Populism & Neo-Thatcherism:
Why Economics is Crucial for the Dissident Right

Jair Bolsonaro, President of Brazil. Photo: Wikimedia  Commons

2,003 words

Populism is an oft-discussed topic in political circles of all stripes, and us dissidents tend to look at it as the best chance at present to put any sort of identitarian ideas into the mainstream, or at the very least as the best chance of stopping mass migration. I wrote a report on the state of populism in Europe not long ago for that very reason.

As I said in that article, there is no “fixed” populist platform; merely a handful of ideas that unite parties under the populist label. These are mainly anti-elitism, anti-immigration, and an appeal in some form to disprivileged native populations. Quite often, it is also simply a matter of the media deciding to call someone or some party populist.

This lack of ideology and consistency also applies to their economic policies. I have found an alarming trend of economic illiteracy and irresponsibility among populists who gain power. Here, I will focus mainly on Matteo Salvini and Jair Bolsonaro – Salvini, because he is racking up debt and selling off Italy’s gold reserves to pay for pensions and other state liabilities, as if he were a social democrat; and Bolsonaro, because he is privatizing just about everything, like a good neoliberal.

In Bolsonaro’s case, during the four months that Bolsonaro has been in power, he has privatized twenty-one major airports, several ports, huge tracts of railways in the Amazon and the southeast, privatized the national post office, privatized the oil refineries of the state oil company Petrobras, and of course fired huge numbers of bureaucrats. As a result, the Brazilian treasury has swollen by billions of dollars in this short time; the auctioning off of the airports alone netted 580 billion US dollars. Some of this is likely necessary. Brazil was a semi-Communist nation for thirty odd years, and the state likely controlled far too much of the economy. But a lot of what is being sold off is infrastructure that even I, as a minarchistically-inclined person when it comes to economics, consider to be vital and something that should be in the hands of the government for the defense purposes, and to prevent “tragedy of the commons” issues, especially when it comes to railroads and ports.

Bolsonaro’s policies remind me of Thatcher’s: he offers quick solutions to deal with current problems, but with no long-term plan, and this is being done for mostly ideological reasons at the cost of the common man. The privatization of the British railroads has been a disaster, and is something we can see ever more clearly forty years after Thatcher. Virgin Rail controls half the network, and mid-size companies control the rest. As a result, you pay three times as much for a train ticket in the UK as on the Continent, plus you will have to switch trains – and companies – half a dozen times during the course of your trip. The carriages are outdated, the equipment and stations are a mess, and nothing is on time. As a result, the British railways, in the nation which first pioneered rail travel, is today among the worst in Europe. (We won’t speak of the United States, as the US has apparently forgotten how to build trains.)

Brazil’s infrastructure, which is already not in the best condition, will likely suffer from Bolsonaro’s policies, but we only know the full extent of his impact a few decades hence. But I see another Thatcher in Bolsonaro. His huge privatization program is being carried out more for ideological reasons than necessity, as Brazil is not in that much more economic trouble than it has always been in; it is not in a crisis, nor in insurmountable debt. Bolsonaro will bring about short-term growth for Brazil, but his long-term impact will likely only enrich global enterprise. Look at who benefited from the mass privatization of industry and infrastructure in Russia after the fall of the Soviet Union, for example.

As for Salvini, he is a different problem. Italy has never truly been able to develop a real economy, in terms of administration and monetary policy, despite being the fourth-largest economy in Europe. Italy has relied on inflation and currency devaluation from the time of the Latin Union, up through Mussolini and until they joined the euro to balance their books. Their big problem since the 2008 crisis has been runaway debt coupled with not being able devalue or inflate their currency since they are on the Euro. This debt is partially caused by bad loan practices, partially by Italians being bad debtors, and partially by half the economy being in the semi-black market. Most of Southern Europe has this same problem, and the ECB has maintained quite inflationary measures to avoid wide-scale defaults, the Greek crisis being the most salient example. But they cannot inflate the euro to the level Southern Europe would need to balance its books, because that would destroy the pension funds, investments and savings of Northern Europe. Even so, the European Central Bank (ECB) rate is stuck at zero, while Northern Europe needs it to be closer to three percent or higher, while Southern Europe would like it to be in the negative.

Because of this high debt (131% debt to GDP), the European Union and the ECB imposed budgetary restrictions on Italy. Salvini has ignored these restrictions which were imposed on previous governments, and has even ignored some of the rules necessary to be an EU member at all, including the restriction to a maximum two percent budget deficit. The EU has threatened financial and economic sanctions, but Salvini is calling their bluff. He won’t stop racking up debt to keep paying pensions, government salaries, and so on. When Greece tried this in 2012-2014, the ECB and Deutsche Bank simply went in, set government salaries and pensions to a maximum, limited daily bank withdrawals, sold off government assets, and generally forced Greece to bend the knee. Italy is a bigger and stronger nation, and Salvini is a much more assertive leader than a Yanis Varoufakis, so there will be nothing of the sort happening in Italy today. What worries me more is Salvini leading an emboldened Southern Europe to again adopt massive budgetary deficits, causing another Eurozone crisis.

