6總結經驗，展望未來

 6 總結經驗，展望未來（Chapter Six: Taking Stock and Looking Forward）

以下為本章的主要結構與重點提煉（本章為全書總結，檢討過去30多年西方領導人的關鍵失誤，並對未來提出警示）：

一、2024–2025年全球選舉浪潮

• 2024年全球超過70國舉行大選，半數世界人口參與投票。
• 多數執政黨慘敗或失去多數席位，需組成聯合政府。
• 例外：墨西哥因經濟成長、薪資上漲、福利投資而維持執政優勢。
• 右翼民粹主義政黨大幅崛起（德國AfD、法國國民聯盟、義大利Meloni、葡萄牙Chega、奧地利FPÖ、日本Sanseitō等）。
• 美國川普2024年勝選並贏得普選票；英國改革黨（Reform）雖席次少但嚴重分割保守黨選票。

二、與1930年代的歷史對比

• 當前局勢與1930年代高度相似：經濟動盪、通脹、債務危機、反全球化浪潮。
• 民粹主義崛起、身份政治、排外民族主義盛行。
• 議會碎片化、極右派快速成長，令人擔憂民主倒退。
• 警告：若處理不當，可能重蹈1930年代貿易戰與極端主義覆轍。

三、悲劇性的選擇（Tragic Choices）

• 當前局面並非必然，而是多位領導人一系列可避免的錯誤決策所致。
• 冷戰結束後本有建立新國際秩序的歷史機會，卻被錯失。

四、關鍵失誤回顧

• 老布希與柯林頓時代：未對俄羅斯提供足夠經濟援助；北約東擴（尤其是柯林頓時期）摧毀與俄羅斯建立新安全架構的可能。
• 小布希時代：伊拉克戰爭、單邊主義，嚴重損害美國信譽與國際秩序。
• 歐巴馬、薩科齊、卡麥隆：利比亞干預超越聯合國授權，導致失敗國家，徹底破壞「保護的責任」（R2P）與規則基礎國際秩序。
• 結果：美國深陷中東、無法有效「重返亞太」、冷戰死灰復燃。

五、新自由主義與中左派的三角化策略

• 中左派政黨長期擁抱新自由主義，忽略勞工階級，導致選民流失。
• 主流政黨低估民粹主義崛起的原因，未能提出替代方案。

六、拜登過渡期與未來展望

• 拜登被描述為意外總統，受疫情影響上台，但未能根本扭轉趨勢。
• 西方精英未能理解自身合法性危機。

結論：美國與西方需深刻反省，否則民粹主義、極化與大國對抗將持續惡化。

整體核心論點：

冷戰結束後，西方（尤其是美國）本有機會建立更穩定的後冷戰秩序，但因北約東擴、中東戰爭、利比亞干預、新自由主義政策等一系列錯誤選擇，導致國際秩序崩壞、國內民粹反撲。目前局面與1930年代有驚人相似之處，未來充滿不確定性，亟需從歷史中汲取教訓。

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Chapter Six

Taking Stock and Looking Forward

The year 2024 was a bumper one for democratic elections. Half the world’s population spread over more than seventy countries went to the polls, sweeping away incumbent governments almost everywhere. Even when they survived, as in Japan, India, and South Africa, governing parties lost their majorities, forcing them into coalitions. The exception was Mexico, where the ruling Morena party gained votes and seats, but did so in an unusual context where rising real wages, robust economic growth, and significant investments in the welfare state over the previous five years shielded the government from the voter rage that was visited upon ruling parties elsewhere.1 In country after country, voters—stung by inflation and angry about immigration—rebelled. The insurgent Chega’s furious declaration that Portuguese voters had had “Enough!” reverberated across the democratic world. In February 2025 German voters continued the trend, delivering devastating losses to the governing Greens, Free Democrats, and Social Democrats. In July, Japan’s governing Liberal Democrats followed up the previous year’s lower-house losses with their worst-ever performance in the upper House of Councilors.

The anti-incumbent fervor partly obscured the more consequential story of these elections: that right-wing populists made huge gains almost everywhere. Japan’s ultra-right-wing Sanseitō, which previously had held a single seat in the upper house, won over 15 percent of the vote and fifteen seats. Germany’s AfD doubled its vote over the previous election to become the second-biggest party in the Bundestag. Austria’s FPÖ had placed first in its elections six months earlier with 28.8 percent of the vote. It was kept out of office only by an improbable three-party coalition stitched together after months of tortured negotiations among Christian Democrats, Social Democrats, and the “liberal” but fiscally conservative NEOS. Poland’s Law and Justice party had lost power following a no-confidence vote the previous December, but it remained the country’s largest party in the April elections. Portugal’s Chega more than doubled its vote, quadrupling its seats in the legislature. In France, Marine Le Pen’s National Rally and its allies won more than a third of the vote and a quarter of the seats in the National Assembly. Giorgia Meloni and her Brothers of Italy–led coalition quadrupled their vote and tripled their seats in the European elections, having taken power with an absolute majority in Italy’s national elections two years before. This performance reflected the overall trend of dramatic far-right gains in the 2024 European elections.

In the US, Donald Trump grew his vote by more than three million over 2020 and fourteen million over 2016, becoming the first Republican in two decades to win the popular vote. Republicans kept the House of Representatives and won control of the Senate, despite having doubled down on hard-right policies since 2020 and in the face of the Biden administration’s major investments in the workforce and infrastructure, as well as robust economic growth that normally protects incumbents. Even in Britain, Keir Starmer’s historic landslide was made possible only by Reform’s savaging of the Tory vote in scores of constituencies, handing the Conservative Party its largest decline in history. If Britain had a proportional representation system, Reform’s 14 percent of the vote would have yielded more than ninety seats instead of five—which was in any case a record. The populist surge that had seemed aberrational to so many commentators when it first erupted with Brexit and Trump’s election eight years earlier appeared now to be baked into the landscape of democratic politics. Traditional center-left parties continued imploding, and center-right parties scrambled toward the far right in vain efforts to staunch the bleeding.

The world had come a long way since the jubilation of 1989. In place of cheery prognostications about a liberal-democratic end of history, ominous comparisons to the 1930s abounded. That decade, too, had been an era of major economic dislocation and widespread insecurity, when countries that were drowning in debt were devastated first by inflation and then by deflation as they crashed off the gold standard in the wake of the Great Depression. Instead of returning to the golden era of globalization that had prevailed from the 1870s to 1914, the post–World War I era descended into destructive trade wars, ushered in by unilateral American tariffs during Warren Harding’s administration and accelerated by the Smoot-Hawley Tariff Act under Herbert Hoover. By the mid-2020s, a comparable dynamic was a looming possibility.

Today’s fragmenting parliaments also seem like an eerie replay of the 1930s, when socialists, social democrats, and communists squabbled with centrist parties and with one another over how to confront the emerging fascist threat. Then, as now, it was an era of virulent identity politics, tolerated and all too easily normalized by conservatives and business elites because it served up convenient scapegoats to blame for the economic malaise afflicting vulnerable voters who might otherwise make demands on them. The identity politics of the 1930s revolved around demonizing Jews and other ethnic minorities more than immigrants, but the effect was similar: to mobilize support for blood-and-soil nationalism by attacking outsiders. It helped the Nazis, who had won just 2.6 percent of the vote in 1928, become the second-largest party in the Reichstag in 1930 and then the largest one in the two elections held in 1932—a status they retained until they seized power the following year. Mussolini had by then been in power in Italy for more than a decade. Franco would follow in Spain three years later. Even in Britain, where the electoral system kept third parties out of Parliament, Oswald Mosley’s British Union of Fascists signed up fifty thousand members by 1934. The pace at which far-right parties were growing in the mid-2020s made it hard to discount the comparison as fanciful.2

Tragic Choices

Whether a dynamic that rhymed with the 1930s would continue unfolding into its centenary remained to be seen. That this was a distinct possibility was the result of disastrous choices made by multiple leaders detailed in the preceding chapters of this book. They weren’t tragic choices in the sense invoked by Mary Sarotte in connection with NATO enlargement, where an agent faces conflicting imperatives that cannot be satisfied simultaneously, or in the sense sometimes invoked by moral philosophers to mean that all available options are bad. On the contrary, our circumstances are tragic in that we didn’t have to be here. Choices were made that could have been made differently. We can’t know for sure where they would have led, but it’s reasonable to believe they could have opened up better possible futures. There was unusual scope for agency because the institutions, ideologies, and constellations of interests that had constrained political leaders so tightly in the last years of the Cold War suddenly loosened up. Nor is this a retrospective judgment. People whom the decision-makers had good reason to regard as credible made powerful cases for choosing different and better directions.

Some of these missed opportunities arose as soon as the Soviet Union collapsed. The most consequential one for the global order revolved around NATO enlargement. Instead of building on the disciplined, farsighted decisions he made when Iraq invaded Kuwait in 1990, George H. W. Bush created much rougher sledding than necessary for his New World Order by refusing to make major economic investments in the new Russia. Such investment might have helped it become a thriving, diversified trading partner in the post–Cold War era as it attempted the unprecedented transition from a collapsing, sclerotic communist system to market-based capitalism. Bill Clinton followed Bush’s lead, effectively ensuring that post-Soviet Russia would be an economic basket case throughout the 1990s. This strengthened the hands of Russian reactionaries, who undermined economic reform and threw Boris Yeltsin into the arms of the corrupt oligarchs as his only economic lifeline to beat back resurgent communists in the mid-1990s. Clinton compounded his error by scuttling the Partnership for Peace and adding Poland, Hungary, and the Czech Republic to NATO, even after his electoral constraint had become moot following his reelection in 1996, and in defiance of powerful arguments made by Brent Scowcroft, Sam Nunn, George Kennan, Bill Perry, and others that he was missing a historic opportunity. The net effect was to scuttle the possibility of a major redesign of the East/West security infrastructure that Yeltsin, François Mitterrand of France, Hans-Dietrich Genscher of Germany, and others had been pressing for since 1990, and to revert instead to an antagonistic relationship with Moscow.

A revival of the Cold War was not yet inevitable, but George W. Bush and European leaders missed the chance for a reset in the early years after Putin came to power in Russia. They rebuffed his repeated overtures to join NATO and develop close ties with the European Union at a time when he was not objecting to NATO enlargement or European integration for others in the former Soviet bloc, including Ukraine, and when he was going the extra mile to be helpful to the US in Afghanistan. Previous declarations by German, British, and Italian leaders about the overriding importance of integrating Russia into Europe’s economy and security arrangements were forgotten or brushed aside, even though Russia was obviously getting back on its feet and would soon become more assertive internationally. Bush’s backing of a slew of new NATO members in 2004 was a thinly disguised quid pro quo for their joining his Coalition of the Willing to invade Iraq the previous year, and it destroyed the last vestiges of Russian goodwill toward the US.

