It is the law of politics that economic downturns are to be followed by populism whether their theater is Argentina, Germany, the Philippines or the USA. The difference lies in the relative strength or lack of thereof of the institutional framework.
Argentina and the Philippines being nations created by empires solely interested in extracting wealth were endowed with an institutional framework completely inadequate to aggregate interests and resolve conflicts.
On the other extreme of the political spectrum is the U.S. — founded to create wealth. Accordingly, its institutional framework was built to prevent power accumulation by a single player and power fragmentation under conflict generated pressures. This provided the necessary resilience to absorb economic and social shocks like depressions and wars.
The system operates by means of deploying checks and balances every time any particular actor accumulates too much power.
It is this system that accounts for the existence of the first and most enduring freedom promoting entity in the world — that is the United States of America.
The entity was tested during the American Revolution, the Civil War and the two Great Depressions (1873 and 1928). The aftermath of both depressions saw populism rise with strength to be defeated by the emergence of centered driven political leaders that restored balance to the system.
In Latin America, populism has led to systemic collapse (Mexico, Chile; Uruguay; Venezuela) or profound economic restructuring (Colombia, Brazil, Argentina).
This is the result of institutional architectures designed to extract economic value for a foreign power. These structures are rigid, sector specific, resilient to change as well as being exclusionary.
As a result, economic downturns create conditions for the rise of virulent forms of populism that, instead of correcting the system, place irresistible pressures that either fracture or bring the system down.
This explains the cycles of dictatorship and democracy that the region has lived ever since Christopher Columbus set foot in the Western Hemisphere.
Globalization however has begun to modify these dynamics by means of promoting the rise of middle classes, the emergence of value creating entrepreneurial business leaders, and introducing transparency into the state apparatus throughout the region.
And while change proceeds at a slower pace than democratic expectations, recent developments in Argentina and Brazil and those of Chile and Peru in the 1990s give reason to hold democratic hope for Latin America.
The doubt however remains as to the extent of the damage that populism could effect on the United States.
The 21st century brand of populism has a very particular mix that has taken the U.S. commanding heights by surprise.
To begin with, that ruling class is mostly part of an Atlantic urban culture that resides in the great American metropolis (New York, Chicago, Boston, Los Angeles, San Francisco, Philadelphia, Boston). They are thus immersed in a global blending machine that gives them an international culture.
Populism however is brewing in America’s heartland and in white urban lower income sections that are far removed from the paths of the elites. This explains the sudden and powerful emergence of two outsiders to the political establishment (Trump and Sanders) as standard bearers of White and Young America offended with a system that denies them entry jobs and meaningful salaries and fails to protect them against a rest of the world that they perceive as hostile and dangerous.
This segment of the U.S. population does not seem to have any connection with the country’s elites and in particular those running the two main political parties.
The question thus arises: will these elites promote systemic changes that allow these people to obtain the skills that will bring value to their pay checks? Or will they just continue to try formulas of the past that have given solid proof of their inadequacy.
Will the elites understand that the Mexican Wall is a killer to the badly needed U.S. industrial redeployment calling for the introduction of robotics into manufacturing? Mexico, as the world leading exporter of flat TV screens, is the place to develop the robots that need to be introduced in manufacturing.
Crippling Mexico will cost the U.S. several decades in development impetus. And with that it will be impossible to train white non-college educated America to operate these robots thereby gaining a better compensated place in the income scale.
And the final question. Will the wonderful American experiment survive a strain of populism that brings higher TV ratings while unleashing the demons of isolationism and segregation?