The Appeal of Populism
Chris Kuehl, Ph.D.
As so often happens, the term populism has taken on a life of its own as the media and analysts try to make sense of the changes that have swept through the Western world over the last few years. There are right-wing groups that seek to change the status quo (National Front in France and AfD in Germany), and there are left-leaning groups with the same basic antipathy toward the powers that be (Five Star Movement in Italy and Syriza in Greece).
The classic definition of a populist is someone who divides the world neatly into two camps—the good ordinary people who are just trying to live a normal life and the corrupt elites who are trying to exploit them. Populists generally do not trust institutions, the media, the courts or bureaucracy. They do not believe experts in general and tend to be isolationists. Movements can drift quickly into racism and other forms of bigotry because they do not trust outsiders who seek to change their way of life. The term has been liberally applied of late to any group that seems upset with the status quo.
There is a core motivation shared by both the left- and right-leaning populists. They are both angry at the economic changes they perceive to be at the heart of their concerns. The basic assertion is that the rich have become far richer at the expense of everybody else. There has been plenty of evidence to support some of that assertion because the very wealthy have indeed become wealthier and the rest of the population has stagnated in terms of income. The story is not as simple as that, of course.
Much of the wealth is created by investment decisions. Those who have seen their wealth expand every year are taking full advantage of the rapid rise in the stock market. The boom has made those with a stake in the markets very rich indeed. At the same time, those who are not engaged in the markets as fully have not seen the raises they were once accustomed to. The lack of wage hikes and salary increases has more to do with the lack of inflation than any other single factor. With limited hikes in the price of goods and services, the providers have little to work with as far as raising wages. The good news is that while wages have not gone up, neither have most prices. In many cases, there has been a dramatic decline in the costs of many items such as fuel.
There are two factors to be aware of that could drastically change the current situation. Both of these changes are nearly inevitable. The first is that the markets go from boom to bust. It is generally acknowledged that the market is too frothy at the moment and in need of a correction. It has been estimated that almost a quarter of the money in the U.S. market is foreign (most of it from Europe). If there is a reason to bring that money home, the correction in the U.S. could be steep indeed. That would wipe out billions of dollars of value and make a lot of wealthy people a great deal less well off. The second change is a surge in inflation. It is not considered imminent, but the economy has rarely been without an inflationary period this long. The negative aspect of an inflation surge is high prices, but at the same time there will be room to offer wage and salary boosts.
The conditions that have provoked the populist resentment can and will likely change, but it hardly means that populism will lose its appeal. The average person is angry and frustrated and not prone to listen to reasoned arguments at this stage. They are too busy finding someone or something to blame.
Learn how to use nearly a dozen different techniques to facilitate and influence communication.
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Communication Skills Support the Credit Function
Functional skills and facts—while important—are not always enough to communicate and persuade others. More employers today are seeking credit managers with strong influencing skills, said Richard van Houten, director of Netherlands-based Bron & Partners, which provides management training.
Although credit professionals are good with facts and figures, communicating that information is sometimes a challenge, van Houten said. “More facts and more knowledge will not always convince others,” he added. “You have to have your facts right, but more and more people are convinced by other skills.”
Learning how to use these others skills effectively can help facilitate and influence communication, he noted. For example, a change in voice and intonation can strengthen a credit professional’s negotiation skills.
Van Houten identified 10 skill sets that credit professionals can use to make their communication more influential:
- Positivism through words and actions
- Voice and intonation
- Reading others character
- Facial expressions and body language
- Acknowledging others
Some of these skills, however, are a bit trickier than others to use, he said. Pain does not mean that you try and make people afraid; it’s used to get people’s attention in a variety of ways. There are three reasons people “buy” a message: when they like what they hear, to end pain or fear, or to prevent or avoid future pain, he explained.
“Research of a debt collector company shows that if smart, convincing language is used in the letter sent out to people whose payment is overdue (again), people will be more easily convinced to pay,” van Houten said. “Most effective is ‘getting the other to feel the pain/negative consequence of not paying’ together with bringing the message smart so that they will not fall into a ‘fight, flight or freeze’ modus. Then they will not change their (payment) behavior. They will simply ignore your message and ‘stick their head in the sand.’ The next letter might even be thrown away.”
In addition, learning how to read another person allows people to adjust how they speak and listen to facilitate the discussion and build trust, he said. “If you can increase trust, then you increase the speed of communication; it lowers the cost of communication.”
Van Houten will demonstrate how to use each of these techniques during the FCIB’s annual International Credit and Risk Summit session Team Motivation, which will cover key skills to motivate an international credit team to work together across borders, cultures and boundaries.
DSO Average 64 Days Worldwide
Last year, one out of four companies worldwide received customer payments after 88 days, according to a new Euler Hermes DSO report. Another quarter was paid within 31 days, and half received payment between one and three months.
The upper range of DSO showed “modest improvement and two days faster than in 2015,” the trade credit insurer stated. Overall, DSO worldwide averaged 64 days by the end of 2016. Differences were noted across countries and industrial sectors, however.
In Western Europe, DSO increased by one day, while it improved in Mediterranean countries, which have been higher than the regional average. “Thus, the gap between worst and best performers is shrinking,” the firm said.
Turkey (80 days), Italy (85 days), Greece (88 days) and China (89 days) were identified as the four countries where getting paid took the longest in 2016. And India and Saudi Arabia (both at 67 days) as well as Portugal and Japan (both at 69 days), France (73 days) and Spain (75 days) were the six countries with DSOs well above the global average, Euler said.
As for industries, machinery, chemicals, construction and information and communication technology were above the global average, while the metal sector recorded 56 days.
The findings above are based on Euler’s Bloomberg panel of 27,000 listed companies worldwide.
In another survey that looks at payment and collections behavior, this month’s International Credit and Collections Survey, conducted by FCIB, takes a look at some of these same countries. Credit professionals who are doing business in Greece, Italy, Poland, Spain and the United Kingdom can share their experiences as well as provide other insights. Each participant will receive the complete results, which includes payment trends for the countries formed from previous surveys. The survey closes July 6.
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Week in Review Editorial Team:
Diana Mota, Associate Editor and David Anderson, Member Relations