No matter how bad things get, it turns out they can always get worse. Wall Street is about to foist a new “innovation” on investors that even the ratings agencies won’t touch.
December 05, 2017
He was a rich businessman, an outspoken outsider with a love of conspiracy theories. And he was a populist running for president.
<p>In 1990, when Donald Trump was still beyond the furthest outskirts of American politics, Stanislaw Tyminski was trying to become the new president of post-communist Poland. He shared something else with the future Trump: nobody in the political elite took Tyminski seriously.</p><p>That was a mistake. He was the standard-bearer for a virulent right-wing populism that would one day take power in Poland and control the politics of the region. He would be the first in a long line of underestimated buffoons of the post-Cold War era who started us on a devolutionary path leading to Donald Trump. Tyminski’s major error: his political backwardness was a little ahead of its time.</p><p>In true Trumpian fashion, Stan Tyminski couldn’t have been a more unlikely politician. As a <a href="http://www.nytimes.com/1990/12/02/world/evolution-in-europe-tyminski-in-peru-spiritual-awareness-then-cable-tv.html" target="_blank">successful businessman</a> in Canada, he had made millions. He proved luckless, however, in Canadian politics. His Libertarian Party never got more than 1% of the vote.</p><p>In 1990, he decided to return to his native Poland, then preparing for its first free presidential election since the 1920s. A relatively open parliamentary election in 1989, as the Warsaw Pact was beginning to unravel, had produced a solid victory for candidates backed by the independent trade union, Solidarity. Those former dissidents-turned-politicians had been governing for a year, with Solidarity intellectual and pioneering newspaper editor Tadeusz Mazowiecki as prime minister but former Communist general Wojciech Jaruzelski holding the presidency. Now, the general was finally stepping aside.</p><p>Running in addition to Mazowiecki was<strong> </strong>former trade union leader Lech Walesa, who had done more than any other Pole to take down the Communist government (and received a Nobel Prize for his efforts). Compared to such political giants, Tyminski was an unknown.</p><p>All three made promises. Walesa <a href="http://www.nytimes.com/1990/11/24/world/a-rough-campaign-closes-in-poland.html" target="_blank">announced</a> that he would provide every Pole with $10,000 to invest in new capitalist enterprises. Mazowiecki swore he’d get the Rolling Stones to perform in Poland. Tyminski had the strangest pitch of all. He carried around a black briefcase inside which, he claimed, was secret information that would blow Polish politics to smithereens.</p><p>Tyminski managed to get a toehold in national politics because, by November 1990, many Poles were already fed up with the status quo Solidarity had ushered in. They’d suffered the early consequences of the “shock therapy” economic reforms that would soon be introduced across much of Eastern Europe and, after 1991, Russia. Although the Polish economy had finally stabilized, unemployment had, by the end of 1990, <a href="https://www.eurofound.europa.eu/observatories/eurwork/articles/the-dynamics-of-unemployment-from-1990-to-2002" target="_blank">shot up</a> from next to nothing to 6.5% and the country’s national income had fallen by <a href="http://ivanstat.com/en/gni/pl.html" target="_blank">more than 11%</a>. Though some were doing well in the new business-friendly environment, the general standard of living had plummeted as part of Poland’s price for entering the global economy. The burden of that had fallen disproportionately on workers in sunset industries, small farmers, and pensioners.</p><p>Mazowiecki, the face of this new political order, would, like Hillary Clinton many years later, go down to ignominious defeat, while Tyminski surprised everyone by making it into the second round of voting. Garnering support from areas hard hit by the dislocations of economic reform, he squared off against the plainspoken, splenetic Walesa.