
as Euro collateral needed for daily operations

A. When Lemans $180 billion
over-nigh funding needs were
not met by the International Funding Market, the entire market  crashed.
1. Worldwide credit flows stopped and ATMs would soon be empty.
2. Bad housing loans were not the problem, rolling over short term
daily funding dollar needs with poor mortgage debt as collateral
immediately would quickly crash the entire financial system.

B. Credit stopped
1. Europe's banks had become the world's hedge fund for world dollar flows.
Loans were highly leveraged borrowed in dollars with Euro denominated collateral

2. Thatcher deregulation of London's financial system had made it the hub of dollar
denominated European bank sponsored debt which flowed into and out of the U.S.
3. The U.S. eventually deregulated to loosened housing mortgage rules and
help financing of Clinton's expand minority housing Community Reinvestment Act.
4. Credit-default swaps failed. Created to safeguard  the resulting low credit rating
housing loans were exempted from regulation by the Gramm-Leach-Bliley Act
which repealed banking industry safeguards provided by the Glass-Steagall Act.5. Many banks did not have the dollar reserves to meet the needs of the banking
and corporate world.
6. Walls Street's model of an extremely leverage wholesale funding model running
out of NY and London would crash.

4. Is FED Involvement in a Geopolitical World Appropriate?

A. No
as a sovereign debt crisis requires Euro Central Bank was the appropriate agency.
B. No as Max Plank Institute blames dysfunctional Euro participants.
C. Yes, it was a failure in the Transatlantic Dollar Flows as described by Mark Blyth.

5. Stability Needs Dollar Supremacy

A. World trade is stable because the world, through Europe's banks, completes the
circular flow of dollars back to the US by investing in U.S. companies.

B. Dollar investments are dependent on
high Intellectual Propert generated

C. Distribution of these profits
has resulted in more income inequality.

D. Trump's disrupting this process
has many academics apprehensive.


Crashed: How a Decade of Financial Crises Changed the World with Adam Tooze

The New Financial Geopolitics ─ Europe: Helper, Spoiler, Risk Generator?

Watson Institute: International/ Public Affairs 86 min

See The Thirteen Commandments of Neoliberalism

Documentary Of The Week: Steve Bannon At Oxford  2 hr video

Return to Political Economy Book Summaries  11/21/18  view horizontally   Please share!

Part 2 Democracy Failures Caused Popularism

summarized from Francis Fukuyama: Democracy's Failure to Perform

1. Development of Illiberal Democracy
A. Causes
          1. Foreign Policy Failures of Developed Democracy
enhanced by U.S. foreign policy failures i.e. Middle East  wars
          2. Non-Liberal Democracy success, especially China
          3. Poor Liberal Democracy Performance i.e. economic
              slowness, immigration concerns, wealth accumulation
     B. Definitions, nominal
         1. States: monopoly on the legitimate use of force.
from Max Weber States are about Power!        
         2. Rule by Law: sovereignty sets the law i.e. China

         3. Rule of Law: sovereignty responsible to same laws
             as the governed. Laws limit power.

         4. Democratic Accountability requires free political parties
             with guarantee substantive accounting and a governments
             that serves the entire population, not just the rich and the poor.
             Liberals missed this effect of their policies.

Everyone Got More, Some Just Got More More Than Others!

C. Modern Political System
1. Generate tremendous power limited by the rule of law and is democratically accountable

2. Patrimonialism: rulers own political system, resources , distribute wealth Who You Know

3. Neo-Illiberal States: look democratic, limited representation, leaders follow the money

D. U.S. Failures at State Building
1. Focus: Build a Liberal Democracy
2. Required focus: moving from Patrimonial State to Modern Political System

a. Iraq and Afghanistan: got the liberal democracy but did not move from
a patriarchal state. Both states moved to Oligarchy where a few wealthy people
form a  Plutocracy. Neither protect citizens or provide services to a limited population.

2. Three Main Forces Are Blowing Up Global Politics

Would a more Federalist Approach decrease the animosity
created by the movement toward traditional liberalism?
Deciding some issues at the state and local level might help!

Return to Political Economy Book Summaries  11/21/18   Please share!

Part 3 Understanding Left-Right Populism
Summarized of
Understanding Right and Left Populism by Samir Gandesha
an Associate Professor in the Department of the Humanities and the
Director of the Institute for the Humanities at Simon Fraser University.

1. Growth of Populism

Right-wing populist parties in Austria, Hungary, and Poland 

Also in Erdogan's Turkey 2003, Modi's India 2014,  Trump's American 2016,
Batten's United Kingdom 2016.

Left-wing populism

The 2011 Tahrir Square generated Arab Spring was short lived

Zuccotti Park [NYNY] 2011
, was felt five years later signaled
rising support for Bernie Sanders and Jeremy Corbyn.

Latin America Bolivarian, Venezuela Bolivia and Argentina

Focus on two populism helps understand the difference between
right and left forms of populism in the context of neoliberal globalization.

