Forget about climate change – the recent rise of populism is a greater threat, according to a prominent political scientist.
Fueled by job displacement, public anger now threatens the legitimacy and stability of countries in the first world, said Eurasia Group President Ian Bremmer at the 2016 Schwab IMPACT conference.
“We increasingly don’t think our leaders are very legitimate,” Bremmer said, adding that populism is more than a political problem. Populations are also distrustful of CEOs, bankers, the media, and academics.
Populism has most recently been driven by globalization. As global trade flourished, middle and working class jobs flowed from the first world to emerging and developing markets, said Bremmer.
Anger among the displaced working and middle classes is channeled into political movements like the candidacies of Donald Trump or Bernie Sanders and initiatives like the Brexit vote, said Bremmer. “Brexit was not about improving the British economy, these people were Palestinians with rocks. The reason this really matters for investors is because it is not going to stop in the developed world.”
Technology is going to displace labor across the world, said Bremmer, leaving large swaths of people unemployed and underemployed.
Most governments will struggle to respond to the changing social order.
“Things blow up when suddenly the social contract doesn’t work anymore,” said Bremmer. “This is happening fast, you’re going to see this in virtually every sector: this sector, the legal profession, services, fast food, trucking, shipping, manufacturing, this job transfer is going to be dramatic.”
Bremmer identified three ways governments could address the problem. The first would be to dramatically change the social contract to support a “gig economy” system of partial employment with public benefits. While countries such as Denmark, Sweden and Singapore have already adopted this model, Bremmer says that most big governments will eventually do so, too.
The U.S. is unlikely to expand the national welfare state, said Bremmer, but many states will probably move in to provide a social safety net for their citizens.