Forget Trump, the midterms are about populism

When the results of the US midterms start to come in this evening, some here in the UK will roll their eyes and think “what a crazy country”.

Others will wonder why Britain and America are such anomalies with Brexit and Trump, and wish that we could be more like, say, Germany.

The truth is that the political era we are currently living through, which is yet to find a satisfactory name, is not unique to the UK or the US. Populism, to use the best term found to date, is now a feature in many countries around the world. Britain and America might have been frontrunners, but we are not unique.

In Germany last week, Chancellor Angela Merkel’s governing coalition suffered heavy losses in the Hesse regional election.

Both Merkel’s centre-right Christian Democrats (CDU) party and the centre-left Social Democrats were down 10 per cent on the previous election, with the left-leaning Greens surging into second place with a fifth of the vote, and the far-right Alternative for Germany entering the regional assembly for the first time with 13 per cent.

Following poor results in other recent regional elections, this spurred Merkel’s resignation as leader of the CDU and the not entirely unexpected announcement that she would not be standing for a fifth term in office.

At the same time, over in Brazil, Jair Bolsonaro won a sweeping victory in the presidential election. The “Trump of the Tropics” leads the Social Liberal Party, a free-market, socially conservative, anti-establishment party outside of the political mainstream.

These two results, both seen as electoral upsets, are not unique.

Last October saw the election of the right-wing Sebastian Kurz as Chancellor of Austria, and in March this year, Matteo Salvini’s right-wing League and Luigi Di Maio’s anti-establishment Five Star Movement triumphed in the Italian elections, finally forming a coalition after three months of protracted negotiations.

Meanwhile in France, the popularity of President Emmanuel Macron has dipped, and the far-left Jean-Luc Melenchon is now the most popular French politician.

What unifies these political developments is the sharp break from the centrist politics which first emerged in the 1990s.

We have transitioned to a new political era, and the fact that countries across the world are making the transition in step with each other should not surprise us.

In the 1980s, with Margaret Thatcher as Prime Minister, Britain led the way on privatisation, free-market economics, and tackling the trade unions.

This policy shift was mirrored by conservative politicians across the world, most notably Ronald Reagan in the US. But it was copied by some centre-left governments too, with Roger Douglas implementing “Rogernomics” as the minister of finance in a Labour administration in New Zealand.

The 1990s then saw a policy shift to the “Third Way”, which sought to triangulate between socialism and capitalism, combining the best of both systems.

Bill Clinton, Wim Kok in the Netherlands, Gerhard Schroeder in Germany, and – of course – Tony Blair were all poster boys for the Third Way, but it was also embraced by many other governments, not least as political consultants travelled the world advocating it as a route to electoral success.

The Third Way approach to politics was continued by subsequent Presidents and Prime Ministers of a variety of political colours. But then came the financial crisis, the after-effects of which are perhaps the key driver for populism across the world. A decade on, voters are itching for change.

This has undoubtedly affected parties on the right, but it is the impact on the left which will leave the biggest legacy.

Some centre-left parties have shifted further to the extreme, in the UK and the US, for example, while others have been usurped by more far-left parties, particularly in countries with proportional electoral systems.

In both Germany and the Netherlands, for example, media outlets been so fixated on the performance of the far-right parties that they have missed the collapse in support for the mainstream centre-left groups and the rise of far-left support.

Electorates traditionally turn to centre-right parties at times of recession, trusting in their economic competence. But my hunch is that next time will be different. Electorates will feel that, having tried the “right-wing” solution to economic troubles, they now wish to try the alternative.

This is why smart business leaders now see Jeremy Corbyn as a bigger threat than Brexit.

And it’s why today’s midterms aren’t just about how well Donald Trump’s popularity has held up during his presidency, but about the spread of left-wing populism throughout the US.