</p><p>Tyminski did everything he could to paint his opponent as the consummate insider, a collaborator with the Communist secret police in his youth. "I have a lot of material and I have it here… and some of it is very serious and of a personal nature," Tyminski told Walesa in a debate on national television, holding that briefcase of his close at hand. Walesa retaliated by <a href="https://www.washingtonpost.com/archive/politics/1990/12/02/walesas-rival-threatens-disclosures/8395e6ec-e819-46db-b920-78241c8fc1a2/" target="_blank">accusing</a> him of being a front man for the former communist secret police. Tyminski was forced to admit that his staff did include ex-secret policemen, but he never actually opened that briefcase. Walesa was resoundingly swept into the presidency by an electoral margin of three to one.</p><p>Stan Tyminski eventually took his wild conspiracy theories and populist pretensions back to Canada, a political has-been. And yet he was prescient in so many ways (including those charges against Walesa, who <a href="https://www.nytimes.com/2017/01/31/world/europe/poland-lech-walesa-communist-report.html?_r=0" target="_blank">probably did collaborate</a> briefly with the secret police). The liberal reforms that Eastern Europe implemented after the transformations of 1989 were supposed to be a one-way journey into a future as prosperous and boring as Scandinavia’s. Tyminski, on the other hand, had conjured up a very different, far grimmer future -- unpredictable, angry, intolerant, paranoid -- the very one that seems to have become our present.</p><p>Tyminski’s “children” now govern nearly every country in Eastern Europe, and the United States, too, is in the grip of a Tyminski-like leader. Perhaps these illiberal leaders have reached the peak of their influence -- or have they? The opposite scenario is too dismal to contemplate: that the political climate has irreversibly changed and liberalism has irrevocably weakened in the U.S., in Eastern Europe, everywhere.</p><p><strong>All (or at Least a Few) Aboard</strong></p><p>Imagine the history of Eastern Europe after 1989 as a train leaving a decrepit station where tasty snacks and interesting reading material aren’t available, the public address system issues garbled announcements, the bathrooms are out of order, and the help desk unstaffed. As the final boarding chimes echo through the station, the passengers pile onto the train. A lucky few are in a first-class car with access to a surprisingly good cafe and plush sleeping compartments, a somewhat larger group in the reserved second-class seats, and everyone else crowded into totally rundown cars with appalling seats. The ultimate destination all of them have been told is a lovely terminal with well-provisioned stores, clean public restrooms, and a responsive administrative system in a city and country equally well run.</p><p>Think of this as the train of “transition.” Everyone on it seems convinced that they’re en route to a stunning market democracy in a post-Cold War world where political differences and ideological struggles have lost their relevance, where as American political theorist Francis Fukuyama famously put it in 1989, the “end of history” is in sight. "Today,” Fukuyama <a href="https://books.google.com/books?id=4HQjTGWNfhwC&pg=PA46&dq=we+have+trouble+imagining+a+world+that+is+radically+better+than+our+own&hl=en&sa=X&ved=0ahUKEwiZzpf019DXAhVSYt8KHfqQAX8Q6AEINDAC#v=onepage&q=we%20have%20trouble%20imagining%20a%20world%20that%20is%20radically%20better%20than%20our%20own&f=false" target="_blank">wrote</a> a couple of years later, “we have trouble imagining a world that is radically better than our own, or a future that is not essentially democratic and capitalist." Pragmatic decisions are all that’s left, and they’re to be chewed over by policymakers and implemented by bureaucrats.</p><p>If Eastern Europeans knew what they’d left behind and were fervent about where they were heading, they had little idea about the nature of the journey they were undertaking. German political scientist Ralf Dahrendorf <a href="https://books.google.com/books?id=gcs3DwAAQBAJ&printsec=frontcover&dq=Reflections+on+the+Revolution+in+Europe&hl=en&sa=X&ved=0ahUKEwjKl_vg19DXAhUDT98KHYQpAlUQ6AEIOjAD#v=onepage&q=Reflections%20on%20the%20Revolution%20in%20Europe&f=false" target="_blank">tried to provide</a> a few time stamps for such a transition: six months to create parties and political institutions, six years to establish the basis for a market economy, and 60 years to build a proper civil society. Except for some cranky members of the extreme right and a few Stalinist leftovers, everyone in the region seemed to back this liberal project, seeing it as a ticket into the larger European community.