The decline in US-Russian relations became all but irreversible at Munich in 2007, when Bush thumbed his nose at Putin’s warnings about American unilateralism. The following April, in both Bucharest and Kiev, Bush publicly endorsed NATO membership for Georgia and Ukraine, making it undeniable that the alliance Russia could never join would expand deeper into former USSR territory. Putin went into Georgia four months later. He abandoned his aspiration to expand Russia’s economic ties with Europe and began developing plans for a Eurasian economic and political bloc instead. Putin might have become an aggressive nationalist anyway as his economy got into trouble after 2010, but it is hard to see how any Russian leader would not have gone down this path after 2008—as Richard Nixon had so presciently predicted sixteen years earlier when urging major economic, political, and diplomatic engagement with the new Russia.

If the first strike against the elder Bush’s New World Order was NATO’s unilateral bombing of Kosovo in 1999, and the second was the Iraq invasion in 2003, the third was the decision by Barack Obama, Nicolas Sarkozy of France, and David Cameron of Britain to flout international law by destroying Gaddafi’s regime in October 2011 in open defiance of UN’s SC 1973, which had authorized NATO’s limited intervention seven months earlier. The action in Libya ushered in a failed state with competing capitals and a civil war that remained unresolved into the mid-2020s, and it compounded the regional devastation that had begun with the US-led invasion of Iraq in 2003. It also obliterated the last remnants of any notion that NATO might evolve into a disinterested backbone for a new rules-based international order, leaving in tatters the hard-won doctrine that governments have an enforceable responsibility to protect the populations in their countries. As a naked defender of Western interests, NATO would endure only so long as its members regarded their interests as aligned. Once that assumption started becoming unstuck after 2016, and especially after 2024, its days as a viable alliance were likely numbered as well.

Apart from the economic and human costs of the failed wars in Afghanistan and Iraq and the ongoing civil war in Libya, with its regional fallout across North Africa and the Middle East, the price in lost prestige paid by the US would be hard to exaggerate. The defeats in Iraq and Afghanistan amounted to the largest display of American weakness on the world stage since Marine helicopters had evacuated the last seven thousand desperate Americans from Saigon when it was about to be overrun by North Vietnamese forces in April 1975. It was a long way to fall. The US had squandered huge amounts of military, diplomatic, and moral capital and backed itself into a renewed Cold War that might well have been avoided. Beyond this, it had trapped itself into spending much of the new century mired in the Middle East, with the result that Barack Obama’s much-trumpeted pivot to Asia turned out to be little more than a slogan. The pace of Chinese development had indeed become staggering. Its new assertiveness across East Asia and through its Belt and Road Initiative into the developing world marked it as America’s emerging geopolitical and economic rival. Yet the US had backed itself into a pointless replay of the Cold War as it staggered from Middle East crisis to Middle East crisis with no end in sight.

There was one benefit gained from the quixotic American catastrophes of the first two decades of the twenty-first century. They finished off the neoconservative fantasy that pro-American democracies could be installed by toppling regimes willy-nilly without regard for their viability, American voters’ willingness to sustain them, or whether they would ultimately be friendly to the US. Important as this victory is, it is hardly a cause for celebration, because the reaction it has fostered—disengaged if muscular America Firstism—is no less damaging. Any notion that the US might deploy its economic, military, and diplomatic heft to stop bullies without itself becoming one was obviously risible in light of the second Trump administration’s early actions toward Panama, Greenland, and Canada.

Lurching from neoconservatism to America Firstism, as the Republican Party has done, will be costly and damaging, but the Democrats, who reflexively bemoan Trump’s brand of unilateralism, have either forgotten or failed to grasp the implications of their own complicity in closing off paths to a better future. It was Bill Clinton who made the decisive early moves to grow NATO, forestalling the possibility of an alternative post–Cold War international security order. Obama and Biden followed his lead with the backing of both center-left and center-right parties in Europe, most of which saw tactical benefits in humoring—or at least acquiescing in—American military adventures, as this allowed them to continue outsourcing the costs of their own defense. It was only a matter of time until someone like Trump would see the domestic political mileage that could be gained from attacking this arrangement.

As this system crumbled in the mid-2020s, forcing the Europeans to ramp up investment in their own security, Democrats wrung their hands about the disappearance of a rules-based international order that they had been as active as Republicans in undermining. All the way back to the Global War on Terror, when they attacked the George W. Bush administration for tactical incompetence without offering any alternative to the Bush Doctrine, they have followed their triangulating instincts to present themselves as more competent managers of the conventional wisdom, as Bush had redefined it, than proponents of an alternative.3 Barack Obama opposed the Iraq invasion, which 40 percent of House Democrats and 58 percent of Senate Democrats voted to authorize. But by backing intervention in Libya—alongside the French, the British, and unilateralists in his own administration—he joined the club of Democrats who lacked the restraint George H. W. Bush had modeled in 1991, rendering any hope of embedding a rules-based international order little more than a distant memory. Continuing to blame everything on Trump, as Democratic leaders repeatedly did, revealed a troubling degree of denial or amnesia that did not bode well for the future. Having destroyed the fledgling post–Cold War order without pursuing or even articulating an alternative, they were left with nothing. In politics, you can’t beat something with nothing.

America’s tragic choices in domestic politics also sprang from a myopia about the conventional wisdom emanating from Washington, DC. Neoliberal economics dates to the 1930s, when Friedrich Hayek and others began challenging John Maynard Keynes’s emerging framework for managing capitalist economies. For decades, their ideas remained on the fringes, confined to institutions like the Mont Pèlerin Society and a few universities—notably James Buchanan’s Jefferson Center at the University of Virginia (subsequently reconstituted at Virginia Tech) and George Mason. Their political influence started growing in the 1970s at think tanks like the Heritage Foundation and the Cato Institute as Keynesian policies were declared to be impotent in the face of stagflation. But it was Margaret Thatcher and Ronald Reagan who gave supply-side neoliberals direct access to the corridors of power.

Neoliberal economic ideas would have faced a tougher fight to displace Keynesian thinking as the new conventional wisdom had it not been for the triangulating embrace of center-left parties. The neoliberals were pushing against an open door. Jimmy Carter’s administration in the US and Prime Minister James Callaghan’s government in the UK began embracing austerity as the solution to stagflation even before Reagan and Thatcher came to power, and Mitterrand made similar moves in France in the early 1980s. The accelerating troubles of communism added momentum to the shift because, unlike the 1930s, there was no alternative system competing for the hearts and minds of workers in the West. Part of the impetus for business elites’ and center-right parties’ acceptance of the New Deal and Great Society in the US, and of the growth of postwar European welfare states, came from a desire to prevent workers from concluding they had nothing to lose but their chains. Indeed, Marxists like Ralph Miliband had criticized the welfare state precisely because it undermined that possibility. Once communism no longer posed a competitive economic threat, Western elites could ignore disgruntled workers, making it easy for center-right parties to keep shifting the goalposts in response to the left’s triangulation.4

Communist economic models were in manifest trouble long before the Soviet bloc began imploding. Mao Zedong died in 1976, opening the way for market reform in China. Within two years, Deng Xiaoping was introducing private incentives and opening the economy to foreign investment. Companies like Caterpillar and Cummins opened offices in China in the late 1970s and started producing engines and equipment there, soon to be followed by retailers like Nike, Apple, and Walmart. In 1978, the state-sponsored Progress Publishers in Moscow released The USSR: A Guide for Businessmen in English, a sign that Soviet leaders were starting to recognize that Western capitalism was the wave of the future well before the fiscal strains of the 1980s set in. That recognition was confirmed for me in a March 1991 meeting between Soviet Politburo member Vadim Zagladin and a visiting Yale delegation, when Zagladin volunteered that he, Gorbachev, and other aspiring Communist Party leaders had concluded in the late 1970s that their command economic model was doomed.5 The giddy momentum of market reform across the collapsing Soviet bloc after 1989 fed the self-confidence among Western elites that Western democratic capitalism did indeed represent the end of history on which the whole world was converging. That center-left parties in the established capitalist democracies decided to get with the program was perhaps unsurprising in this context, cementing the displacement of Keynesian orthodoxy by the neoliberal one as they embraced the new consensus.

But they missed the extent to which the financial crisis changed things. The neoliberal technocrats’ hegemony was indissolubly linked to their reputation for competence. All the talk of the self-reinforcing virtues of financial deregulation and the supposed capacity of central bankers to fine-tune interest rates and monetary policy to produce soft landings blew up in the fall of 2008. The crash and the Great Recession that followed inevitably gave way to a tortured and many-sided debate among economists and commentators about what caused it. Financial deregulation? The housing bubble? If housing, was it government pressure to write subprime mortgages, securitization, or collateralized debt obligations? Was it the shadow banking system? Was it a perfect storm of all these factors? What mattered politically was that the Fed, the regulators, and the Bush and Obama administration officials—many of whom had for decades been moving through the revolving door between Washington and Wall Street—were so utterly blindsided and visibly panicked by the crisis.

It wasn’t just that politicians gave the regulators and financial players implicated in causing the crisis a free ride—letting them keep their jobs and bailing them out—which fueled voter anger that intensified as the downstream effects of the crisis dragged on for millions. Nor was it only that their solution—to bail out the banks with hundreds of billions in public money—violated fundamental tenets of their professed approach. That they did so in ways that benefited themselves and their associates while imposing austerity on so many others was, at minimum, terrible optics—adding to the rage of those left behind. Those decisions were bound to be costly for incumbents, but by themselves they wouldn’t have been enough to upend electoral politics as most Western countries have known it since World War II. They wouldn’t have made parties like the British Tories or the US Republicans vulnerable to wholesale takeovers. They wouldn’t have been enough to cause long-established multiparty systems to splinter, with center-left parties imploding and center-right ones hemorrhaging support to new populist parties with nativist agendas aimed at dismantling the postwar economic and political architecture. And they wouldn’t have been enough to produce a precipitous collapse of trust in representative institutions, leading academic commentators and the chattering classes to fret about democracy’s viability for the first time in living memory.6

For all that to happen, there had to be a more fundamental rift between voters and established parties and politicians. Beyond the stunning scale of the crisis and the mainstream politicians’ failure to see it coming—and beyond their self-serving response to it—was their failure to grasp how thoroughly it had destroyed the legitimacy of the neoliberal order that they had championed for decades as the One True Way, to which there was no alternative. The crisis was, after all, at least as damning an indictment of neoliberal orthodoxy as persistent stagflation had been of the Keynesian orthodoxy in the 1970s. Indeed, the crisis revealed the neoliberals to be closet Keynesians—but only for themselves. As Björn Bremer has documented, once the period of “emergency Keynesianism” between 2008 and 2010 was over, center-left parties joined the center right in quickly reverting to austerity. This added the whiff of hypocrisy to the bipartisan moralizing over deficits and embrace of austerity measures justified as being in the national interest. The hypocrisy was most brazen in the US, where Republicans routinely excoriated Democrats for deficit spending and flatly opposed raising taxes in all circumstances, yet when in power they ran up deficits with abandon to pay for unfunded wars and giveaways to Republican interests.7 In 2025, Senate Republicans went even further when they showed themselves willing to abandon the strictures of the budget reconciliation process, which hitherto had required the budget bill to avoid adding to the debt beyond a specified period as a condition for exempting it from the filibuster. This allowed them permanently to extend $3.8 trillion in expiring 2017 cuts, without finding offsetting spending reductions.8

While most political leaders failed to grasp that their legitimacy was irretrievably compromised, some did. As the fortunes of elites and most voters continued diverging in the years following the financial crisis, innovative populists like Donald Trump, Nigel Farage, Giorgia Meloni, Jair Bolsonaro, and Marine Le Pen saw openings to mobilize new constituencies to challenge the basic terms of the neoliberal consensus with an anti-elitist nativism geared to rejecting free trade and the institutions that went with it. And some mainstream politicians who sensed that the foundations of politics were shifting—notably Boris Johnson, Viktor Orbán, and Tayyip Erdoğan—began reinventing themselves to ride the populist wave. It did not matter that they lacked coherent programs. They saw what others could not or would not see: The shopworn consensus and global order that sustained it had become a tottering edifice that was waiting to be pushed over.

