It's Politics, Stupid!

Populists Sideline Economic Reason

FILE PHOTO: Nigel Farage Stands Down as Leader of UKIP
UKIP Leader Nigel Farage on the Brexit campaign trail. Photo: Jeff J Mitchell/Getty Images
  • Why it matters

    Why it matters

    U.S. presidential candidate Hillary Clinton is unlikely to focus on the economy in her campaign because populists like her opponent Donald Trump have convinced voters that a strong economy only benefits corporations and the rich.

  • Facts


    • The Obama administration avoided an economic depression after the 2008 global financial crisis.
    • A wave of renationalization would adversely affect Germany’s strongly export-oriented economy.
    • Many of Germany’s key trading partners when it comes to exports face uncertain political prospects in the near future.
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“It’s the economy, stupid!” was one of the three guiding principles in Bill Clinton’s successful presidential campaign in 1992. Coined by Clinton campaign manager James Carville, the slogan caught on quickly. He wanted to remind Mr. Clinton’s campaign workers that the recession, accompanied by rising unemployment figures, was a weak spot for then President George H.W. Bush.

Some 24 years later, the United States is in the midst of another presidential election, and this time Mr. Clinton’s wife Hillary is running for the office. She too ought to be able to use the economic situation to her advantage. After all, the U.S. economy has recovered from the worst crisis in seven decades under her fellow Democrat, President Barack Obama. After the 2008 global financial crisis, the Obama administration not only managed to avoid a repetition of the Great Depression of the 1930s, but to trigger a turnaround in the job market.

The U.S. economy is now in the late phase of a weak but lengthy recovery, and there’s no recession in sight – not a bad economic basis for an election campaign. Besides, Ms. Clinton is running against Donald Trump, whose economic program so far is a crude mixture of protectionism and tax cuts for companies and the wealthy.

And yet, Ms. Clinton’s campaign managers have chosen not to use “It’s the economy, stupid!” as one of their guiding principles. Apparently, elections can no longer be won with economic arguments today, whether they’re in the United States or in other established industrialized nations like Britain.

On the contrary, economic arguments even appear to be harmful to candidates running a campaign against populists, who use them to validate their counterargument that they merely benefit a nebulous “system” of global financial capitalism and not ordinary citizens.

Populists from Donald Trump to French right-wing politician Marine Le Pen persuade the losers of globalization – real or perceived – that their lives will improve if their country isolates itself against companies, products and, most of all, people from foreign countries, and suspends its cooperation in international organizations.

Globalization, with its increasingly tight mesh of political and economic cooperation, open markets and cultural exchange, is in retreat. Let's hope that the pendulum doesn't swing as far back as it did in the 1930s.


The referendum in Great Britain on withdrawing from the European Union showed how successful such crude rhetoric could be, when citizens of probably the most traditional democracy in the world chose to renationalize the country. If Americans were to vote for Mr. Trump and to reject international cooperation in politics and business, it would confirm a worrisome trend. Globalization, with its increasingly tight mesh of political and economic cooperation, open markets and cultural exchange, is in retreat. Let’s hope that the pendulum doesn’t swing as far back as it did in the 1930s.

This political climate is particularly dangerous for companies, especially those from export-oriented countries like Germany. Just as German industry has benefited from the global opening of markets since the 1990s, the German economy would also suffer under a wave of renationalization.

All it takes is a look at the key countries for the German export economy to realize what is at stake. The three most important are the United States, France and Great Britain, two countries in which populists with protectionist leanings are seeking power and one that has just voted to leave the European Union. Germany’s fourth-largest trading partner in terms of exports is the Netherlands, where the parliament also includes politicians with strong nationalist tendencies.

Next on the list are China, which is in the midst of an economic and political transition with an uncertain outcome, and two countries that could also see a change in direction this fall: Austria, where the far-right Freedom Party (FPÖ) could win a repeat of the presidential election, and Italy, where Prime Minister Matteo Renzi could be ousted over a referendum on the constitutional reform he has proposed, paving the way for Beppe Grillo’s populist Five Star Movement to win in subsequent new elections. Finally there is Poland, a country where a right-wing populist government is in the process of curtailing fundamental democratic rights.

More than half of German exports go to these countries. And though business is still strong today, it would not be surprising to see companies start holding back on investment decisions given what may come. In fact, business leaders have every reason to start using “It’s politics, stupid!” as their new mantra.


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