</p><p>For the first few years, the train of transition rolled along. There was grumbling in the back cars, but everyone was still on board with the overall plan to reach Western Europe or bust.</p><p>As it happened, the first-class passengers were easily transported to the heart of the sunny West. The second-class passengers barely made it across the border. And<strong> </strong>the rest didn’t get far beyond that original, disheveled station. </p><p><strong>Mind the Gap</strong></p><p>When I first traveled across Eastern Europe in 1990, the very year of the Polish presidential election, many of the people I interviewed expected to be living like Viennese or Londoners within five years, a decade at the most. If this was a delusion, it was one partially fueled by the outside advisers who flooded the region in 1990. Planners from the U.S. Agency for International Development, for example, put a <a href="https://books.google.com/books?id=kGNpBgAAQBAJ&pg=PA22&dq=%22would+take+just+five+years%22&hl=en&sa=X&ved=0ahUKEwj585CU2NDXAhUhSN8KHafBAPYQ6AEILjAB#v=onepage&q=%22would%20take%20just%20five%20years%22&f=false" target="_blank">five-year window</a> on their assistance package.</p><p>And for some, the transition did last only a few years because cities like Warsaw in Poland quickly became high-priced locations for international corporate offices and NGOs. So the capital cities of Eastern Europe made the trip west, while smaller cities and towns and, above all, the countryside remained mired in the past. This urban-rural gap mirrored the one that still persists between Western Europe and Eastern Europe. In 1991, <a href="http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?page=4" target="_blank">according to</a> the World Bank’s figures, Hungary’s per capita gross domestic product was $3,333, Austria’s $22,356. By 2016, Hungary’s had risen to $27,481, while Austria’s stood at $48,004. In other words, though the gap had been narrowed considerably, as with other Eastern European countries -- Poland ($27,764), Romania ($22,347), Bulgaria ($20,326) -- it had at best been <a href="https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_(PPP)_per_capita" target="_blank">cut in half</a>.</p><p>“In 1965, West Germany was already the wealthiest and most productive country in Europe,” Adam Jagusiak, a former peace activist and Polish Foreign Ministry employee, <a href="http://www.johnfeffer.com/the-persistent-gap/" target="_blank">told me</a> in an interview in 2013. “It took them only 20 years. They produced more than France and Britain. They had their <em>Wirtschaftswunder</em>, their economic miracle. What’s most disappointing for most people, not just me, is that after 23 years we cannot close the gap… Poland would have to grow 10 percent annually to close the gap. That’s a neck-breaking pace, like Japan in the 1950s and 1960s or like South Korea in the 1970s. We grow maybe two or three percent.”</p><p>The liberal project succeeded in ushering virtually all of Eastern Europe into the European Union. But in the end, because of the persistent gap between expectations and reality, voters began to look around for something different.</p><p><strong>Opportunism Knocks</strong></p><p>Stan Tyminski ran for president before unemployment in Poland <a href="https://www.indexmundi.com/poland/unemployment_rate.html" target="_blank">soared</a> from 6.5% in 1990 to 20% by 2002. In Hungary, Viktor OrbÃ¡n had far better timing.</p><p>OrbÃ¡n was a young lawyer in Budapest in 1988 when he helped found a liberal party that you had to be under 35 to join. Fidesz, the Alliance of Young Democrats, won a commendable 21 seats in the 1990 elections, good enough for a sixth-place showing. Four years later, that country’s former Communist Party (renamed the Socialists) came out on top, while Fidesz dropped a couple spots. What disappointed OrbÃ¡n far more, however, was the way the Alliance of Free Democrats -- the “adult” version of Fidesz -- opted to form a coalition government with the Socialists.