The Populist Temptation:
Economic Grievance and Political Reaction in the Modern Era

Barry Eichengreen

Oxford University Press 2018
A book review by Danny Yee © 2018
Written against the backdrop of the Trump presidency, Brexit, and European populist movements, The Populist Temptation is an attempt to situate these in their economic and historical context.

Eichengreen defines populist political movements as those with "anti-elite, authoritarian, and nativist tendencies". He is an economic historian himself, however, and his focus is not on these movements themselves but on the "economic grievances" that drive them and the welfare systems aimed at preventing them. A focus on the United States and the United Kingdom, and on the last century or so, limits his reach, but he includes some comparisons — and also considers examples where populist movements failed, not just those which were successful.

"American Panorama" is a history of populism in the United States, starting in the 1890s and looking at the Populists, the Klu Klux Klan, Huey Long, and Joseph McCarthy. "Luddites and Laborers" turns to the United Kingdom, proceeding from Chartism to Chamberlain. And "Voyage of the Bismarck" describes Germany's "precocious development of the social insurance state combined with tariff protection for both agriculture and industry, a response that effectively suppressed anxiety about economic change on both the Left and the Right".

Eichengreen then returns to the United States in "The Associationalist Way", looking at the lead up to the Great Depression and at how the absence of a strong state led to weak social insurance and a welfare capitalism with "welfare provision by enlightened employers"; the New Deal was "less a rejection of Hoover's quasi-corporatist approach than a balancing act". And "Unemployment and Reaction" contrasts policy responses to depression in pre-war Britain and Germany.

"The Age of Moderation" and "Things Come Apart" offer a potted, economic history, again focused on the United States and parts of Western Europe, down to 1973 and then through to the end of the century. The post-war period saw growth, demand for semi-skilled workers and high returns to labour, and welfare for those who missed out. But this was followed by a shift towards skilled labour and away from manufacturing, impacts from globalisation and immigration, and a decline of unions and welfare provision. Here Eichengreen is clearly a participant in ongoing debates within his field.

"Trumped Up" looks at the background to the election of Trump, and "Breaking Point" that of Brexit and euroskepticism more generally. "Containment" considers a range of measures to counter populism, both economic ones such as improving growth, reducing inequality, a universal income, and taxes on robots and political ones such as devolution (Eichengreen assumes a US context, describing this as "federalism") and tweaking electoral systems. And "Au Revoir Europe?" looks at the challenges facing the European Union and offers some suggestions — changing the bank risk weighting of government bonds to give national governments more fiscal autonomy, increasing funding for countries willing to settle migrants, and changing EU institutions.

There is, then, a lot in The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era about how economic changes and downturns have left sections of populations worse off and about the welfare systems designed to support them. There is little about political reaction per se and, disappointingly, almost nothing about temptation or grievance, about the psychological and ideological factors that influence populations (and individual political actors) towards populism.

The different political trajectories of Britain and Germany in the 1930s, for example, surely were influenced by unemployment rates and welfare — "in Britain, benefit cuts lagged behind wage declines instead of leading them, as in Germany" — and it is indeed "hard to reject the view that the failure of German society and government to do more for the unemployed was consequential in the worst possible way". But by itself that seems a somewhat lop-sided perspective.

Eichengreen is no economic determinist, however, and his account makes an effective complement to the political history that will be more familiar to most. The Populist Temptation is a nice introduction to the economics of welfare in the United States and Europe over the last century.

September 2018

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%T The Populist Temptation
%S Economic Grievance and Political Reaction in the Modern Era
%A Eichengreen, Barry
%I Oxford University Press
%D 2018
%O hardcover, notes, index
%G ISBN-13 9780190866280
%P 244pp