Populism in American Politics: Why the Next President Needs to be an Elitist

Amid the ruckus of 3AM calls, superdelegates, and allegations of racism, one curious factor has been lost in this presidential race: the increasingly important role of populism in American politics, especially during election year.

All three candidates in the fray are singing a distinctively populist tune. Barack Obama (Anti-NAFTA), Hillary Clinton (Job-protectionism) and John McCain (National Security) have significantly racheted up their appeals to the working-class. One cannot really blame them for adopting this strategy. By and large, this section of Americans voters is increasingly wary of free trade causing jobs to be shipped overseas, as well as being fed up with the confused approach to national security of the current administration.

The results have shown that this particular strategy is paying handsome dividends. On the Republican side, McCain has sewn up the party's nomination despite being viewed with suspicion by the party's more conservative section. Even his detractors admit that McCain is someone who has the right background and qualifications to right America's national security policy. On the Democratic side, Clinton has always appealed to the White, working-class populace and to her credit, she has maintained her support base, as evidenced by her victory in Ohio and her positive poll numbers in Pennsylvania.

Obama's case is a bit more complicated. He started off weak, but made rapid ground in the race, largely due to his appeal to educated, urban males and Blacks. However, he has recently changed tack and his campaign rhetoric has taken a more populist approach. His calls for "change", heady slogans such as "the urgency of now" (whatever that means) and his staunch anti-NAFTA stance are viewed as his attempts to maintain support amongst swing voters.

In a recent article in the Financial Times, Alan Greenspan has argued that a free-market, tarriff-free approach should continue to be the cornerstone of American economic policy, the one success of the current administration. The venerable banker has history on his side. A protectionist economic approach has always tended to pay dividends in the short-term, but has typically backfired over the course of multiple business cycles.

Take the current credit crisis. Amid the carnage on Wall Street, one silver lining for the top investment banks has been what are known as Sovereign Wealth Funds (SWFs), assets held by governments in another country's currency. These comprise of financial instruments, such as stocks, bonds and derivatives. It is hard to believe, but had it not been for SWFs, behemoths like Citi and Merrill Lynch would have been in an even worse situation than they currently are.

Thus far, most Western economies, including the U.S', have maintained regulations that have allowed freer capital and labor flows. Given that US economic policy still sets the tone for the Europeans, the current rhetoric in the American electoral landscape could set a dangerous precedent in the years to come.

Alexander Hamilton, America's first treasury secretary, and a staunch Federalist, believed that the well-educated elite should set the nation's economic agenda. All three presidential candidates in the 2008 race would do well to follow his sage advice.