Just how exceptional the new populists were was underscored by the reactions they elicited from mainstream politicians and commentators. The predominant impulse was to reach for idiosyncratic explanations or otherwise diminish the significance of their successes. David Cameron was a fool to have called the referendum, and the Remainers botched their campaign. Farage was an opportunist who would remain sidelined by Britain’s two-party system. Ditto for Le Pen, who, like her father, would be kept out of power by the Fifth Republic’s two-round voting system. Trump lost the popular vote and sneaked to victory in 2016 by fewer than eighty thousand votes spread across three states. Hungary had weak democratic traditions pre-1989. It was wracked by violence and elite manipulation in the interwar years, making it more susceptible to backsliding than the other Central European countries. Turkey had never been integrated into the European Union despite a decades-long on-again, off-again accession process that eventually alienated Erdoğan. There was always a story to tell that allowed establishment politicians to minimize the significance of what was happening, or to address it via gentlemen’s agreements to avoid coalitions with the new far-right parties while triangulating toward the anti-immigration policies that were integral to their support. But these tactical responses obscured the strategically vital question: Why were tens of millions of voters across the democratic capitalist world available to be mobilized by these populists in the first place?

The Biden Interregnum

Joe Biden was a partial exception, if a star-crossed one. He was an accidental president, initially a beneficiary but ultimately a victim of the COVID epidemic. By 2020, his political career was waning. Having failed in efforts to win the Democratic presidential nomination in 1988 and 2008, he had also been sidelined in 2016 when, ambivalent about running in the wake of his son Beau’s recent death from brain cancer, he was nudged aside by Barack Obama, who declared it to be Hillary Clinton’s turn. Once she lost, it seemed that Biden’s time had passed. He would be seventy-eight in 2020, four years older than Donald Trump was in 2016 and five years older than Ronald Reagan had been when reelected in 1984 as the oldest president in US history. Before the pandemic hit, Trump looked hard to beat. Two-thirds of sitting presidents are reelected. The economy was doing well enough, and whatever the demerits of his chaotic governing style, Trump was a brilliantly charismatic campaigner. More than two dozen Democrats threw their hats into the primary ring. Most were hoping to get lucky or auditioning for the future, so the field winnowed quickly. But 2020 was Biden’s Hail Mary shot, so he clung on despite disastrous showings in the early contests in Iowa and New Hampshire. His victory in the South Carolina primary on February 29 revived his flagging campaign. Three days later he won ten of the fifteen Super Tuesday contests, all but clinching the nomination just as the scale and seriousness of the COVID crisis were becoming clear. His only remaining serious challenger, Bernie Sanders, dropped out a month later, after which Biden coasted to the nomination.

The pandemic turned a long shot into a credibly winnable race. By midsummer, the country was on full lockdown, millions of workers had been laid off, and millions more were working from home while struggling with children who were themselves struggling with remote schooling. The economy was heading for recession, and although the financial markets had bottomed out, they were still in bear market territory with the Dow more than five thousand points below its prepandemic high. President Trump’s haphazard response to the crisis—marked by manifestly implausible predictions that it would soon go away, and risible proposals for homespun remedies like ultraviolet light and ingesting bleach—caused his approval ratings to plummet from around 50 percent before the virus hit to 39 percent by June. His Operation Warp Speed program to fund the hunt for a vaccine would ultimately be judged an impressive success, but emergency-use vaccinations were not authorized until after the election. Perhaps most important, the lockdown deprived Trump of his best weapon: massive rallies where he pumped up crowds and mobilized supporters. Biden, at best an indifferent campaigner, ran a low-wattage effort from his basement, promising to be a competent manager who would deliver the vaccine to hundreds of millions of Americans and end the chaos. On Election Day, despite losing thirteen House seats, the Democrats retained control of the chamber, and they also won the Senate, albeit with a razor-thin majority that depended on Vice President Kamala Harris’s tiebreaking vote to pass any legislation. They could govern, just.

And they tried. In contrast to Macron’s En Marche! party in 2017 and Starmer’s Labour in 2024, the Democratic administration that took office in the US in January 2021 quickly differentiated itself from the New Democrats who had dominated the party in government from Jimmy Carter to Barack Obama. Emblematic—and to some extent an architect—of the rethink was Jake Sullivan, a Yale graduate and Rhodes Scholar who had served in various senior roles in the Obama White House and Hillary Clinton’s 2016 campaign. Sullivan spent the years of the first Trump administration as a corporate consultant, licking his wounds while conducting a postmortem on the 2016 Democratic defeat. The results of his soul-searching were summed up in an article entitled “The New Old Democrats,” at once a mea culpa for inattention to traditional Democratic voters who had long been alienated from the party and a manifesto for the party’s renewal that would inform much of the Biden administration’s governing agenda.9

Bernie Sanders’s strong showing in the 2016 primaries had rattled Sullivan to the point that he pushed Clinton to distance herself from the Trans-Pacific Partnership trade agreement, which Sullivan had assisted her in negotiating, and to campaign harder in the Rust Belt during the last weeks of the campaign. Though careful not to repudiate the triangulating strategies of Bill Clinton and Barack Obama, Sullivan called for a renewal of New Deal and Great Society thinking, “to marry the principles of Roosevelt and the ambition of Johnson with updated understandings of how the job market works, how families live, and how corporate and political power are exercised in the globalized, technology-driven landscape.” This meant focusing centrally on the increasingly precarious middle- and working-class populations of contract and freelance workers who must often change jobs and will comprise 40 percent of the workforce by 2030. Most of them, he noted, will continue to be service-sector workers who are not unionized and so lack leverage in negotiating with employers and navigating the vicissitudes of the business cycle.

Sullivan then sketched the policies a Democratic administration must prioritize to win and retain the support of this increasingly vulnerable class. His proposals had affinities with the Sanders campaign proposals, but they were tailored to this population and tempered by political realism. Whereas Sanders had called for universal health care, a tough political sell in the US, where tens of millions still have employer-subsidized health insurance, Sullivan argued that the self-insured should be able to buy into Medicare or a comparable public insurance scheme. Whereas Sanders had called for free college tuition for all, Sullivan prioritized debt-free lifelong learning geared to a world in which adult workers must expect to retool multiple times. He also called for incentives to encourage businesses to provide apprenticeships, similar to the programs that are widespread in Britain and that send half a million people into Germany’s workforce each year. And because so many families depend on two wage earners or are headed by a single adult who often cares for aging parents as well as children, he argued that affordable child care and elder care should be central priorities for sustaining a viable workforce.

He proposed a mix of sticks and carrots to restructure the government’s relations with business. The sticks were geared to breaking up concentrations of corporate power with aggressive antitrust enforcement and redressing inequality by reversing the 2017 Trump tax cuts. On the incentives front, he called for leveraging public investment with private capital by expanding the Earned Income Tax Credit and introducing place-based incentives geared to breaking “the cycle of economic unraveling and social unraveling in cities and regions that have fallen behind.” In effect, this was a call for a return to an industrial policy of the sort that had been fashionable in Western democracies in the 1960s and 1970s but had since been denounced by neoliberals as a form of government interference that inevitably distorts market-based capital allocation. It was a measure of how much the bloom was off the rose for reflexive appeals to the market that Sullivan was echoing a recent paper coauthored by Larry Summers. Whatever the economic costs of interfering with market-based allocations, which had concentrated 75 percent of all US venture capital in three states, the social and political costs of not doing so were no longer viable.10

The Biden administration that took office in January 2021 was drinking out of a fire hydrant. It had to manage the logistical challenges of delivering the vaccine to hundreds of millions of Americans during a nationwide lockdown with much of the government working from home, sustain support for tens of millions of distressed workers who had been or were in danger of being laid off, help tens of thousands of businesses avoid bankruptcy, and do what was needed to end the recession and mitigate its aftermath. Cognizant of the widespread consensus that Obama’s stimulus after the 2008 financial crisis had been too small and prolonged the Great Recession unnecessarily, the administration supplemented the $4 trillion the Trump administration had already spent in response to the pandemic with the $1.9 trillion American Rescue Plan, which consisted mostly of emergency relief and other countercyclical measures. It also had to manage the US withdrawal from Afghanistan that the Trump administration had negotiated with the Taliban. The plan called for the final departure of all American troops by May 2021.

Both these actions turned out to be costly. Republicans would effectively blame the Biden stimulus for the price increases that began accelerating as soon as he took office and peaked at 9 percent in mid-2022, even though inflation was a worldwide phenomenon, most of it driven by supply-chain shocks associated with COVID and the Russia-Ukraine war.11 In Afghanistan, the rapid collapse of Ashraf Ghani’s regime and his flight to the United Arab Emirates as the Taliban was seizing control of Kabul led to a hectic American withdrawal that limited the United States’ capacity to remove military equipment and evacuate refugees. The chaos was dramatized when an ISIS suicide bomber blew himself up at Hamid Karzai International Airport as the Americans were leaving, killing 182 people including 13 US soldiers. The perception of a botched withdrawal shattered Biden’s image for competence, contributing, however unfairly, to a rapid decline of his popularity from which he never recovered.

