A Strong Economy Won’t Make You Popular These Days

President Emmanuel Macron of France, left, and Prime Minister Justin Trudeau of Canada at the G20 summit in 2017. The two leaders, who were welcomed as young faces of reform, can’t seem to get much of a lift from their countries’ good economies.CreditPool photo by Ian Langsdon
President Emmanuel Macron of France, left, and Prime Minister Justin Trudeau of Canada at the G20 summit in 2017. The two leaders, who were welcomed as young faces of reform, can’t seem to get much of a lift from their countries’ good economies.CreditPool photo by Ian Langsdon

With Angela Merkel and Emmanuel Macron visiting Donald Trump this week, much of the commentary has focused on how wildly different the staid German chancellor and the globally minded French president are from the mercurial American president. But the three do share one trait: They are all unpopular at home despite the good economic times.

This is new. For most of the postwar era, voters in the big democracies rewarded leaders for strong economies and punished them for policies that hurt growth. Now the link between good politics and good economics seems to have broken.

Last year, the global economy was finally accelerating out of the long torpor that followed the financial crisis of 2008. Unemployment hit lows not seen in decades, and inflation all but disappeared. Yet by January, my index of approval ratings for leaders in 20 major democracies showed their average rating hitting a new low of just 35 percent, down from a peak of more than 50 percent a decade ago.

President Trump is Exhibit A of this fraying connection between politics and economics. Surveys of consumer confidence show that Americans haven’t felt this good about the economy since at least the height of the dot-com boom in 2000. Yet Mr. Trump’s approval ratings have hovered around record lows for this point in any president’s first term. Many commentators assume this is because Mr. Trump’s divisive personality has overshadowed the strong economy.

But personality can’t explain the struggles of Chancellor Merkel, who is as bland as Mr. Trump is controversial. Germany is enjoying a recovery even more surprisingly robust than the United States’. Yet in September Ms. Merkel led her party to its worst showing since 1949, and her approval ratings remain depressed.

The same decline has bedeviled Mr. Macron and other decidedly mainstream leaders like Prime Minister Justin Trudeau of Canada and Shinzo Abe, prime minister of Japan. Yet none of these leaders comes close to matching President Trump for outrageousness. All three are seen as economic reformers who have produced relatively strong results, yet they all have approval ratings around 40 percent, just as bad as Mr. Trump’s.

All politics is local, and maybe all of these leaders are suffering setbacks owing to domestic political issues. But that would be quite a coincidence. Something else seems to be at work.

Perhaps the most persuasive explanation is the rise of angry populism, built on a rejection of the established order and a growing focus on issues of culture and national identity, rather than practical economic outcomes.

In the past populism tended to rise in bad times and ebb in good ones, so you might have expected it to recede as the global recovery increased employment and wages over the past 18 months. But economic factors may no longer matter as much in a bitterly emotional political age, and leader approval ratings have continued to fall.

More people are getting their news from highly politicized arms of both traditional and social media, which can turn anything — including the economy — into a partisan issue. Until recently, party affiliation did not seem relevant to consumer optimism in the United States, but it does now. Before the 2016 presidential election, Democrats were more optimistic than Republicans, but that reversed immediately after Mr. Trump took office.

In this environment, the honeymoons granted newly elected leaders are now brutally short. Much of the recent decline in the approval ratings index is explained by the falling popularity of relative newcomers like Mr. Macron and Prime Minister Theresa May of Britain. Of the 20 leaders in the index, five came to power over the past two years with positive approval ratings, and four of them fell below 50 percent within a year. Ms. May’s approval rating has fallen into the mid-30s, worse than Mr. Trump’s.

The changing nature and control of the news also helps to explain an even more unexpected disconnect between political and economic reality: the rare leaders who remain popular despite a faltering economy. In my index, which uses only polls independent of government control, there are just two — both elected autocrats.

In Russia, President Vladimir Putin’s 80 percent approval rating recently helped him win another six-year term in office, despite painfully bad economic conditions since the 2014 oil price collapse. He has remained popular by dominating the media, sidelining rivals and stirring up nationalism through actions like the conquest of Crimea.

Like Mr. Putin, President Recep Tayyip Erdogan of Turkey has used state control of media, nationalist conspiracy theories and foreign adventures (including the recent dispatch of troops into Syria) to maintain his popularity. Emboldened by his approval ratings, Mr. Erdogan has just called early elections for June even though Turkey has one of the world’s highest rates of inflation — a cancer that has ended many other political careers.

These trends are worrying. Good economics should remain good politics. Democracies work best when voters hold politicians accountable for economic results. If leaders sense that the economy no longer matters, they are free to push any policy that will energize their base — which may explain Mr. Trump’s recent nationalist threats against China and populist threats against big companies, both potentially bad economic policies.

And then there is this worrisome thought: If leaders embrace aggressively populist and nationalistic policies in good times, what will happen when the economy takes a turn for the worse?

Ruchir Sharma, author of The Rise and Fall of Nations: Forces of Change in the Post-Crisis World, is the chief global strategist at Morgan Stanley Investment Management and a contributing opinion writer.

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