Populism, internet freedoms and government spending

It's a critical year for several democracies around the world. President Sarkozy faces an uphill battle in the second round of elections; Dutch Prime Minister Mark Rutte tendered his government's resignation after failing to agree on new budget cuts; President Obama faces off Mitt Romney in the most important elections in the world; Prime Minister Noda will most likely fall victim to the split Diet this year or next; South Koreans will choose their president after the national assembly elections failed to yield a clear popular mandate for any party.

But elections in 2012 stand out from past displays of democratic principles - there appears to be a new wave of populism sweeping over the world, primarily characterized by widespread discourse regarding the role of government in the lives of the multitude.

In particular, defending the rights of individuals online has produced a political movement that will only gain greater following as US and EU policymakers continue to draft draconian measures to limit the freedom of speech. Democratization of public opinion through the medium of social networking sites has been an empowering force and the new Pirate Party seeks to "make sure that the offline civil liberties would carry over into the online world"

They have a five step plan:

1. Create Sweden’s largest youth wing of any party, giving [them] credibility enough to succeed in… 
2. The European Elections, where [they] need to beat 4% (note: [they] got 7.13%), which in turn is a stepping stone to… 
3. Getting entry in the Swedish Parliament, which would start turning things around immediately. But in order to really change European policy, [they] need to… 
4. Take about 5% in 3-4 more key parliaments in Europe, in key countries like Germany, France, or Poland, and use the combined leverage of those heavyweight parliaments to change the view on information policy across the European Union. Once that is done… 
5. The world would have to follow, since no monopolistic repression happens if Europe doesn’t agree to it – since the EU is the world’s largest economy, larger than the US.

Considering the already sizable and growing support for this movement, Pirate Parties will have a place in European Union policymaking in the near future.

Meanwhile, the looming economic crisis has European country on edge and elected officials in a quandary - governments need to pass austerity measures to safeguard the economy, yet the public rejects any budget that would scale back spending on welfare.

Just today, the Dutch government collapsed over a new austerity budget that would have brought deficits below 3% of the GDP as agreed upon in the EU fiscal pact. According to journalist Neil Clark:

The people have had enough of austerity... Holland’s GDP growth in the ten years since it’s had the Euro has just been 1.5 per cent. And they’re now being told that because of this absolutely insane fiscal pact that was agreed upon last year. It will destroy the good life that the Dutch people have been used to over the years. And unsurprisingly the Dutch are saying, it’s enough.

Indeed, decreasing government spending is politically challenging and ruinous for coalitions; however, Sweden provides a clear example of how decreased spending complemented by reduction of taxes could have a positive effect on growth.

According to Sweden's finance minister Anders Borg, Stockholm owes its success to the following policies that were unpopular at start, but proved instrumental in improving services and development

• Substantially reducing income taxes - particularly, through the introduction of earned income tax credits, for low- and middle-income earners - and reforming benefits systems. 
• Reforming the educational system and improving the situation of groups with weak employment prospects. In particular, developing schools and vocational training to better target knowledge and skills for a modern economy. 
• A strong commitment to sound public finances; a fiscal policy framework with an expenditure ceiling and a surplus target
• Pro-growth reforms including the de-regulation of markets, selling of state-owned companies, introducing competition in health care and education, abolishing of wealth and inheritance taxes.

The US Tea Party supported similar positions, but overburdened itself by unnecessarily supporting socially conservative issues and failing to come up with a clear economic plan to resolve the deficit without capsizing the entire economy. In addition, the movement seems to be losing momentum as the Republican Party fields slightly more right than it had in the past.

While policymakers in the US and EU struggle to develop sound fiscal policy for long-term growth, Argentina has fallen wayside (again) - the decision to nationalize the oil firm YPF appears to be driven more by President Kirchner's desire to pander to the public than short or long-term benefits to the country.

Competing domestic forces have always limited the number of policies that elected officials can carry out. The new element in the 21st century is the increasing power of the masses to fuel the momentum of political movements. This will produce a mixed bag of politicians: some like Anders Borg will pursue policy and allow the results to speak for themselves; others like Christina Kirchner will revert to directly appealing to the public through cheap cosmetic measures such as nationalization and bursts of public spending.

As the US presidential election approaches, it remains to be seen how each of the candidates will field their positions - and unhappy America may see both candidates buckle