Given these handicaps, it is surprising that the administration enacted as much of its positive agenda as it did. With the economy in recession, rescinding the Trump tax cuts was not an option. Nor would there be an aggressive campaign against concentrations of corporate power, though the administration did ramp up antitrust enforcement. But before the Democrats lost control of the House in the midterms, they made a down payment on an industrial policy geared to twenty-first-century economic realities. Whereas Trump had talked endlessly about infrastructure but done nothing, in November 2021 Biden signed a $1.2 trillion bill—four times the size of Obama’s 2015 law that had done little more than keep pace with growing congestion. In addition to major commitments for repairing crumbling highways, bridges, and railways, the infrastructure law provided $65 billion for broadband access, clean water, and electric grid renewal. Then, in two successive weeks in August 2022, Biden signed the $280 billion CHIPS and Science Act, and the $891 billion Inflation Reduction Act, both comprising investment incentives and provisions to mitigate economic vulnerability and reinvigorate America’s workforce.12

The Inflation Reduction Act was a greatly scaled-down substitute for Biden’s $3.5 trillion Build Back Better plan, which was to have accompanied the infrastructure bill. It had been derailed by Democratic Senator Joe Manchin from West Virginia, whose support was essential to its passage and who objected to the cost and pace of its transition to clean energy—coal mining being a major part of the West Virginia economy. These constraints meant that provisions in the Inflation Reduction and CHIPS acts were bound to be small-bore. Most of the funds were spent on climate change initiatives, with some tax benefits tied to hiring workers from apprenticeship programs. The CHIPS Act was the main vehicle for place-based industrial policy and workforce investment. By late 2024, the government had committed some $60 billion in CHIPS funds to seventeen companies, with an expected yield of 38,000 new manufacturing jobs and over 78,000 construction jobs—a drop in the bucket for America’s workforce of 170 million. Ditto for workforce development, for which some $200 million was given out to Samsung, Intel, GlobalFoundries, Micron, TSMC, and Texas Instruments. The administration committed about $373 million in subsidies for apprenticeships in 2023 and 2024, and added $109 million to the Workplace Innovation and Opportunity Act, the federal government’s largest program of direct funding for workforce programs. As with the employment subsidies, the administration’s intentions were good, but none of this could make a significant dent in restructuring the workforce for the new economy.13

Timing isn’t everything in politics, but it is a great deal, and for Biden it was brutal. Most of his constructive measures were not implemented until the second half of his term, when perceptions of him as an ineffectual drifter were already fixed. Part of these perceptions stemmed from factors beyond his control, but part reflected his ineptitude as a salesman for his policies—especially by comparison with the consummate showman Trump. Emblematic of the difference was that by the 2024 election, voters remembered that Trump had sent them stimulus checks but not Biden—even though Biden’s had been more recent. The reason: Trump’s name appeared on the checks issued during his administration, and Biden’s did not appear on his. By the time Biden left office, Democratic Party websites featured long lists of his achievements that would have been news to most voters. The Biden administration increased the child tax credit and the Earned Income Tax Credit. It helped millions of renters and homeowners stay in their homes and kept hundreds of thousands of retailers and small businesses afloat during the lockdown. It presided over a quicker and stronger economic recovery than other G10 economies—a recovery that was also impressive by historical American standards. Yet Bidenomics, a term Biden coined early on to signal his innovative agenda, had become a pejorative label of failure by the time of the 2024 election season.14

By then, the Democrats were inescapably on the defensive. Biden’s manifest frailty and disastrous performance in his June 2024 debate with Donald Trump left an indelible image of creeping senility, triggering a palace coup three weeks later to replace him as the presumptive Democratic nominee with Vice President Kamala Harris. With two-thirds of Americans believing that the country was on the wrong track, Harris was saddled with the impossible task of defending an unpopular administration while also trying to differentiate herself from it. And she had to do so while leading a truncated campaign, her legitimacy as a candidate in doubt because she had not won the nomination herself. She ran a surprisingly well-coordinated campaign under the circumstances, marked by a unified convention in Chicago and unprecedented fundraising. The race tightened to the point that many reputable polls had her within the margin of error in the battleground states, but in the end, she lost them all—and the national popular vote—decisively. Rather than marking an end to the Trump era, the Biden administration would instead go down in history as an interregnum.

Could the Democrats have won with a different candidate or a tidier handoff to Harris? Possibly. The economy was in good enough shape, growing faster than that of any other country in the G10, unemployment was at a fifty-year low, and more than sixteen million new jobs had been created. Despite a terrible year for sitting governments internationally, US Democrats shed less support than incumbents in every 2024 election in developed democracies except Belgium. And as the Canadian and Australian elections the following April and May underscored, center-left incumbent governments can defeat insurgent right-wing populists in comparable countries and circumstances. So it is possible to conjure scenarios in which the Democrats could have won the presidency, though with Harris it was bound to be a heavy lift.15

More concerning for the future was that the Harris campaign was terrifyingly similar to Hillary Clinton’s in 2016, suggesting that Sullivan’s call for strategic redirection of the party had been ignored or forgotten. Clinton’s campaign had been tone-deaf to the economic vulnerabilities of working- and middle-class Americans. Trump, by contrast, had made them central from the start of his 2016 campaign and never wavered. The difference was captured in their slogans: “America’s best days lie ahead!” versus “Make America great again!” Both slogans were cribbed from Ronald Reagan, but when he declared in the early 1980s that the country’s best days lay in the future, it was when four decades of wage stagnation and erosion of middle-class wealth were just getting started. Trump’s slogan was backward-looking, aimed at the Americans who had endured that stagnation. He was tapping into a feeling of loss—which social scientists have known for decades is more potent than the prospect of future gains.

Amos Tversky and Daniel Kahneman initiated the behavioral revolution in economics in 1979 by showing, against conventional orthodoxy, that people are loss-averse: Losing a dollar causes more unhappiness than gaining a dollar brings happiness.16 It’s a robust finding, perhaps traceable to the fact that for millennia most people lived so close to starvation that even a small loss was potentially catastrophic. Whatever its origins, Trump played into it by promising to reverse the changes that he blamed on the neoliberal consensus, especially the loss of traditional American industries to globalization, which had devastated communities. Attacking Hispanic immigration reinforced that message by layering the threat of ethnic and cultural displacement—dubbed the Great Replacement theory by far-right conspiracy theorists—on top of economic loss. Trump promised to restore 1950s Middle America.

Harris walked into the same trap. Her trademark slogan “We’re not going back!” resonated with what had become the Democratic base—people with college degrees, bicoastal celebrities, cosmopolitan internationalists, and party activists—all of whom saw the Trump years as an aberration. She supplemented this appeal with speech after speech decrying Trump’s negativism, insisting that her campaign was about optimism and above all “Joy!”—which she enlisted Oprah Winfrey to scream at the top of her lungs at the Democratic National Convention—and dubbing herself and her running mate, Tim Walz, “joyful warriors.” Trump doubled down on MAGA, supplementing it with more frequent appeals to “America First” than in his previous campaigns. His message to Middle America was that the Biden administration had failed them just as previous administrations had, a message the Harris campaign never took seriously because the macroeconomic indicators were good by comparative and historical standards. The Harris team seemed flummoxed that polls consistently showed majorities of Americans believing that Bidenomics was a failure, and that Trump would be better for the economy.17

Inflation, which became the proxy in voters’ minds for the condition of the economy, was emblematic. Most of the inflation was imported. It peaked in June 2022, the same month that wages—which had been falling since the start of the pandemic—turned around. By mid-2023, wage growth, especially among lowest-paid workers, was outpacing inflation, so that over the course of the Biden administration, changes in wages and prices came close to canceling each other out, with prices growing a total of 21.3 percent while wages grew 19.4 percent. The Harris campaign could arguably have done a better job of explaining these facts, but to believe that this would have made the decisive difference is to miss the psychology of loss aversion. People who know they are paying more for gasoline and groceries than they were four years ago will not be mollified by being told that their wages have grown an equivalent amount, even if it is true. They focus on what they must shell out now versus what they had to shell out then. Before prices took off in 2021, some 20 percent of Americans thought they were worse off than a year earlier. By 2022, that number had increased to 35 percent. In 2023, by which time wage growth was outpacing inflation, over 30 percent still said they were worse off than a year earlier.18

Talking about joy and focusing on future gains also signals tone-deafness to the economic strains millions of Americans live with. Almost 20 percent of households cannot pay their monthly bills. A quarter believe that they are not doing “at least okay” financially. Over 45 percent do not have three months’ worth of emergency savings. More than a third say that they could not find $400 to meet a medical emergency without borrowing it. In the wake of the pandemic, consumer loan and credit card balances rose to their highest levels in two decades, at the same time as higher interest rates (not counted in measures of inflation) made that debt more burdensome. Unsurprisingly, credit card delinquency rates surged to their highest levels in over a decade. Ditto with auto loan balances and delinquency rates, which by the end of 2024 stood at their highest rate since 2010. Nor was the stress limited to the lowest paid, whose incomes have grown relative to middle-income workers in recent decades. Focusing on those gains can be misleading, because the middle class is in decline. As Daniel Markovits has documented, the rich have pulled away from the middle class, and many middle-class jobs are disappearing. They typically face downward mobility, and half of them belong to the “sandwich generation”—people who are supporting both their children and their aging parents. These are not people who will likely resonate with politicians preaching optimism and joy.19

Like Clinton in 2016, Harris featured long lists of policies on her website that could help vulnerable families, from increasing the child tax credit, to subsidizing first-time homebuyers, to regulating rents and outlawing price gouging—all of which polled well individually. But most voters didn’t know that they were Harris’s policies, a reality that was ironically underscored in a Washington Post op-ed contending that most voters “unknowingly” preferred Harris’s agenda to Trump’s. Trump won the messaging war through endless repetition of a small number of initiatives aimed at providing tangible relief to the economically stressed voters he was trying to reach: Abolish taxes on tips and Social Security, and make interest on car loans tax deductible. It didn’t help that Harris ducked media opportunities, notably failing to appear on Joe Rogan’s podcast, which reaches between sixteen million and twenty-four million people, where she could have pitched her proposals to groups among whom they would resonate. Rogan’s demographic was disproportionately young males, whose most important concern was unaffordable housing. Her $25,000 in down-payment assistance for first-time homebuyers was tailor-made for them. It was campaign malpractice to skip opportunities of that kind. Harris was preaching to her choir while flaunting the endorsements of Hollywood celebrities like Julia Roberts, Beyoncé, and Taylor Swift.20