</p><p>That was the moment when, having second thoughts about liberalism as a vehicle for his own personal ambitions, he began to transform both Fidesz, which dropped its under-35 requirement, and himself. When economic “reform” shocked Hungary as it had Poland, OrbÃ¡n recast himself as an increasingly illiberal Hungarian nationalist and his once-liberal party became a pillar of the new right. In 2010, he became prime minister for the second time, a position he’s held for the last seven years.</p><p>In a remarkable number of ways OrbÃ¡n anticipated Donald Trump. He reversed his country’s longstanding mistrust of Russia by <a href="https://newrepublic.com/article/132778/vladimir-putins-little-helper" target="_blank">openly courting</a> its president, Vladimir Putin, and <a href="https://budapestbeacon.com/full-text-of-viktor-orbans-speech-at-baile-tusnad-tusnadfurdo-of-26-july-2014/" target="_blank">pledging</a> to transform Hungarian politics along the lines of that country’s “illiberal state.” He railed against <a href="http://fpif.org/stop-the-presses/" target="_blank">mainstream journalism</a>, attempted to bend <a href="https://budapestbeacon.com/fidesz-politicians-continue-target-judges/" target="_blank">the judiciary</a> (and <a href="https://budapestbeacon.com/hungarys-post-communist-constitution-turns-five-years-old/" target="_blank">the constitution</a>) to his will, and rigged the <a href="http://www.johnfeffer.com/hungarys-u-turn/" target="_blank">state apparatus</a> to benefit his supporters. In perhaps his most ominous twist, OrbÃ¡n courted the Hungarian version of the alt-right with relentless <a href="https://www.theguardian.com/world/2016/jul/26/hungarian-prime-minister-viktor-orban-praises-donald-trump" target="_blank">anti-immigrant</a> statements and the occasional <a href="https://www.ft.com/content/9c16b174-62e5-11e7-91a7-502f7ee26895" target="_blank">anti-Semitic</a> gesture.</p><p>The Polish right wing was so enamored of OrbÃ¡n’s success that, in 2011, former Prime Minister Jaroslaw Kaczynski <a href="https://www.ft.com/content/0a3c7d44-b48e-11e5-8358-9a82b43f6b2f" target="_blank">announced</a> that “the day will come when we will succeed and we will have Budapest in Warsaw.” Four years later, his Law and Justice Party took power on a mixed platform of populism and conspiracy theories reminiscent of Stan Tyminski’s.</p><p>Now, Donald Trump is constructing Budapest in Washington D.C., as he unwittingly follows Tyminski’s and OrbÃ¡n’s trajectory. The reality TV star cultivated his status as an extreme outsider. During the Obama era, he identified a political opportunity on the right and, in September 2009, <a href="http://www.thesmokinggun.com/documents/celebrity/trump-a-republican-for-now-908431" target="_blank">switched</a> from the Democratic to the Republican Party. Seven years later, having combined outlandish conspiracy theories (think: birtherism) with an astute critique of liberal elites, he squeaked into power. He surely owes something to native (and nativist) traditions from Huey Long to Ross Perot, but he shares so much more with his compatriots<strong> </strong>across the Atlantic.</p><p>That transatlantic commonality begins with his canny exploitation of the gap between expectation and reality. The United States, like Eastern Europe, was going through its own “economic transition” in the 1990s. Millions of Americans expected the new economy -- the global economy, the digital economy, the service economy, the sharing economy -- to produce new jobs, better<em> </em>jobs. And it did generate enormous wealth, but mostly, as in Eastern Europe, for a narrow, highly urbanized slice of the population. Income inequality has increased so dramatically that the American world now <a href="http://inequality.stanford.edu/publications/20-facts-about-us-inequality-everyone-should-know" target="_blank">resembles</a> the nineteenth-century Gilded Age.