(Published in the Globe and Mail on January 8th, 2025)

Prime Minister Justin Trudeau, who announced his resignation this week, was pushed out for the same reason Donald Trump was again elected as U.S. president: growing populist discontent. And this goes beyond North America. Populist forces have recently had electoral successes in many other countries, including Italy, Argentina, India, Germany, and France.

Although this discontent is often attributed to rising inequality, stagnant wages and higher costs of living, the source of populism isn’t necessarily economics or right-wing ideology. Cross-country evidence shows that people are expressing dissatisfaction and voting out incumbent governments even when their economy is doing well (so-called “vibecession”). And research shows that populist leaders draw roughly equal support from low- and high-income individuals.

U.S. President Joe Biden kept the tariffs Mr. Trump put in place and enacted large subsidies and redistributive policies. Mr. Trudeau’s middle-class agenda left the poverty rate and after-tax inequality lower than when he took power in 2015. The median after-tax income also grew 8 per cent faster than inflation. But none of this has calmed the discontent.

The roots of populist movements have not really changed since the Roman populares in 50 BCE: It lies in people’s lack of trust in the prevailing establishment. Losing the trust of Canadians is where Mr. Trudeau failed.

Massive and rapid societal changes – such as large volumes of immigration, globalization, technological disruptions, social-justice recognition, weather destruction – generated widespread dislocation, insecurity and anxiety. People felt things were out of control, and that “the elite” were looking after their own instead of working in the people’s interests. They thus started supporting populist movements, who promised to restore control and a sense of safety and comfort.

Who would blame them?

Governing establishments (of any political spectrum) have seemed powerless in controlling their borders, providing quality public services, affordable housing, and preventing fraud and environmental degradation. The Liberals lost public trust when they struggled to provide services as essential as passports, digitize the government, manage procurement (for example, ArriveCan) avoid conflicts of interest (such as WE charity, Aga Khan), and control the number of people entering the country.

More broadly, governments have promoted globalization and environmental protections but have failed to help those negatively affected. The rich fraudsters who caused the financial crisis were not prosecuted, and the victims did not receive tangible help. Caving to special-interest groups is common, even if it means reneging on core principles. And when questioned about any of this, responses are often derisive, arrogant and self-righteous. No wonder that less than 30 per cent of Canadians trust their government, according to a Statistics Canada survey. It is delusional to think that a tweak in tax rates, sending cheques in the mail or lifting sales taxes will gain back that trust.

Dissatisfaction may not be fully rooted in economics, but good economic management matters in gaining trust. Perception of poor economic management played a big role in Mr. Trudeau’s demise.

Whoever follows Mr. Trudeau will need to improve the quality and accessibility of basic services such as health care as well as financial and employment supports. They need to get directly involved in increasing the supply of affordable housing, keep pace with an increasingly digital and service-driven economy, be better at enforcing rules and norms in a truly fair manner and improve the controlled entry and integration of immigrants.

The next government also needs to promote competition and labour-friendly policies, coupled with less protection of industry and special-interest groups. The government needs to better balance resiliency and efficiency, rules and flexibility, individual and societal risk bearing, and climate mitigation and energy security.

How about decentralizing power to lower levels of governance – levels closer to the citizens they serve – to give more voice and control to the population? There is also a need to recognize that many of the assumptions in mainstream macroeconomic frameworks – on which governments base their economic policies – are not backed by empirical evidence. Economics has too often become a triumph of ideology over facts.

Finally, the next government desperately needs to be more transparent, reliable, accountable and better at communicating data and evidence that support decisions.

Failure to establish a sense of trust will enable opportunistic politicians, who are another part of the elite, to use this mistrust to manipulate the masses to gain power and advance their own interests. This is what happened in Rome with the populares: Julius Caesar’s populist appeal was instrumental in undermining the republican system and getting himself appointed as “dictator for life.”

It remains to be seen if this will happen in Canada, but events in the United States don’t look optimistic. Let’s remember Mr. Trump’s promise that, if elected, Americans would never need to vote again.