Harris also signaled that she was living on a different planet by failing to grasp that vulnerable voters see the world in zero-sum terms, where one person’s gain is another’s loss. In her speech accepting the nomination at the Chicago convention—to which 28.9 million viewers tuned in—her central theme was to decry Trump’s negativism and insist that America is a country where “anything is possible,” where “nothing is out of reach,” where “none of us has to fail for all of us to succeed.”21 She seemed oblivious to a truth about economic psychology that Trump grasped intuitively: People’s propensity to see the world in zero-sum rather than positive-sum terms varies with their experience. A significant body of research by economists and psychologists shows that older voters, who grew up in an era of high economic growth, are more likely to see the world as positive-sum than younger voters, who have come of age in slower-growth conditions and are more likely to see it as zero-sum. Moreover, two distinct increases in zero-sum attitudes have coincided with two slowdowns in economic growth: during the 1970s and over the past two decades. People with zero-sum outlooks are less likely to think that wealth can grow enough for everyone and more likely to believe that people can only get rich at another’s expense. This lesson should have been learned from Hillary Clinton’s loss in 2016. Self-identified Democrats who voted for Trump that year had strongly zero-sum beliefs.22

Failure to heed this lesson helps make sense of why Harris underperformed with younger voters, winning the usually safe Democratic demographic by only 52 percent, compared with Trump’s 46 percent—a ten-point jump for him over four years earlier. It also helps explain why Trump won 56 percent of young men. Consider the lived experience of working- and middle-class Americans born in 2004, the midpoint of the Gen Z cohort. They were four years old at the time of the financial crisis, likely the start of a multiyear period of economic stress for their parents. They were ten when Iraq collapsed back into civil war and sixteen when the Taliban retook Afghanistan, bookends to the multitrillion-dollar foreign-policy failure that brought no tangible benefit to the US. They were high school sophomores when COVID hit. They finished school under lockdown with the economy in free fall, and one or both of their parents had likely been laid off. And they were twenty, coping with the residue of post-COVID inflation and still eighteen years away from the median age of a first-time homebuyer, at the time of the 2024 election. It is hardly surprising that young voters report substantially higher levels of stress, worry, and loneliness than the rest of the population. Yet Harris was peddling optimism, hope, and a positive-sum vision in which nothing is out of reach. She denounced Trump for “denigrating America” and “talking about how terrible everything is.” He was meeting them where they were. She was speaking past them.23

Attending to the difference between positive- and zero-sum worldviews also helps account for why millions of Americans could identify with Trump as “one of us” when plainly he was not. As a New York billionaire who inherited what today would be hundreds of millions of dollars from his father, endlessly flaunts his wealth, and travels in his private jet between his luxury properties and golf courses, he had nothing in common with the tens of thousands of MAGA supporters who turned out to his rallies and the tens of millions who voted for him. But his ideology is unremittingly zero-sum. It shapes his approach to trade and geopolitics as well as his America First nativism and relentless hostility to immigration. Even if Trump’s supporters don’t agree with everything he says, or they know that particular claims he makes are exaggerated or false, his worldview resonates. A trade deficit with China means they are taking advantage of us. An immigrant who gets a job is taking it from an American. NATO is freeloading off the US. Money spent on Ukraine’s defense is a rip-off unless they give us mineral rights in return. For people who see the world as zero-sum, Trump is looking out for us, and that makes him one of us. Harris is not, and she isn’t.

The Populists and the Future

The zero-sum outlook that was such fertile terrain for Trump has become widely prevalent across many older democracies.24 This can scarcely be surprising given the fiscal strain with which so many in their populations are living. One poignant snapshot taken in 2019 revealed fewer than a third of Europeans reporting cash left for discretionary spending at the end of the month, and in no country did that number exceed 50 percent.25

It would be misleading to say that the prevalence of a zero-sum outlook is the cause of the nativist and anti-immigrant sentiment that right-wing populists appeal to so successfully, but it seems clear that the electoral appeal of those sentiments is unlikely to diminish among voters who see the world in zero-sum terms. This creates a dilemma for mainstream parties and politicians who are losing support to the far right. One option is triangulation: Adopt their policies with the hope of staunching the hemorrhaging. The alternative is to try to address the conditions that give rise to the zero-sum outlooks that the far right feeds on and reinforces.

Figure 6.1 Most Europeans Have No Money for Discretionary Spending

Source: European Council of Foreign Relations survey. Reproduced with permission from ECFR/Datapraxis.

The triangulating course is powerfully tempting. Politicians whose time horizon is the next election understandably run scared of being outflanked on the right if they don’t. This dynamic is exemplified by center-right parties like Britain’s Tories and Germany’s CDU adopting strong anti-immigration platforms to head off the respective threats from Reform and the AfD. Whether this tactic can do any better for center-right parties chasing the far right than it did for the center left chasing the center right in the 1990s and 2000s is an open question. The 2024 UK and 2025 German elections are obviously not encouraging.

Pursued as a strategy in the OECD countries, clamping down on immigration will increase fiscal strain on governments, because the old-age dependency ratio (the ratio of retired to working-age people) is growing in all of them. For the OECD as a whole, in 1980 there were twenty people aged sixty-five and over for every hundred between ages twenty and sixty-four. By 2020, that had increased to thirty, and it is projected to double to fifty-nine by 2060. There is significant variation in those projections among OECD countries, but it is growing in all of them due to increasing longevity and declining fertility rates. All else equal, steadily shrinking working populations are going to find themselves supporting steadily expanding retired ones.

Figure 6.2 Old-Age Dependency Ratios for the OECD, 1980–2060

Source: Calculations from United Nations, World Populations Prospects, 2022 Revisions. Some of the values are provisional or estimated.

Some far-right parties and politicians aspire to ameliorate this stress by reversing the decline in fertility rates. Hungary’s Viktor Orbán, who declared in 2022 that Europe is committing “civilizational suicide” due to the combination of immigration and declining birth rates, champions this view and has acted on it. Hungary spends around 5 percent of its GDP trying to increase its birth rate, including government loans that are written off for couples that have at least three children, subsidies for first-time homebuyers with children, government-run fertility clinics, and lifetime exemptions from taxation for women who have four children. Polish parents receive around €120 per month for every child after the first, up to the age of eighteen. Echoing this impulse, in 2025 the Trump administration was exploring a $5,000 “baby bonus” for American mothers to combat the alleged Great Replacement of Americans by immigrants. But whatever their ideological appeal, there is no evidence that such measures have much impact on fertility rates. Hungary increased its birth rate slightly from a low of 1.2 births per woman in 2013 (the lowest in the EU) to 1.6 a decade later, still below even a population-sustaining level. Poland saw a slight uptick in the birth rate after it introduced its program in 2016, but the rate soon reverted, reaching its lowest level since World War II in 2023, even though the program was covering four million children (55 percent of all Polish children) by 2017.26

Figure 6.3 Number of Children per Woman in the European Union, 2022

Source: Eurostat.

This isn’t surprising. Declining fertility rates and rising old-age dependency ratios are not aberrational. They are by-products of a global transition that demographers have studied since the 1920s.27 Until the mid-eighteenth century, populations remained stable. Birth rates were high, but few children made it to adulthood, and those who did died young. Populations then started growing in the Global North because death rates fell due to improved living conditions, sanitation, and nutrition, while birth rates remained high—known as phase 2 of the transition. Population growth began slowing in the late nineteenth century—phase 3—because fertility rates fell as women’s status and education improved and access to contraception became widespread. Most countries in the Global North are now at the end of phase 4, marked by low birth rates and death rates. Populations stabilize as women average 2.1 children, but the old-age dependency ratio grows along with longevity. Shrinking working-age populations are supporting expanding retired populations. Once fertility falls below replacement rates—as is happening in all OECD countries today, except Israel—a country enters phase 5, exacerbating the problem.

The demographic transition doesn’t follow an inexorable path. The discovery of antibiotics, starting with penicillin in 1928, increased longevity in many countries, accelerating phase 2. Labor shortages during World War II led to the rapid influx of millions of women into the workforce, about a third of whom continued working after the war, accelerating phase 3. Likewise with the move from one to two wage earners per family and the growth of single-female-headed households in the late 1960s and early 1970s, which reduced fertility rates further in most Western countries. China is joining phase 4 countries much faster than it would otherwise have done because of its one-child policy, which was enforced from 1979 to 2015. That brought fertility rates down dramatically, increasing its old-age dependency ratio from about 6 percent of the working-age population to more than 20 percent.28

Figure 6.4 Five-Phase World Demographic Transition

Source: Our World in Data.

While societal changes and government policies affect the pace and shape of the demographic transition, reversing it would require a social revolution of gargantuan proportions. Far-right parties aspire to do it by rolling the clock back. Their appeals to tradition and Europe’s Judeo-Christian heritage signal that they want to see a return to nuclear families in which wives stay at home as full-time mothers. As Orbán put it in a declaration signed by leaders of sixteen far-right parties in mid-2021, “In a time when Europe is facing a serious demographic crisis with low birth rates and an ageing population, pro-family policy making should be an answer instead of mass immigration.”29 Fertility rates would have to increase dramatically to four or more births per woman to address the fiscal challenge. On its return to power in 2021, Afghanistan’s Taliban government banned girls from most employment and schooling beyond the sixth grade. A measure that draconian might have an impact on family structure and fertility rates if enforced over time, but any policies a democratic government could adopt are unlikely to have a meaningful effect. Even successful reforms would not begin to alter old-age dependency ratios for decades.

The economic challenge is at least as daunting as the social and political ones. Even if tens of millions of twenty-first-century European women—70 percent of whom are in the labor market, more than half of them full-time—could be induced to have more children, huge subsidies to families would be required, given how financially strained most people are. Few two-earner families can sacrifice one of their salaries any more than single-female-headed households can, and in any case, far-right parties typically advocate work requirements as conditions for social support. This approach would also exacerbate old-age dependency ratios in the short and medium run as millions of women left the labor market, intensifying the fiscal strain on their governments. Contemplating these possibilities underscores the extent to which far-right populists are inherently oppositional. They rail against the status quo without having viable alternatives.