Empirical study by Norris and Inglehart (2016) emphasized
1) anti-establishment
2) authoritarian
3) nativism

Theoretical account by Ernesto Laclau (decades) saw an equivalential chain”
of different demands
a democratic, horizontal and egalitarian discourse.

2. Populism:
Economic Insecurity or Cultural Backlash?

Three distinct elements
1) anti-establishmentism  
1) representative democracy

2)  authoritarianism             vs. 2) liberalism

3) nativism                        vs. 3)osmopolitanism

Two distinct axes: economic and cultural
1) evils of state economic management
2) conservative” vs. “progressive” values.

Three approaches

1) the rules of the game
2) the “supply-side” party politics
3) the “demand-side” of party politics

Two causes.
1) response to economic insecurity
 backlash by older white males

Norris and Inglehart argue that the latter is the most convincing argument:
“We believe that these are the groups most likely to feel that they have become
strangers from the predominant values in their own country
left behind by progressive tides of cultural change which they do not share…
The silent revolution of the 1970s appears to have spawned an angry and
resentful counter-revolutionary backlash today.”

One wonders whether the authors don’t seriously underestimate the threat right-wing
populism poses to the institutions of liberal-democracy in the United States

A worrying inference that the authors explicitly draw from their
progressivist premises is that populism will eventually die

The study therefore fails to sufficiently appreciate the ways in which populist governments
seek to institutionalize their agendas, thereby changing the rules of the game.
This has become most drastically evident in the case of Poland, for example,
in which Andrzej Duda (leader of the right-populist Law and Justice party) has significantly
limited the autonomy of the judicial branch of government.  Other such examples abound.

3. Neoliberal globalization is comprised of four processes:

1) accumulation by dispossession  
2) de-regulation
3) privatization  
4) upward re-distribution of wealth

Together they have increased economic insecurity and cultural anxiety
1) the creation of surplus peoples  
2) rising global inequality
3)  threats to identity

Anxiety from neoliberal globalization has ammunition from right and left populists.

Neither Norris and Inglehart nor Laclau adequately account for such insecurity
in their theorization of populism.

“the people” are differentially deployed by right and left and they themselves
must be understood in terms of the respective enemies through which
“the people” is constructed. And this is the decisive dimension of populism.

Right populism defines "the people" as those confronting an
external enemy.
1) Islamic terrorism 
2) Refugees
3) European Commission,
4) International Jewish Conspiracy ...

Left populism defines “the people”
as social structures/institutions
1) state and capital that thwart its aspirations for self-determination
2) allows hospitality towards the other

Right populism defines the enemy in personalized terms
Insecurity and anxiety are necessary and unavoidable
even a favorable result of capitalist social relations.
Acceptable fear of the stranger and a punitive state result.

Left populism defines the enemy in terms of socio-economic structures.
Insecurity and anxiety are caused by a dismantling of the welfare state
and workforce casualisation.
These egalitarian solutions that can also turn authoritarian.

See The Populists (article) | The Gilded Age | Khan Academy

Part Four Populism is the Reset Mechanism

Populism is not an economic distribution complaint,
it is driven by 3 decades of market driven globalization

It is not just about wage stagnation and loss of jobs

It is about disempowerment, social exclusion, unfairness, and humiliation.

Many Trump Populists seek recognition, having a meaning,
a say in shaping the forces that govern their collective lives.

from M. Sandel: Populism, Trump, and the Future of Democracy


George McGovern the populist who lost, Trump Won,  Why, was it the man, the media, why were people unhappy

Important Question: is Kantian Morality Enough for the Public Sector,
especially since some think it is too much!

Should public discussion go beyond safe and delimiting morality
and moral duty, beyond the legality of rights and human dignity.

Should respect for work and be part of the discourse?

Should competing conceptions of the "good life" be on the table of public discussion?

Update from Ian Bremmer Populism in Europe & America  1/24/19
Battle is not over between right and left populists.
Populist power will increase as European Parliamentary Elections, the big 2019 story.
Dysfunction between bureaucrats and politicians will weaken Europe.
Difficult to govern, harder to manage geopolitically arrangements between countries

Editor's Note: Michael wants more that Kant. Kant is enough.

Michael Aandel is a lot like Charles Murray who is basically correct,
but wants too much control of what constitutes correct morals and ethics.

Extreme conservatives want too much control, extreme liberals want no control.

Left wing populism is economic, the main stream view feels this is the starting point

Right wing populism is about the cultural loss caused by immigration, not prejudice

Summary of Summary

Neoliberal globalization
increased economic insecurity and cultural anxiety.

Insecurity may need more attention by populist theory.

These are key to understanding the difference between right and left forms of populism

Related Studies Nazism And Neoliberal Mythmaking

German Reconstruction As State-Phobia      

The State As Killer   

Europe and the Centre-Left Fall under Hayek’s Spell

A Map of Hayek's Delusion