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Robert McGarveyNobody said governing was easy, but lately, governing a democracy has become virtually impossible. In particular, in our divided societies, it seems producing a sensible budget is a thing of the past.

The divide in sensibilities is no more apparent than in Canada. A decade of austere Stephen Harper conservatism so divided the nation that Justin Trudeau was handed the first Liberal parliamentary majority in a generation last fall.

The morning after his stunning electoral victory, a clearly overjoyed Trudeau was eagerly shaking hands with surprised commuters in the underground stations of Toronto. This was such a great contrast to the distant and unfriendly Harper that it made international headlines.

Trudeau’s government then chose in its first budget to increase government spending dramatically. The policy direction deliberately reversed course from the Harper Conservatives: “Budget 2016 focuses on growth, not austerity. . . .”

The Trudeau budget anticipates a $29-billion deficit but economists think this is only the starting point for even larger losses. Government spending will provide additional support for the poorest among us and keep construction workers busy. But will it help reinvigorate the Canadian economy? Not according to Andrew Coyne, a respected National Post columnist, who characterized the budget as “the public finance equivalent of borrowing to buy the groceries.”

Across the Atlantic, the divide is even greater. The ghost of Margaret Thatcher stalks the corridors of the Conservative government of United Kingdom Prime Minister David Cameron. Cameron clearly considers financial “prudence” to be the highest public virtue. Indeed, he and overly keen Chancellor of the Exchequer George Osborne have bet their political futures on it.

Alas, the budget season has not been kind to either politician. The shocking pushback to deepening cuts in Britain’s social welfare system did not come from the opposition benches. Rather, a heartfelt emotional attack on the budget’s priorities came from a highly respected fellow Conservative, Ian Duncan Smith.

Duncan Smith suggested that the cuts to disability benefits were politically motivated, a form of class warfare that undermined the principle that “we’re all in this together.” His deep criticism and subsequent resignation sparked an unprecedented reversal by the Cameron government on the benefit cuts.

It appears that neither austerity nor deficit spending will satisfy the majority in a modern democracy. More broadly, the remarkable popularity of Donald Trump and Bernie Sanders in the United States suggests the public is losing faith in the political establishment. Many see their rise as a total repudiation of politics as usual.

For decades, Western democracies have been governed by a set of competing economic principles, which can loosely be called Keynesianism and monetarism.

Keynesianism emerged during the Great Depression. It assigned a strong role to government in economic management and saw deficit spending as a way to support the capitalist system when the private sector was unable to meet the growth expectations of the nation.

Opposition to Keynesianism emerged in the late 1960 with the rise of monetarism. Monetarism shifted the economic guardianship role from government to business and conditioned the political fortunes of the Thatcher and Ronald Reagan revolutions in the late ’70s.

Monetarists believe in the purity of markets and – more notably – that everything of importance can be reduced to a market signal. For true believers, the political universe is essentially boiled down to a set of financial variables in the budget. The more dangerous implication is the belief that managing those financial variables is the best way to govern complex human systems.

As a result, balancing the budget becomes the principal role of government. Getting the numbers to work is the politician’s role and once this is accomplished, everything else will take care of itself.

Given the state of modern democracy, it’s fair to say that both these sets of principles are bankrupt.

An increasingly angry public wants more from its politicians than exploding deficits, or punishing austerity and civilizational decline.  The public is tossing out the rulebook and blowing the political establishment to pieces.

So what or who will emerge to lead Western democracies out of the wilderness and into the light of this new century?

The world waits with bated breath.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

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