Some mainstream governments have tried subsidies to sustain fertility rates while parents remain in the workforce. The Nordic countries have led the way, with half of all children under the age of two enrolled in nurseries—almost double the EU average. In Sweden, heavily subsidized day care limits parental contributions to 11 percent of the cost—the lowest in the developed world. These countries also provide generously subsidized parental leave, ranging from seven months in Finland to a year divided between two parents in Sweden. Whatever the desirability of these measures on other grounds, they have had a negligible effect on fertility rates. Sweden’s rate has actually fallen from 1.9 children per woman to around 1.5 since 2013, the same level as Denmark and Finland. France has tried a mix of subsidies for day care, cash payments to parents that increase with the number of children, and other benefits like larger pensions and cheaper train travel for large families. It has the highest fertility rate in the EU, but at 1.8 children per woman, it has not even reached the replacement rate. Nor do cultural factors have an impact. The Catholic church’s hostility to abortion and birth control notwithstanding, Europe’s Catholic countries have among the lowest fertility rates—1.5 births per woman in Ireland, 1.3 in Italy and Poland, and 1.2 in Spain. Women in phase 4 countries delay having children and have fewer of them. Nothing that governments do greatly changes this fact.30

Some governments have tried to limit the costs of supporting their growing retired populations by increasing the retirement age, but as Emmanuel Macron discovered in 2023—when his decision to raise it from sixty-two to sixty-four provoked some of the largest demonstrations in decades and had to be rammed through via a procedure that avoided a vote in the National Assembly—there are political limits to this solution. Even in the US, proposals for gradual phase-ins of modest increases to the retirement age face trenchant opposition, underscoring how hard and unrewarding most jobs are. The other logical possibility is to limit longevity. Anyone contemplating that option should read Anthony Trollope’s The Fixed Period, a dystopian satire set in the 1880s about a country formed by young adults who adopt a policy of euthanizing sixty-eight-year-olds. It collapses into acrimony as the people who enacted the law approach their terminal age. There is no avoiding the reality that the fiscal strain on governments of countries in phase 4 of the demographic transition will continue to grow if they refuse substantial immigration.31

The remaining option is to bite that bullet by dealing with the costs domestically. The Danish Social Democrats have enjoyed some success with this approach. In 2015, in the wake of the refugee crises spawned by the Libyan and Syrian civil wars, they embraced one of the most restrictive immigration policies in Europe under the new leadership of then thirty-eight-year-old Mette Frederiksen. Heavily criticized for selling out by other center-left politicians and activists, she was successful at leading the left to victory in 2019 and again in 2022 with an increased 28 percent of the vote—the party’s best showing in two decades—while defusing the appeal of the right-wing populists, whose support fell from 21.8 percent in 2015 to 14.3 percent in 2022. Bucking the austerity trend in the rest of Europe, her Social Democrats have poured money into health care, education, and the welfare system. They reduced the retirement age for blue-collar workers (while increasing it to seventy for white-collar workers), adopted rent controls to protect tenants, and instituted carbon taxes to fight climate change. They did this while sustaining Denmark’s free education through university and one of the most generous unemployment and retraining programs for displaced workers in the world, amounting to 2 percent of GDP—twenty times what is spent in the US. But they have held fast on immigration restrictions, with Denmark’s foreign-born population at 12.6 percent in 2025—well below the 20 percent in Germany and Sweden.32

These programs come with a hefty price tag. Denmark is among the most heavily taxed of the advanced democracies, comparable only to Belgium and France. It has income tax rates that rise to 55.9 percent, an 8 percent labor market tax, a 25 percent value-added tax (VAT), and various other indirect taxes that combine for a tax-to-GDP ratio of over 43 percent. That compares with a 34 percent average for the OECD and 25 percent in the US. Moreover, the cost of sustaining Denmark’s system will continue to grow. The European Commission projects that Denmark’s old-age dependency ratio will increase from 34.1 percent in 2019 to 53.8 percent by 2070. As in the rest of Europe, without significant increases in its working-age immigrant population, Denmark will have to tax itself at ever-higher rates to sustain this system in anything like its present form.33

Significantly higher taxes are not without precedent in the older democracies. From World War II until the supply-side revolution of the 1980s, many of them had notably more steeply progressive tax systems, with top marginal rates above 80 or even 90 percent. Moves toward re-creating that world would sharpen conflicts between the populist left and populist right, who agree on their hostility to technocratic elites, immigration, and free trade, but not on distributive politics. Whereas left populists and parties like Denmark’s Social Democrats support high taxes to fund redistribution and a welfare state, provided their benefits are shielded from immigrants, right populists want low tax regimes. Germany’s AfD advocates radical cuts in income, corporate, and energy taxes, as well as the abolition of taxes on wealth, inheritance, and property. France’s National Rally wants to exempt taxes on households and local businesses and on people under thirty, and reduce the VAT on energy and necessities. Yet these parties want to retain and even expand their welfare states. The AfD favors a robust minimum wage and family subsidies. National Rally wants to reduce the retirement age to sixty for long-term workers, index pensions for inflation, and reverse Macron’s cuts in unemployment benefits. Britain’s Reform party advocates tens of billions of pounds in tax cuts while increasing winter fuel subsidies, scrapping the two-child benefit cap, and adding billions in National Health Service (NHS) spending. Left-populist agendas in these countries court intergenerational class warfare as their populations age. Right-populist agendas are fantastical.34

Voters’ preferences don’t fall out of the sky. Economic stress predisposes people to see the world in zero-sum terms, but they must be mobilized. It’s not as if sixty-three million American voters were looking for a candidate who would advocate building a wall along the southern border before Trump came along. These voters had not been available in anything like these numbers until the 2008 financial crisis and its aftermath made them receptive to attacks on immigrants and free trade. To be sure, there had been rumblings before then. In 1992, Ross Perot won almost twenty million votes in the presidential election—the best performance by a third-party candidate since Teddy Roosevelt in 1912—by predicting a “giant sucking sound” of American jobs leaving for Mexico in the wake of the newly negotiated NAFTA. That year, Patrick Buchanan won almost three million votes (23 percent) in the Republican primaries against incumbent President George H. W. Bush, denouncing NAFTA and immigrants in thinly veiled racist terms, and four years later, he won over three million primary votes (20.8 percent) in a three-way race against Steve Forbes and Bob Dole. Significant as those numbers were, there was never a serious prospect of someone like Buchanan or Perot winning the nomination of a major party or winning the election as an independent.

The mainstream political response to the financial crisis and its aftermath changed that. Bailing out financial elites while imposing austerity on the rest of the population expanded the pool of potential voters who could be mobilized by populist candidates. Mainstream politicians with their heads in the sand about what had changed set themselves up to be marginalized by fringe candidates peddling arguments that resonate with people who have zero-sum worldviews. This was starkly evident in tariff debates, where long-accepted appeals to comparative advantage and mutual gains from trade increasingly fell on deaf ears, while Trump’s insistence that trade deficits mean Americans are being ripped off gained traction. Telling people with zero-sum worldviews that the US derives benefits from free trade just doesn’t work. Either they don’t believe it, or they believe that the benefits must be accruing to someone other than themselves. Telling them that consumer prices will be higher with tariffs becomes a tough sell once Trump’s message resonates with, and reinforces, their worldview.

And they are at least partly right. It is true, for instance, that in 2025 the $235 billion US trade deficit in manufacturing with Europe was partly offset by a $76 billion trade surplus in services, but the services in question were mainly financial and digital. The winners were financial and tech companies, mostly in New York and California. Europe exports more than four times as many cars to the US as it imports from the US, and it enjoys substantial trade surpluses with the US in machinery, chemicals, and other manufactured goods that are produced in Middle America. This difference is emblematic of why the combination of globalization and supply-side austerity has been disastrous politics for mainstream parties, especially the center left, which abandoned voters in the hardest-hit industries while currying favor with the winners. “Governments aren’t good at picking winners” was the standard neoliberal mantra. Its proponents heaped scorn on industrial policy in all its forms and demanded that government get out of the economy. What they missed, and what the new populist politicians saw, is that economic losers can be mobilized to pick governments.

The results are not pretty. Because almost all far-right parties have not yet been in government, they have had the freedom to push policies that are at best impractical and at worst likely to aggravate the problems they identify. The one instance in which such a policy has been unambiguously implemented—Brexit—is instructive. As the costs of leaving the EU (anemic growth and costly red tape for doing business with Britain’s largest trading partner) have mounted, and the promised benefits (more lucrative alternatives to European trade and increased funds for the NHS) have failed to materialize, buyers’ remorse has steadily grown. In March 2021, British voters were equally divided, with 44 percent believing that Brexit had been the right decision and 44 percent believing it had not, but by mid-2025, only 32 percent believed it had been the right decision, while 56 percent were convinced it had not. For the most part, far-right populist policies are untested, but as with tax cuts, immigration, and social spending, the basic arithmetic doesn’t add up. What happens when populists in power try to square that circle came into focus with the fight over Trump’s One Big Beautiful Bill in mid-2025, as Republicans found that they could only satisfy both the tax-cutting and social-spending interests in their coalition by adding $4.1 trillion in debt over the next decade. Other countries don’t have that luxury.35

Far-right populists are, in any case, fighting the last war. Restoring domestic industrial jobs that have been lost since the 1990s through tariffs and immigration restrictions is a fool’s errand because the real challenge of the present and future is robotics and AI. The coming battle with China is going to be over telecommunications, microprocessors, quantum computing, solar energy, nuclear and fusion power, rare earth metals, electric cars, biotech, and pharmaceuticals—not over low-wage industrial manufacturing. What this will mean for the future is radically uncertain, with estimates ranging from massive elimination of good jobs to massive expansion of them.36 But it is obvious that we are not going back to the past that populists promise. In this respect, those who describe figures like Trump as fascists miss the mark. Fascism was radically forward-looking. Hitler was a high modernist who promised a transformative future in a Thousand-Year Reich that would dominate the world. Likewise with Mussolini’s expansive corporatism. Trump wants to retreat behind walls and re-create what is billed as a lost past—however idealized it might be. The same holds for other right-wing populists. Hitler’s ethnic politics were about expansion and domination—if not extermination—of non-Aryan races. Mussolini’s variant of lebensraum was spazio vitale. Figures like Marine Le Pen, Viktor Orbán, and Giorgia Meloni are traditionalists. Their commitment to the EU is conditional on turning it into Fortress Europe. If it turns out that they can’t, they will likely want to go their separate national ways.

The fantastical policies of right-wing populists aside, zero-sum politics is destructively self-defeating. Engaging in it perpetuates it. As with the prisoner’s dilemma, one party’s uncooperative behavior provokes the same in others, to everyone’s detriment. This is most obvious with trade wars, where tariffs provoke escalating cycles of retaliation. They are hard to break out of not only because of that dynamic, but also because politicians aligned with different domestic interests engage in pork barrel politics with those who want other tariffs. The Smoot-Hawley Tariff Act of 1930 in the US exemplified both dynamics. Initially intended to protect American agriculture, the tariffs proliferated to other industries and were eventually imposed on thousands of imported goods, provoking retaliatory tariffs that undermined Smoot-Hawley’s original purpose. Demand—and therefore prices—for US agricultural exports fell, leading to increased farm foreclosures and hampering the nation’s recovery. The cycle was broken only when Congress delegated its power to negotiate tariffs to the president in the Reciprocal Trade Agreement Act of 1934, enabling Franklin Roosevelt to negotiate nineteen trade agreements over the next five years without Senate approval. This paved the way for the liberalized trade regime that was enshrined in the General Agreement on Tariffs and Trade after World War II.