Another bad thing Salvini is doing is selling off the Italian gold reserves. Since 2001, all Eurozone members have signed and renewed a four-year agreement to back twenty percent of their GDP in gold. This means that the euro effectively has a twenty percent gold backing, for all you gold-nuts out there. This is part of the reason why the euro is so strong. Gold is still the most predictive store of value in the world – always has been, and still is. Salvini is likely to renege on this agreement, sell off Italy’s gold reserves, and use the proceeds to pay for welfare and pensions. This is another bad decision, especially seeing as he is also racking up debt. This is like being an investor running a high-risk strategy while selling off all your hedges. If Salvini blows up the euro with debt, or if fiat and the debt-based system collapse, you want to have gold to back a new currency, which I think is the reason why the Eurozone holds such a large gold reserve. It is a hedge against the American debt-based dollar.

Trump is actually doing a similarly bad thing in terms of monetary policy. He has kept the Fed from raising rates, which it should have been doing ever since it stopped quantitative easing (QE). When the Fed announced a rate hike in December, markets took a nosedive – which they should. Everyone knows the current stock market is a bubble that is only being kept afloat by low lending rates, and up until recently by QE (which ends this month in the Eurozone). We really do need a market adjustment. But since none of the issues that caused the 2008 crisis have been solved, and almost everyone from businesses to private individuals to financial institutions have taken on huge amounts of debt since 2008, this will really not be so much a recession as a depression. No one wants that to happen, least of all Trump, who claims the economy as one of his big successes (it really isn’t; it’s neither his, nor a success). So Trump has kept the Fed from raising rates. We don’t quite know how he did that, but we know that he managed to get the Fed to change course after the December nosedive, and markets went back up and are again approaching ridiculous highs. It is all being done on borrowed time, however. Most economists predict a recession to hit between the third quarter of 2019 and the first quarter of 2020. Several banks, Rabobank among them, have already published reports to this effect.

My point in illustrating why these politicians have bad economic policies is that I think economics do matter. People in this movement often say that we should ignore economics, focus on social and cultural issues, and sort out economics once we are in power. I think this is silly. Economic policy matters hugely in how an economy is directed, who thrives from it, who doesn’t, what sectors grow, how much money the average man has to spend, who can afford a home and kids, and so on. Economic policies must be part of any truly nationalist political platform. This is not to say that the core of that message is wrong; let’s not fight internally about economics, because we all know that we have libertarians, socialists, and whatever else in these circles, and we need to be a united front. But I do think we need to develop at least some bare-bones policy positions on economics in order to be a functional movement. Many people still primarily vote with their wallets, such as when they engage in white flight for “better schools” and to flee “bad neighborhoods.” Thus, having a sound monetary policy and emphasizing the economic benefits of remigration and a homogenous country are strong selling points.

Furthermore, the risk we run in letting leaders with poor economic instincts run our countries is that it will backfire on nationalism, populism, and the Right more generally. Imagine that Salvini crashes the Italian economy the way Greece did – which is a genuine possibility. The Italian banks have over four hundred billion Euros in bad loans on the books, and have only been kept afloat by government bailouts, the last one in 2016. These bailouts were made possible by an EU and ECB that are decidedly disinclined to make life easy for Salvini. So imagine what will happen if Italy crashes, and we have another Greece situation. The Italian people will blame Salvini, the Right, and the populists for it, and they will vote against them at the first opportunity they get, and it will further be cited as an example of the danger populism poses to people’s economic interests, just as that is being used now as a scare tactic in relation to Brexit. Perhaps voters will turn to the far Left for answers. Similarly, in the event of a 2020 recession, Trump will likely fail to win reelection – and God help American whites if a vengeful Democratic Party attains power.

Allowing economic illiterates to take power is a danger for the entire Right. If you want to become a movement leader, or get into politics in any way, brush up on your economics. First, get to know the tax code, then learn the theories, from the Austrian school, through Marxism and Distributism, to all the LARPers like Georgism and anarcho-capitalism. And keep up with the news. Follow some economic news from alternative sources, such as Macro Voices’ podcasts, Zero Hedge – that sort of thing. A good understanding of economics is crucial when going into politics. And if you are someone with a following, talk about economics a bit. Yes, identity and a sense of belonging are our main focus, but you will also need to offer ordinary people a material reason to support you.