It’s time for business leaders to start looking past the global populism surge, which sounds like decidedly odd advice considering that the surge seems just to be getting started. Though Austrian nationalist candidate Norbert Hofer lost yesterday’s presidential election, the more significant result was the drubbing that Italian voters inflicted on Prime Minister Matteo Renzi in a constitutional referendum. The main beneficiary is the populist, anti-establishment, anti-euro Five Star Movement, a party founded just seven years ago by TV comedian Beppe Grillo. This new high-profile populist victory, coming after Brexit and Donald Trump’s win, gives momentum to already strong populists in France, Germany, and the Netherlands, all of which hold national elections next year.
So why look past populism, which is still gaining strength? Because even in this incredibly uncertain world, we can predict a couple of things with moderate confidence. One is that the populists won’t be able to deliver on their promises. Many of their favored policies won’t be enacted because legislatures won’t approve them or because the populists, on assuming the burden of power, will have to face the real-world consequences of what they propose to do. In the U.S. we’ve already seen Trump back away from major campaign promises on trade, deregulation, and immigration, even before his inauguration.
To the extent the populists’ policies are enacted, they won’t work; that is, they won’t deliver the promised benefits to supporters. Slapping heavy tariffs on imports won’t bring the old heavy manufacturing jobs back to Pennsylvania, Ohio, Michigan, or Wisconsin, as Trump promised. Abandoning the euro won’t make any European nation more prosperous. Prohibiting or severely restricting immigrants won’t bring more and better jobs to a country’s citizens.
We can also be reasonably confident that as failed promises stack up, the revolt of the populists’ supporters will be just as sudden as the populists’ rise was. In a hyper-connected world filled with constantly connected people, prevailing opinion can lurch radically. Italy voted for Renzi as an iconoclastic, anti-establishment savior just two years ago; now voters are fed up with him. In 2012 France swung from center-right President Nicolas Sarkozy to extreme socialist Francois Hollande, who is now so reviled that he will be the first French president since World War II not to run for re-election, and nationalist Marine Le Pen is the country’s fastest rising candidate.
Business leaders should prepare for the possibility that the populist surge may be, by historical standards, a brief phenomenon, burning itself out within maybe a few years. No one can say precisely how that scenario might unfold, and major disruptive events such as war could always rewrite the script. Nonetheless, even now, it isn’t too early for leaders to prepare a scenario plan on what’s past populism.
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What We’re Reading Today
Japan’s PM to visit Pearl Harbor
Shinzo Abe will become the first sitting Japanese leader to visit Pearl Harbor when he travels to Hawaii to meet with President Barack Obama later this month. It follows Obama’s trip to Hiroshima, in May, making Obama the first sitting U.S. president to visit the site of the nuclear bomb attack. Huffington Post
Ben Carson tapped to lead HUD
President-elect Donald Trump said Carson has a “brilliant mind and is passionate about strengthening communities.” The pick comes less than a month after a Carson aide said that the former neurosurgeon wasn’t interested in running an agency, since he doesn’t experience running a government organization. NPR
Apple reveals self-driving car technology in the works
For the first time, Apple publicly confirmed what was long-rumored: It is working on autonomous-vehicle technology. In a letter to transportation regulators, Apple’s director of product integrity Steve Kenner said the company is “investing heavily in machine learning and automation” for transportation purposes, among other things. Based on Kenner’s letter, Apple appears to be focused on designing an autonomous system, rather than building a vehicle. WSJ
U.S. Army Corps. of Engineers deny Dakota Access Pipeline permit
On Sunday, the agency denied a permit that Energy Transfer Partners LP needs, in order to complete a portion of the pipeline that would run under Lake Oahe. It’s a victory for Native American protestors fighting the development of the pipeline. However, President-elect Donald Trump could reverse the decision, and he has previously said he supports the pipeline. Fortune
Building Better Leaders
Accenture America CEO bans memos
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The Best Workplace for Latinos is…
…Miami Children’s Health System. USAA and Marriott International also made the top 10. Fortune
There’s a thin line between pride and arrogance
Your organization has become arrogant when the company loses sight of serving customers and instead focuses on what it can teach outsiders. Harvard Working Knowledge
New World Orders
Italian leader resigns in populist revolt
After Italian voters rejected a constitutional referendum, Prime Minster Matteo Renzi announced his resignation. Right-wing populists celebrated the stinging defeat for the referendum, though it thrusts the country into the political unknown. It could open the door for Beppe Grillo, a former comedian who leads an anti-establishment, anti-Euro party. Fortune
Right wing candidate loses in Austria
The possibility of a far-right candidate becoming president of a European country for the first time since World War II came to a crashing end on Sunday. Alexander Van der Bellen, a former Green Party leader, easily defeated the right wing’s anti-immigrant candidate, Norbert Hofer, forcing a concession less than half an hour of the first exit polls. The Guardian
New Zealand leader steps down
In a surprising decision, John Key resigned as New Zealand’s Prime Minister, a position he has held since 2008. He cited family reasons and his long tenure, noting “ten years at the top [as head of his party] is a long time.” New Zealand’s National Party will hold a special caucus next week to determine a replacement. CNN
Up or Out
CEO David Sacks has resigned from Zenefits. WSJ
Xerox has named William Osbourn, Jr. CFO of Xerox Corp, after it splits into two public companies. BusinessWire
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Recount ordered in Michigan
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Tech billionaires gathered on Sunday…
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VP-elect Mike Pence says Trump will decide…
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Quote of the Day
“There’s just too much speculation, and we are just in “wait-and-see” mode. Certainly, politics has the potential to impact an industry because it impacts the economy. We are very hopeful that President-elect Trump will do what’s necessary to keep the economy humming, and to make sure we have access to the kinds of talent we need as a company to continue to innovate. Education is huge. And yes, there’s talk today about the potential to make repatriation of cash easier [by letting companies bring back cash from overseas at a lower tax rate than currently]. That would be something of interest to us because we have a lot of offshore cash. We could put that money to use if it was easier to bring back in.” — Juniper Networks CEO Rami Rahim discussing how the company is preparing for President-elect Donald Trump’s presidency. Fortune