Congress was only willing to cede that power to the president five years into the Great Depression, when it had become obvious there was no other path out. It worked. FDR knew what was required, and he had established his credibility with his dizzying swath of New Deal legislation the previous year—a dramatic contrast to the torpor of the Hoover years. But it also set a precedent that President Trump would exploit to produce the opposite result nine decades later. The Trade Expansion Act, adopted at President Kennedy’s behest in 1962 as the successor to the New Deal law, which had expired the previous year, empowered the president to negotiate tariff reductions of up to 80 percent, but it also included an emergency provision that allowed him to impose tariffs in response to national security threats. In 2025, by which time the powers of the president—especially in matters of national security—had vastly expanded, Trump invoked this provision to impose tariffs on all American imports and additional “reciprocal” tariffs on scores of countries, many of them confiscatory. Whether and how much Congress or the Supreme Court would rein in this assertion of power was an open question, but the fact that Trump could impose them with the acquiescence—if not agreement—of congressional Republicans, many of whom had traditionally favored free trade, was testimony to how intimidated they were by the zero-sum outlook that resonates so powerfully with his base.37

Trump’s trade war is the end point in an evolution that marries the two halves of this book. America’s return to unilateralism under his leadership calls to mind Ernest Hemingway’s line about how he went bankrupt: first gradually, then suddenly. It began with Bill Clinton’s expansion of NATO and bombing of Kosovo in 1999, eroding his predecessor’s efforts to establish a multilateral post–Cold War regime—mediated through the UN Security Council—to manage international conflict. It accelerated with George W. Bush’s Coalition of the Willing in Iraq and went into overdrive with Donald Trump’s full-throated America Firstism. This spawned both Trump’s economic nationalism—verging on autarky—and his torching of what was left of NATO’s credibility as a multilateral alliance by fostering radical uncertainty about whether the US would meet its Article 5 obligations in the event of an attack on a member country. He broadcast his zero-sum outlook at every turn and confirmed it with his every action. He would support participation in collective arrangements only if the US controlled them and they offered the largest available transactional benefits. This is why he wanted to dismember the European Union. It is a multilateral institution that he could not control. He would have more leverage negotiating with countries individually than with a twenty-seven-member union representing five hundred million people.

And his zero-sum behavior inevitably prompted the same in others. This became clear in mid-2025, when Trump insisted that NATO members increase defense spending to 5 percent of GDP as a condition for the US remaining in the alliance, whereas in Europe the conversation emphasized increased spending as preparation for the possibility that the US might leave. No longer confident that they could count on the US going forward, Europe’s NATO members would have to do it for themselves. Whether they could solve the “herding cats” problem without any obvious alternative to American leadership remained an open question, given the rundown and poorly coordinated state of their militaries, their domestic economic needs, and their governments’ differing views of the Russia-Ukraine war. Because Putin would be unlikely to survive in office if he lost in Ukraine, it seemed clear that either Russia would win the war, or it would remain at a stalemate as long as he remained in the Kremlin. Given Trump’s relentlessly transactional view of international politics, his determination to decouple the US from China as much as possible, and Xi Jinping’s regional ambitions, it seemed unlikely that there would be any chance for a reset among the three great powers until all three leaders had passed from the scene. Then it would depend on who came next and how much damage had been done in the meantime.38

The internal politics in many established democracies will continue to be challenged by demographic realities. A logical solution for governments faced with the relentlessly rising old-age dependency ratios would be to take advantage of the labor surplus in emerging-market and developing countries, most of which are between phases 2 and 3 of the demographic transition—with some six hundred million young people expected to enter the working-age population between 2025 and 2030—and accept significant immigration to expand the tax-paying labor force. But that seems unlikely, because most of those governments are either committed to—or running scared of—the anti-immigration political agendas that have been weaponized by the populist right. Combining an anti-immigration agenda with a commitment to low taxes raises the specter of ever-increasing austerity, at least in countries whose governments are unable or unwilling to deploy debt to fund a new era of economic growth. Even governments that are willing to raise taxes to the levels currently prevailing in Denmark and France will not be immune from such pressures as the dependency ratios increase and those who are living from paycheck to paycheck in the shrinking working-age population find themselves required to pay increasing amounts to provide services for the elderly—services that will seem unlikely to be there for them once they retire. The resulting intergenerational conflict might not reach the levels that Trollope satirized in The Fixed Period, but it will likely be ugly.39

The better and more benign approach would be for governments to make substantial public investments to improve the economic circumstances of the working population. This would reduce workers’ propensity to see the world in zero-sum terms, which might in turn make them less resentful of supporting older generations and, eventually, more open to accepting significant increases in immigration. As much as possible, such investment should be in the form of predistribution—investing to produce desirable employment on a wide scale—rather than redistribution to compensate those who fall by the wayside. This is true not only for the obvious economic reasons, but also because most people would rather have good jobs than live off government handouts.40 There is no blueprint for predistribution in the emerging economies of the 2020s and 2030s any more than there was a blueprint for the New Deal in the 1930s. FDR made much of it up as he went along, sustaining things that worked and abandoning those that did not. Policies that will likely pay dividends are those that foster human capital, like ensuring basic nutrition, education, and retraining for displaced workers; policies that indirectly facilitate labor force participation, like affordable day care; direct public investment in the economy to create employment, as with infrastructure projects and other public works; and indirect investment and regulation to bolster low incomes, such as minimum wages, wage subsidies like the EITC, and health insurance. One thing that more than four decades of supply-side policy has made clear is that waiting for tax cuts to produce growth whose benefits are widely shared is waiting for Godot.

Where will the money come from? Borrowing is an option for countries where the politics and economics are feasible. An encouraging sign in March 2025 was when, in a Nixon-to-China moment, Germany’s incoming CDU chancellor, Friedrich Merz, engineered the suspension of Germany’s debt brake that Angela Merkel had embedded in the constitution sixteen years earlier. The trigger was the imperative to increase defense spending in the wake of Trump’s stepping back, but Merz also planned €500 billion over twelve years for long-overdue investment in Germany’s infrastructure as well as in climate change and the green economy. That is a large number, comparable to a $2.3 trillion investment in the US economy. Similar developments became likely across Europe as NATO members committed at their June 2025 Hague summit to raise defense spending to a staggering 5 percent of GDP by 2032, 1.5 percent of which would go toward long-overdue refurbishment of infrastructure. Plans to spend on this scale will likely create pressure from other EU members to revise the Fiscal Compact and perhaps even for the European Central Bank to issue Eurobonds to facilitate new growth—a precedent already set during the pandemic. This could unleash a new era of European growth with the potential to reverse the austerity politics of the last two decades. Governments that are more constrained will have to revisit their historically low tax rates sooner, perhaps with windfall profits taxes on emerging forms of AI to fund workforce retraining for economies that are changing faster than ever before.41

Another encouraging sign in mid-2025 was that in the UK, Keir Starmer finally began pursuing a raft of policies that promised better results than those of his first wasted year. This might have been because, by then, Labour had fallen to a dismal 23 percent in the polls—11 points below its performance in the previous July’s election, 7 points behind Reform, which now stood uncontested in first place at 30 percent, and only 6 points ahead of the foundering Tories, who polled a historic low of 17 percent. Or it might have been because Labour was inspired by Merz’s about-face on Germany’s debt brake and the advent of a new era of military Keynesianism in Europe. Or it might have been that Labour saw opportunities to capitalize on the reverse brain drain triggered by Donald Trump’s attack on universities and research funding in the US. For whatever reason or combination of reasons, in June 2025, Chancellor of the Exchequer Rachel Reeves set out a £2 trillion spending plan on health, defense, and infrastructure projects aimed at restoring Britain’s desultory growth and reversing the relentless slide in Labour’s popularity.42

A more ambitious manifesto than anything Reeves had previously proposed, it included funding for transportation, upgrades in defense hardware, airport expansion, nuclear power stations, and green energy investments. She promised action on the much-discussed Oxford-Cambridge corridor, which has been billed as Britain’s answer to Silicon Valley. She included substantial sums for social housing and regulatory reform to reverse the housing backlog. Significant sums would go to regions beyond London—long overdue investment in places like Blackpool, Cardiff, Teesside, and Kirkcaldy. She promised real NHS spending increases of 2.7 percent per year over four years, some of it frontloaded into the first two. On the funding side, Reeves moderated her characteristic caution by projecting substantial savings from efficiency reforms, without providing much detail on how they would be achieved. She also relaxed fiscal rules to allow the government to incentivize private investment by issuing loans and guarantees that would not appear as debt on the government’s balance sheet, and by using other forms of creative accounting to facilitate housing and green energy projects. It was the government’s first serious effort to free itself from the fiscal yoke it had inherited from the Tories and give Labour a fighting chance to realize a political comeback.43

The big question was whether the benefits would show up soon enough for Labour to get the credit in 2029. Like Biden’s Infrastructure Investment and Jobs Act and his CHIPS Act, this was an infrastructure-heavy approach that got off to a slow start. One reason politicians talk about infrastructure more often than they invest in it is that it is slow to implement, so apart from those who benefit from the jobs involved in building it, voters are unlikely to reward them at the next election. FDR understood this during the New Deal, insisting that long-term investments be accompanied by measures that affect voters in the short run. Whereas his secretary of the interior, Harold Ickes, focused on public works and other forms of infrastructure, Harry Hopkins at the Federal Emergency Relief Administration spent hundreds of millions of dollars (some $8 billion today) through the states and $1 billion (more than $24 billion today) of federal money on “quickie” projects through the Civil Works Administration in 1933 and early 1934. Notoriously, he rejected projects that promised long-run benefits, remarking that people “don’t eat in the long run—they eat every day.”44 The question was: What would Starmer and Reeves implement that would matter to voters by 2029?