</p><p>In the eras of Presidents Franklin Delano Roosevelt and Lyndon Johnson, the liberal project meant government intervention in the economy on behalf of working Americans and the disadvantaged. By the time Bill Clinton took the White House in 1993, the focus of the “new” Democrats was already shifting to global <a href="https://www.bloomberg.com/view/articles/2016-08-25/bill-clinton-stopped-at-nothing-in-fight-for-nafta" target="_blank">free-trade deals</a> that would only accelerate the country’s loss of manufacturing jobs and a harsh vision of social spending represented most starkly by Clinton’s grim version of <a href="https://www.washingtonpost.com/opinions/time-to-revisit-bill-clintons-welfare-reform/2016/05/28/fe9ce506-2426-11e6-9e7f-57890b612299_story.html?utm_term=.5f2f333b2c27" target="_blank">welfare reform</a>. Meanwhile, the increasing coziness of the “new” Democratic Party and Wall Street would <a href="https://www.theguardian.com/world/2014/apr/19/wall-street-deregulation-clinton-advisers-obama" target="_blank">lead to</a> significant financial deregulation that, in turn, would produce an economic meltdown in 2007-2008.</p><p>Although Barack Obama would prove progressive on some issues, he would also embrace Clintonesque positions on trade, social welfare, and Wall Street. As in Eastern Europe, such a liberal project would leave many people behind. So no one should have been surprised that these disappointed voters would eventually seek their revenge at the polls, as traditional Democrats in working-class neighborhoods began to vote Republican.</p><p>Aided by “dark money” and his dark mutterings about migrants, Mexicans, and Muslims, Trump rode a wave of Eastern European-style disenchantment to the Oval Office. Now, he’s taking his revenge not just against the neoliberalism of the Clinton and Obama years, but the entire twentieth-century liberal understanding of the state.</p><p>Conservative anti-tax advocate Grover Norquist <a href="http://www.cnn.com/2012/11/26/opinion/avlon-grover-norquist/index.html" target="_blank">once remarked</a> that his dream was not “to abolish government” but “to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." The question today in both Eastern Europe and the U.S. is: Have Trump, OrbÃ¡n, and others shrunk liberalism to such a degree that they can now drown it in that bathtub?<strong> </strong></p><p><strong>The Future of Liberalism</strong></p><p>Those wielding political metaphors love the idea of oscillation. You know, the pendulum swinging back and forth, the tide ebbing and flowing, voters opting for one political flavor and then, surfeited, returning to what they once rejected.</p><p>So far, voters in Eastern Europe haven’t shown any signs of wanting to return to the liberal politics that had delivered their countries to the promised land of European Union (EU) membership. In Hungary, Fidesz continues to <a href="https://bbj.hu/analysis/one-third-of-all-voters-undecided-in-party-preference_137748" target="_blank">lead the polls</a> as the 2018 elections approach. The right-wing Law and Justice Party in Poland has only <a href="https://www.foreignaffairs.com/articles/central-europe/2017-11-03/why-polands-law-and-justice-party-remains-so-popular" target="_blank">increased</a> its popularity since it captured the state in elections two years ago.</p><p>Indeed, the rest of the region is following their lead.<strong> </strong>In October, the party of billionaire right-wing businessman Andrej BabiÅ¡ captured the most votes in the Czech elections.<em> </em>Boyko Borisov, a populist with an authoritarian bent, has returned to power in Bulgaria, while nationalists are back in charge in Croatia. The <a href="https://www.politico.eu/article/slovakia-fico-migrants-refugees-asylum-crisis-smer-election/" target="_blank">anti-immigrant and anti-Muslim</a> leader of Slovakia, Robert Fico, has been prime minister for nine of the last 11 years. (Though governing from the social-democratic left, Fico has exhibited distinctly <a href="http://salon.eu.sk/en/archiv/969" target="_blank">authoritarian tendencies</a>.) These leaders have different political philosophies and operate in different cultural contexts, but they all share one thing: an aversion to the liberal project.