The Unlikely Weapon Against Populism: How National Service Could Stabilize Our Economy
In an era defined by deep political polarization and economic uncertainty, investors and business leaders are constantly searching for the next source of systemic risk. We analyze stock market trends, scrutinize central banking policies, and build complex models to predict economic shifts. Yet, one of the greatest threats to our financial stability may not be found in balance sheets or trading algorithms, but in the growing social divisions that fuel populism. Populist movements, with their often unpredictable and protectionist policies, can create significant market volatility and deter long-term investment. What if the antidote to this economic poison isn’t a fiscal policy, but a social one?
A compelling, if unconventional, proposition recently emerged from a letter to the Financial Times by Hubert Kucharski of the Leeds Policy Institute. His argument is simple yet profound: to counter the divisive rhetoric of populism, the UK should consider implementing a Norway-style national service. The idea is that by bringing young people from every conceivable background—socio-economic, geographic, and ethnic—together in a shared mission, you can systematically dismantle the “us versus them” mentality that populism thrives on. This isn’t just about fostering civic duty; it’s about building the social cohesion that is a fundamental, yet often overlooked, pillar of a robust and resilient economy.
The Hidden Tax of Division: Populism’s Economic Toll
Before exploring the solution, it’s crucial to understand the problem in terms that resonate with the world of finance and investing. Populism is not merely a political phenomenon; it’s an economic one with a tangible cost. When political discourse becomes fractured and hostile, it introduces a high degree of uncertainty, which is poison to capital markets. Investors prize stability and predictability, two qualities that are often the first casualties of a populist surge.
The economic consequences are well-documented. Policies can shift dramatically, trade agreements can be torn up, and regulations can be weaponized, creating a hostile environment for businesses. A 2020 study published by the Centre for Economic Policy Research (CEPR) found that populist leaders in power can lead to a long-term decline in a country’s GDP. This isn’t just a theoretical risk; it’s a drag on national prosperity that impacts everything from the stock market to individual pension funds. This instability forces investors to demand a higher risk premium for holding a country’s assets, making it more expensive for governments and corporations to borrow money and fund growth. In this environment, long-term strategic investing gives way to short-term, speculative trading, undermining sustainable economic development.
At its core, populism exploits and deepens societal rifts. It creates echo chambers where empathy for “the other side” withers. This erosion of social capital—the trust, norms, and networks that facilitate co-operation within a society—has direct economic consequences. A society with low social trust experiences higher transaction costs, reduced innovation due to a lack of collaboration, and political gridlock that stalls essential economic reforms. In essence, a divided nation is an inefficient and fragile economy.
A Blueprint for Unity: Deconstructing the Norwegian Model
This is where the idea of national service enters the conversation, not as a nostalgic call to arms, but as a strategic investment in social infrastructure. The model proposed is not the rigid, military-only conscription of the past. Instead, it’s based on the modern, progressive system used in Norway, which was updated in 2015 to be universal and gender-neutral.
The Norwegian system is a masterclass in modern civic engagement. Every 19-year-old, male and female, is required to attend a screening day. However, only a fraction—the most motivated and qualified candidates, numbering around 10,000 out of a cohort of 60,000—are actually conscripted for 12-19 months of service. This service isn’t limited to the military; it includes vital roles in civil defense and other government agencies. The crucial element is the shared experience: the process itself forces a national cross-section of youth to meet, interact, and be assessed on the same terms, regardless of their background.
To understand its innovative nature, let’s compare it to traditional conscription models.
| Feature | Traditional Conscription Model | Modern Norwegian Model |
|---|---|---|
| Purpose | Primarily to fill military ranks for national defense. | Defense, civic engagement, social cohesion, and skill development. |
| Selection | Often a mass call-up with limited exemptions. | Universal screening, but highly selective conscription based on motivation and qualification. |
| Gender | Almost exclusively male. | Fully gender-neutral; men and women serve together in all roles. |
| Service Options | Largely confined to military roles. | Includes military, civil defense, and other potential government service roles. |
| Economic View | Often seen as a temporary disruption to the labor market. | Viewed as an investment in human capital and national resilience. |
The Norwegian approach transforms national service from a burdensome duty into a competitive opportunity for personal and professional development. It builds a sense of shared identity and purpose, directly countering the divisive narratives that fuel political extremism.