The most important priority was restoring public faith in the NHS, which, as political analyst Sam Freedman notes, is the primary way British voters judge the quality of public services. The NHS used to be Britain’s most popular institution, but in 2025 satisfaction levels stood at record lows, with accident and emergency wait times near record highs—partly a hangover from the pandemic, partly because the service has not kept pace with changes in longevity and medical innovation, and partly because of years of systematic underfunding by Tory governments. Whether the £22.6 billion Labour planned to spend in the first two years would make a dent in NHS’s problems was an open question, since much of that sum seemed likely to be absorbed by inflation, including pay settlements, population growth and aging, and efforts to reduce long wait times for elective care. This meant that much of the burden of improving public perceptions of the NHS would depend on harvesting major savings from as yet unspecified efficiency gains in the projected 10-Year Health Plan. Failing that—or absent larger up-front investments—the 2025 Starmer-Reeves plan risked turning out to be too little too late, consigning the Starmer government to the same fate as the Biden administration.45

Perhaps the most encouraging European democracy at the end of the first quarter of the century is Spain. It has the second-lowest fertility rate in the EU (behind Malta) and is projected to have the highest old-age dependency ratio by midcentury. Yet it has managed to resist the anti-immigration politics sweeping other democracies, despite having one of Europe’s largest shares of foreign-born residents and despite the rise of the far-right, anti-immigrant party Vox, which emerged in 2013 and became a political force in the 2019 elections by winning more than 15 percent of the vote and fifty-two seats in the Cortes. Pedro Sánchez’s Socialist governments, which have been in office since 2018, have refused to run scared of Vox on immigration. Instead, they have continued the pragmatic policies followed by most Spanish governments this century, marked by openness to immigration from inside and outside the EU, including pathways to normalize irregular migrants and eventually grant them citizenship. This permissive attitude has persisted in the face of Spain’s comparatively high levels of unemployment, because, as in Britain and the US, immigrants in Spain’s highly segmented labor market work mainly in low-paying sectors with tough working conditions that Spanish-born workers avoid, such as agriculture, domestic service, and catering. Unlike his European counterparts who have been traumatized by the far right, Sánchez has been unabashed in tying the country’s economic viability to immigration, insisting, as he did in the Cortes in October 2024, that “Spain needs to choose between being an open and prosperous country or a closed-off, poor country.”46

Sánchez had been expected to pay a heavy price for his pro-immigration stance in the 2023 elections, when Spain faced post-COVID inflation and social dislocation similar to what had battered many incumbent governments elsewhere. In the event, Vox underperformed predictions, dropping to 12.4 percent of the vote and losing nineteen seats, allowing Sánchez to cobble together a minority government. Spain’s comparatively strong economic growth was perhaps one of the reasons Vox’s zero-sum message did not gain better traction. This continued in 2024, when The Economist cited Spain’s high level of immigration as a major factor in its 3.2 percent GDP growth and its ranking as the best performing of the world’s thirty-seven richest economies. With the economy predicted to continue outperforming the European average and other signs of reduced economic stress—in 2024, Spain recorded its lowest percentage of citizens living in or at risk of poverty in a decade—the possibility that the country might avoid cycles of self-reinforcing zero-sum politics was at least conceivable, offering a ray of hope in an otherwise bleak European political landscape.47

Part of the reason the Socialists were able to prevail with this strategy is idiosyncratic: Spain’s blood-and-soil nationalism is fragmented due to the presence of Basque and Catalan separatist movements. Their parties are virulently opposed both by the center-right People’s Party and by Vox, whose members hate them viscerally. If a deputy from Barcelona begins speaking Catalan in the Cortes, Vox deputies start screaming and People’s Party deputies walk out. This dynamic fragments the political right as well as the natural constituency for anti-immigrant politics, to the advantage of the Socialists, who are more muted in rejecting separatist aspirations. In 2021, the Sánchez government pardoned nine Catalan leaders who had been imprisoned for their role in Catalonia’s failed 2017 independence bid, and in 2023 it granted a general amnesty in exchange for separatist support for Sánchez’s minority government. The socialists have made good use of this advantage, with the result that Spain stands out as a compelling illustration that governments able to call the bluff of anti-immigration populists can succeed in implementing policies that ultimately benefit their populations.48

Shouting at the Wind, Again?

What should we make of these developments in Germany, Britain, and Spain, and the decisions by Canadian and Australian voters in 2025 to resist the populist wave that has swept so much of the democratic world? Are they green shoots that will blossom into a better politics, or will they turn out to be stillborn hopes, unable to escape the bleak legacy of decades of bad political decisions? The answer depends on whether the emerging generation of political leaders understand the errors of omission and commission since the Cold War that have produced today’s politics. These errors, born of the dispiriting combination of amnesia and myopia documented in this book, have yet to be widely appreciated.

The amnesia was an almost willful unlearning of painful historical lessons. Despite a promising start in responding to Saddam Hussein’s invasion of Kuwait in 1990, Western leaders, once the Soviet empire collapsed, made choices more akin to the disastrous policies of the victorious powers after World War I than to those of their far-sighted counterparts after World War II, who were determined not to repeat past mistakes. Where the League of Nations had floundered and failed, and the return to the gold standard had decimated many economies, post–World War II leaders created the UN and the Bretton Woods system and invested heavily in ancillary institutions to manage international security and prevent war among the great powers. They also worked hard to integrate historical adversaries into cooperative economic and security arrangements through the EU and NATO, and they made huge financial outlays to help former adversaries build thriving capitalist democracies.

But the historical learning that produced the post–World War II order was ignored or forgotten after the Cold War. Leaders of both parties in the US succumbed to the temptation to exploit the country’s position as the world’s lone hegemon, weakening multilateralism and international institutions and paving the way for resurgent nationalisms. The US also led the way in domestic politics. Keynesian policies were successfully blamed for the stagflation of the 1970s, creating an opening to mainstream the supply-side neoliberalism that had been hovering in right-wing think tanks for decades. Leaders of both parties turned away from industrial policies that had fostered widespread, secure employment in favor of supply-side policies whose benefits did not trickle down as promised. Instead, they rendered millions of voters increasingly vulnerable to the vicissitudes of the business cycle, ever-more-mobile capital that hunts the world for cheap labor, and new technologies that make their jobs obsolete. The pattern was replicated across most of the capitalist democracies, as public sectors were privatized, capital markets were integrated, and taxes, regulations, and social support were cut.

Once the communist economies vanished, the neoliberals found themselves pushing against open doors with variants of There Is No Alternative. Triangulation strategies led center-left parties to embrace the new orthodoxy and stick doggedly to it, even after the financial crisis had rubbished its legitimacy and as their management of the aftermath decimated their electoral support in country after country. Perhaps the best epitaph for this strategy came from the Dutch Labour Party politician Jeroen Dijsselbloem, who had enforced an austere neoliberal diet as finance minister in a coalition led by the center-right Mark Rutte from 2012 to 2017. Labour’s voters responded by deserting the party in droves, leaving it with 5.7 percent of the vote in the 2017 elections, as compared with 24.8 percent five years earlier—an even worse implosion than the French Socialists endured that year. Yet Dijsselbloem insisted that the party had done the right thing while in office, lamenting of his voters, “We have lost them somewhere along the way.”49

The historical amnesia that led so many politicians to undermine the fledgling post–Cold War order and alienate huge swaths of their electorate was buttressed by a myopic outlook that repeatedly took better possibilities off the table. In 1840, Alexis de Tocqueville had praised Americans for understanding that people will be more likely to thrive if others in their society can thrive too. This was the doctrine of “self-interest rightly understood” that he thought the reactionary French aristocrats of his day must either learn or continue facing revolutionary explosions like those of 1789 and 1830 that would eventually sweep them away. He believed this admonition was vindicated when revolution erupted again in France in 1848, as he pointed out in the preface to the twelfth edition of Democracy in America, published that year. By flatly rejecting widespread aspirations for a better life, his peers were sawing off the branch they were sitting on. Like Keynes seven decades later, Tocqueville was shouting at the wind.50

Whether or not Tocqueville was right to discern this enlightened self-interest in nineteenth-century Americans, US political leaders have displayed little capacity for it since the Soviet empire collapsed. They had the chance to build on and deepen the rules-based international order that FDR and Harry Truman had begun constructing at the end of World War II, which had stalled for much of the Cold War. Instead, they made decision after decision that undermined that order and all but ensured that the West’s decades-long standoff with the USSR would be replicated in its dealings with the new Russia. They did it because they could get away with it, brushing aside missed opportunities and warnings about what their unilateralism would provoke once their adversaries were able to respond.

At home political leaders behaved likewise, imposing neoliberal economic regimes because no one could stop them. With unions on the back foot and Keynesian demand management discredited, they abandoned the prudential considerations that had led political and economic elites to support the New Deal and Great Society in the US and comparable initiatives in European social democracies. Once capitalism was the only game in town, they saw no reason to worry that workers might conclude they had nothing to lose but their chains. The question going forward is whether the rude awakening delivered since 2016 is sinking in. The danger is that political leaders will rely on the eventual failure of populist policies to regain voter support—a risk that came into view six months into the second Trump administration. Voters were souring on Trump’s management of the economy and immigration, the signature issues that had won him the election. Democratic leaders and commentators reveled in the schadenfreude, but none of them addressed a more troubling fact: Their own popularity stood at its lowest level since the early 1990s, when Newt Gingrich orchestrated the first Republican takeover of Congress in more than four decades.51

Democracies are at an inflection point. The supply-side era that was ushered in after the stagflation of the 1970s and went into overdrive with the collapse of communism has run its course. Its proponents have themselves been discredited by the failures of their macroeconomic management and their opportunistic use of Keynesian remedies to bail themselves and their allies out of trouble while imposing austerity on everyone else. Another piece of conventional wisdom has been shredded since 2016: that everyone must live with the neoliberal project because There Is No Alternative. The rise of far-right populism has revealed that alternatives do exist—ones that people left behind by neoliberalism can be mobilized to support, and that people who celebrated Fukuyama’s “end of history” do not want for themselves or their children. It is time for them to wake up to the fact that unless democratic capitalism delivers demonstrable advantages for most citizens, they will have few reasons to support it.

It is not enough to wait for the populists to fail. They might be voted out of office when they don’t deliver, but that is far from certain. They might become more repressive, turning recent episodes of democratic backsliding into harbingers of the future. They might involve their countries in foreign conflicts—one of the oldest tricks in the book for governments that are failing at home—with plenty of opportunities to do so in a protracted zero-sum global environment. Or they might simply stumble on in government, particularly if mainstream parties offer no viable alternatives that address the conditions that gave rise to populism. As the forty-two-year-old Franklin Roosevelt told the defeated Democrats in 1924, “Waiting with hands folded for the Republicans to make mistakes” would never be enough. They needed to devise a program that would speak to the interests of most voters, get behind it, and—when the opportunity arose—implement it.52

FDR was still hammering away at this theme in the run-up to his fourth victorious presidential election twenty years later. In his January 1944 State of the Union message, he argued that the Bill of Rights had been appropriate for an agrarian society when the Constitution was written, but more was needed for people to have a viable shot at a good life in a modern industrial economy. He proposed an economic Bill of Rights, beginning with a right to “a useful and remunerative job” that would provide adequate sustenance. He added rights to education, a decent home, medical care, and “protection from the economic fears of old age and sickness and accident and unemployment,” rights for farmers to earn a decent living and for businessmen to trade in a world free of domination by monopolies. This was the manifesto for postwar reconstruction that FDR never lived to implement, though parts of it would be realized in Harry Truman’s Fair Deal and Lyndon Johnson’s Great Society.

FDR’s rationale for his Second Bill of Rights was that people cannot be genuinely free without economic security. “Necessitous men are not free men,” he insisted. “People who are hungry—people who are out of a job—are the stuff of which dictatorships are made.”53 This was obvious common sense when FDR said it eight decades ago. It remains obvious common sense today.

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