Political risk rises as voters feel only the populists are listening

Consumer demand


Hierachy of needs

This week, the new UK premier, Theresa May, highlighted how the central banks have encouraged the populists’ rise:

We have to acknowledge some of the bad side-effects. People with assets have got richer, people without have not.

The problem, of course, goes wider than this.  The continuing failure to recover from the 2008 Financial Crisis is one of the 3 major policy errors of recent years, along with the disaster of the Iraq War and its aftermath, and the seemingly uncontrolled growth in immigration.  Collectively, these have undermined confidence in the Western political system.

In turn, this loss of confidence has led to the rise of the populists.  The chart above, based on the insight of American psychologist Abraham Maslow, highlights why this has happened.  Maslow’s research showed that people were motivated by a range of needs:

  The most basic needs are for Safety and Security – if people are worried about possible dangers, or their ability to earn a living, they will become frightened and insecure
  Social standing and Status are also critical – people want to understand their place in society, and be recognised for their role within it
  Less tangible needs then develop, if these needs are being met – Self-actualisation, Self-development and Service
  These focus on realising one’s own potential, developing new skills, and on helping others and serving society

This analysis makes it easy to see why the comfortable certainties of the SuperCycle are now history for an increasing number of people in the West.

The rise of terrorism, and the seeming inability of governments to respond successfully to domestic and international threats, naturally makes people uncertain and worried.  Similarly, the rise of the “gig economy” has meant tens of millions of people are now dependent on temporary work and zero-hours contracts – often juggling several jobs in a day to earn enough to eat and pay the bills.

Equally important is that the seemingly inevitable “rise of the middle class” has ended.  People are no longer confident that going to college will provide them with a steadily rising income, along with healthcare and the prospect of a comfortable retirement.  Many Millennials have large tuition fee debts, and find it hard to believe that their generation will end up doing better than their parents.  As Fortune magazine reported earlier this year:

“The vast majority of American workers expect to have less money at the end of their careers than their parents did—and that fear is highest among 20-something millennials

This trend has been developing for some time, as Forbes reported in 2013 on a survey in Montreal and Vancouver:

Somebody with the same degree, the same job and the same demographic profile is earning less today than they were in the 1980s”

And yet, despite all the growth of social media, it is clear that policymakers are not even listening to these concerns, let alone responding to them, as the Wall Street Journal noted last year:

The biggest thing leaders don’t do now is listen. They no longer hear the voices of common people. Or they imitate what they think it is and it sounds backward and embarrassing. In this age we will see political leaders, and institutions, rock, shatter and fall due to that deafness.” (my emphasis)

Fortune, Forbes and the Wall Street Journal are not revolutionary media, keen to stir up unrest and incite social disorder.  They are simply reporting facts.  And yet, these facts have continued to be ignored – to the point where populists have a real chance of gaining power – if not this year, then perhaps next year or the year after.

As I noted recently, nearly two-thirds of Americans feel their country is headed in the wrong direction, and their views are widely shared across the West.

It really is long past time for policymakers to stop sheltering behind the fig-leaf of the central banks, and the absurd idea these can stimulate economic growth by creating more and more debt.  The voters simply want straight-talking about the issues in the Hierarchy of Needs that concern them.

If today’s leaders continue to refuse to listen, they will inevitably find populists who will.


Markets struggle with political risk as populist momentum gains


Markets have forgotten how to price political uncertainty in recent decades, as ...

Learn more

President Xi tells China's government to "control asset bubbles"


China’s housing bubble is not just about Shenzhen.  It is the most obviou...

Learn more
More posts
If you don’t want to know the future, look away now

Next week, I will publish my annual Budget Outlook, covering the 2021-2023 period. It will highlight...

The Top 5 pandemic paradigm shifts

The Covid-19 pandemic has accelerated the fundamental changes which were already underway in global ...

Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 10...

Smartphone sales head into decline as affordability becomes key

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartpho...

China’s plastic ban and recycling launch marks end of ‘business as usual’ for plastics industry

Paradigm shifts start slowly at first, and it is easy to miss them. But then one day, they suddenly ...

Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomb...

Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’...

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows....


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more