The Financial Ripple Effect: From Social Cohesion to Market Stability
The economic and financial implications of a more cohesive society are profound and far-reaching. A national service program, structured correctly, could generate positive externalities that directly benefit the financial technology, banking, and investment sectors.
1. Enhancing Human Capital: The most direct economic benefit is the creation of a more skilled and resilient workforce. Participants gain soft skills like discipline, problem-solving, and leadership, which are universally valuable. Specialized training in areas like cybersecurity, logistics, or emergency planning creates a pool of talent that can be absorbed by key sectors of the economy. This is a direct subsidy to the nation’s human capital stock, a core driver of long-term economics.
2. Fostering Innovation and Entrepreneurship: By breaking down social silos, national service can become an incubator for innovation. When a future software engineer from a top university is forced to collaborate with a skilled mechanic from a rural area and a logistics specialist from an immigrant family, new perspectives collide. This cross-pollination of ideas and experiences is the lifeblood of entrepreneurship. It’s not hard to imagine a future fintech startup being born from a bond forged between teammates during their service year, solving a problem they identified together.
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3. Improving Financial Inclusion and Literacy: A civil service track could be designed to address critical economic challenges. Teams could be deployed to underserved communities to teach financial literacy, help small businesses with digital transformation, or assist citizens in navigating the complexities of modern banking and finance. This would not only improve social outcomes but also expand the customer base for financial services, creating a more inclusive and dynamic economy. Perhaps blockchain technology could even be used to create a secure, verifiable record of the skills and qualifications earned during service, creating a portable credential for participants.
4. Reducing Long-Term Political Risk: For investors, this is the ultimate prize. A society that is more integrated and less susceptible to the siren song of populism is a more stable and predictable place to invest capital. According to the OECD, high levels of social trust are correlated with better economic performance and more effective governance. By systematically rebuilding that trust, a national service program reduces the country’s political risk profile. This can lead to a lower cost of capital, a more stable currency, and a more attractive environment for the long-term, patient investment needed to fund infrastructure, technology, and innovation.
The Practical Hurdles and Contrarian Views
Of course, implementing such a program is not without significant challenges. The most immediate objection is the staggering cost of administration, training, housing, and stipends for tens of thousands of young people. A 2019 proposal for a similar scheme in the UK was estimated to cost £1.5 billion annually, a figure that would likely be much higher today. This expenditure would have to be justified against other pressing needs like healthcare and education.
Furthermore, there are strong libertarian arguments against any form of mandatory service, viewing it as an unacceptable infringement on individual freedom. Critics would also argue that pulling a significant portion of a generation out of higher education or the workforce for a year could create a “lost year” of economic productivity, even if the long-term benefits are substantial.
Finally, is it the most efficient tool for the job? One could argue that the desired social cohesion could be achieved through less drastic and less expensive means, such as better-funded public schools, investments in community programs, or reforms to the political system itself.
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An Investment in Our Collective Future
Despite the valid concerns, the idea of a modern national service deserves serious consideration not as a social program, but as a long-term economic strategy. It addresses the root cause of political instability—social fragmentation—rather than merely treating its symptoms. For the worlds of finance, investing, and business, which depend on a stable and predictable societal foundation, the erosion of that foundation is the ultimate systemic risk.
Viewing national service through this lens reframes the debate. It ceases to be an expense and becomes an investment—an investment in human capital, in social trust, and in the very stability that makes a modern economy possible. In an age of unprecedented division, perhaps the most innovative economic policy is one that reminds us, through shared experience and common purpose, that we are all part of the same enterprise.