</p><p>Further out on the fringes, the Eastern European alt-right flourishes. This year, neo-Nazis <a href="http://www.balkaninsight.com/en/article/us-condemns-zagreb-neo-nazi-march-for-trump-02-27-2017" target="_blank">flew</a> the American flag in a February march in Croatia’s capital Zagreb to celebrate Donald Trump; 60,000 far-right nationalists <a href="https://www.theguardian.com/world/2017/nov/12/white-europe-60000-nationalists-march-on-polands-independence-day" target="_blank">gathered</a> for Poland’s annual independence day in November; and Hungary has become a <a href="https://www.theatlantic.com/international/archive/2017/05/how-hungary-became-a-haven-for-the-alt-right/527178/" target="_blank">virtual mecca</a> for extremists. As right-wing authoritarians gain mainstream appeal, those further to the right are courting greater visibility.</p><p>In Europe, there is still a counterweight to this rejection of the liberal project: the European Union. It has, for instance, strongly <a href="https://www.ft.com/content/b1bd2424-6ed7-11e7-93ff-99f383b09ff9" target="_blank">censured</a> the Polish and Hungarian governments for their illiberal policies, and it still carries real weight. Unless the EU manages to transform its economic policies in a way that stops favoring rich countries and wealthy individuals, however, it’s likely to prove incapable of stemming the tide of reaction. New French President Emmanuel Macron has <a href="http://www.euronews.com/2017/09/26/watch-live-french-president-emmanuel-macron-set-to-outline-his-eu-reform-plans" target="_blank">offered</a> some interesting proposals -- from an EU-wide <a href="https://www.euractiv.com/section/future-eu/news/macron-relaunches-financial-transaction-tax-project-including-the-uk/" target="_blank">financial transactions tax</a> to the <a href="https://www.politico.eu/article/europe-digital-tax-google-tallinn-france-italy-amazon-facebook/" target="_blank">taxation of digital companies</a> -- that might temper some of the galloping greed. But such EU reforms won’t boost the fortunes of liberalism in Eastern Europe unless that organization begins to address the persistent divide between the two parts of the continent and (as in the United States) between thriving metropolitan centers and those left behind in more rural areas.</p><p>In America, Donald Trump remains a deeply unpopular president. Widespread political resistance to his administration and the Republican Congress has already claimed some <a href="https://www.nytimes.com/2017/11/07/us/politics/gillespie-northam-trump-virginia-governor-election.html" target="_blank">early victories</a>. But thanks to the Supreme Court’s <em>Citizens United</em> decision in 2010, rich, right-wing, anti-liberal individuals and foundations have had an <a href="https://www.amazon.com/Dark-Money-History-Billionaires-Radical/dp/0385535597" target="_blank">outsized impact</a> on politics. Buoyed by the support of the Koch brothers and others, the Trump administration will do everything possible over the next three years to bankrupt the economy through tax “reform,” pack the courts with anti-liberal judges, shed federal personnel, gut federal regulations, and otherwise ensure that the government it hands to its successor will be as close to drowned as possible.</p><p>When it comes to this version of “populism,” Eastern Europe led the way. The question now is: Will it again? If anti-Trump forces here don’t address persistent voter disgust with the status quo, the Eastern European example offers a grim glimpse of a possible American future as right-wing libertarians, intolerant nationalists, and alt-right extremists secure their lock on the policy apparatus.</p><p>Waiting for the “inevitable” pendulum swing of politics is like waiting for Godot. The political scene will not regain equilibrium by itself. In Eastern Europe, as in the United States, the opposition has to jettison those elements of the liberal project that have proven self-defeating -- the economics of inequality and the politics of collusion with the powerful -- and offer a genuine antidote to right-wing populists. If not, you might as well slap a do-not-resuscitate order on liberalism, kiss social welfare goodbye, and brace yourself for a very mean season ahead.</p>
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