Joachim Klement: A Professional Civil Service Can Delay the Economic Damage of Populism by Approximately Four Years
Klement cites a 2026 cross-national study by Morelli et al. to explain how an independent and professional civil service can secure approximately four years of buffer time against economic decline under populist leadership by delaying policy shocks, but emphasizes that this is a delay rather than prevention; economic risks will significantly intensify after populist leaders win a second term.
In his investment newsletter, Joachim Klement offers a practical judgment for political risk assessment: following the election of a populist leader, an independent and professional civil service can delay economic downturns by approximately four years. This conclusion stems from a 2026 cross-national study by Massimo Morelli and colleagues, which examined the differential impact of populist leaders on economies in countries with varying bureaucratic quality. Klement also references a 2023 study indicating that populist leaders typically cost the economy about 10% of GDP over 15 years—a heavy burden particularly for Western European nations already struggling with sluggish growth due to demographic pressures.
Morelli et al. divided the sample countries into high and low groups based on their bureaucracy scores. This score does not measure the size of the civil service but is derived from three indicators in the V-Dem Democracy Database: rigorous and impartial administration, merit-based recruitment systems, and remuneration protections for civil servants. In other words, it measures the independence and professionalism of the civil service rather than its sheer scale. This distinction is crucial for investors, as a bloated but non-independent bureaucracy does not offer equivalent protection.
The results show that countries with a professional and independent civil service can delay economic decline by approximately four years after the election of a populist leader. Klement stresses that this protection is a delay, not a prevention—economic downturns eventually set in even in countries with the highest bureaucratic quality. However, the key lies in the time window: if the populist leader steps down after a single term, the four-year buffer may be sufficient to avoid the worst economic consequences. Yet, once a populist wins a second term, the situation becomes dangerous.