The Virtue Premium
On leaders who build stages and forget the floor
In late 2023, Jacinda Ardern stood before a packed forum at the Harvard Kennedy School. She had resigned as New Zealand’s prime minister in January of that year, citing exhaustion, and was now collecting fellowships and global speaking engagements. Fortune had named her the world’s greatest leader. Time put her in its 100 most influential. Harvard had awarded her an honorary doctorate of laws.
Two years later, New Zealand holds twenty-one days of diesel reserves and is spending over a billion dollars to build an import terminal for the very fossil fuels Ardern’s government banned. Wholesale electricity prices have more than doubled. A record 131,000 people left the country in a single year, nearly forty percent of them under thirty.
The applause was real. So is the bill.
I’ve been watching this pattern across western democracies, and something keeps surfacing: a specific kind of policy failure that follows a specific kind of political success. Leaders signal a destination. The signal earns praise. Practical objections get coded as moral failure. And then the bill arrives, years later, in a currency the signalers no longer have to pay.
It’s happening everywhere. Left and right. Large economies and small. The content varies. The mechanism doesn’t.
New Zealand: twenty-one days of diesel
In 2018, Ardern’s government banned new offshore oil and gas exploration permits. The framing was climate leadership: New Zealand would lead the world into a post-fossil future. The Zero Carbon Act followed in 2019. A “wellbeing budget” prioritized sustainability metrics over GDP growth. The international press was rapturous.
Gas production fell roughly thirty percent in six years. The Marsden Point refinery, the country’s only fuel-processing facility, closed in March 2022, making New Zealand one hundred percent dependent on imported refined fuel. Nearly half its petrol now comes from South Korean refineries and a third from Singapore, both reliant on Middle Eastern crude transiting the Strait of Hormuz.
In 2020, the same year Ardern’s government declared a climate emergency, New Zealand imported over a million tonnes of Indonesian coal. The dirtiest fuel. Because domestic gas was declining and renewables couldn’t fill the gap. The signal said one thing. The grid and human well-being required another.
The knowledge needed to balance a power grid, secure supply chains, and manage energy transitions doesn’t sit in a parliament building. It’s dispersed across engineers, traders, geologists, real world practitioners. It can’t be legislated into existence. When a government signals away its domestic production before alternatives exist, the need gets displaced to somewhere harder to see and harder to control.
What happens to a country’s sovereignty when it holds three weeks of fuel?
Germany: the grid that went brown
Angela Merkel’s nuclear phase-out might be the purest case study of signaling-as-policy in the twenty-first century.
In 2010, Merkel’s center-right government extended the lifetimes of Germany’s seventeen nuclear reactors. Then Fukushima happened. Nine thousand kilometers away in Japan. The earthquake spooked the Baden-Württemberg state election, and Merkel reversed course entirely, shutting down eight reactors immediately and scheduling the rest for closure by 2022.
Seventy-one percent of Germans believed the reversal was tactical, not principled. It probably was. A center-right chancellor executed the Green Party’s signature policy because the electoral math demanded it.
Germany shut down its last reactor in April 2023. On the morning after, coal provided thirty percent of the country’s electricity. The signal was green. The grid was brown, dirty, and producing more carbon than ever.
The nuclear phase-out made Germany dependent on Russian gas. That dependency constrained its response when Russia invaded Ukraine: Berlin hesitated on sanctions, delayed weapons deliveries, and spent months arguing over an embargo that Poland and the Baltics demanded on day one. One signaling decision in 2011 narrowed Germany’s options in 2022, which damaged its credibility in 2023, which weakened the European security architecture that German industry depends on. The bill doesn’t arrive once. It compounds.
The direct costs alone: industrial electricity prices twenty-five percent above the EU average. BASF, Germany’s chemical flagship, investing nearly nine billion euros in a new plant in China while closing production lines at its historic Ludwigshafen site. Volkswagen cutting fifty thousand German jobs. Manufacturing lost 120,000 positions in 2024 alone. GDP contracted in both 2023 and 2024: the longest stretch of economic stagnation in seven decades.
Germany’s current energy minister, Katherina Reiche, in March 2026: “The phase-out of nuclear power was a huge mistake. A huge mistake.”
What do you tell the factory worker in Ludwigshafen whose job moved to China so that a politician could win a state election?
The United Kingdom: the sovereignty signal
Brexit was sold as a return to self-determination. “Take back control” was the phrase, and it worked because it named something real: a democratic deficit, a feeling that decisions were made elsewhere, by people who didn’t have to live with consequences.
But “take back control” was a signal, not a plan. The campaign bus drove around the country promising £350 million a week for the NHS, a figure the UK Statistics Authority called “a clear misuse of official statistics” during the campaign itself. Raising the objection got you coded as an elite remainer who didn’t respect the will of the people. The harder questions (supply chains, customs infrastructure, the Irish border, labor market dependence on EU workers) met the same reception.
Eric Hoffer wrote in 1951 that a rising mass movement holds a following “not by its doctrine and promises but by the refuge it offers from the anxieties, barrenness and meaninglessness of individual existence.” Brexit offered that refuge to a post-industrial England that no longer knew what it was for. The doctrine came later: years of negotiations, multiple prime ministers, a Northern Ireland protocol nobody likes, and a bill that arrives in increments too small to make headlines but too large to ignore. UK goods trade with the EU fell by roughly twenty percent in real terms between 2019 and 2024. Business investment flatlined for six years after the referendum. The Centre for European Reform estimates a cumulative GDP shortfall of five percent relative to comparable economies. Bloomberg Economics puts the cost at roughly a hundred billion pounds a year in output the country simply doesn’t produce anymore. No single quarter looks catastrophic. The sum is.
The signal was sovereignty. The country took back control and spent six years discovering how much it couldn’t control alone.
Is there a version of patriotism that includes reading the fine print?
The historicist’s bill
Something connects these cases. It goes deeper than bad policy.
Karl Popper wrote The Open Society and Its Enemies in exile during World War II, watching the most educated civilization in Europe destroy itself. His target was historicism: the belief that history moves toward a knowable destination. Once you believe you know where history is heading, three things follow. Opposition becomes irrational (you’re fighting the tide). Present costs become acceptable (the destination justifies them). And coercion becomes a moral obligation, because you’re helping people arrive where they were going anyway.
The destination doesn’t have to be forward. Popper wrote about progressive historicism, but the mechanism runs in any direction. A restored golden age is still a destination. “Take back control” and “Make America Great Again” are as destination-certain as “the right side of history.” Each declares where things must end up and treats practical objections as betrayal of the vision. The direction is the costume. The certainty is the mechanism.
This sounds like an old problem, confined to Marxists and fascists who are safely dead. It is alive in ordinary Tuesday politics. “The right side of history.” “The arc of the moral universe.” “The clean energy future.” “Take back control.” Each phrase contains the same assumption: we know the destination, and anyone raising practical objections is naive at best, morally deficient at worst.
This is why the practical warnings get ignored. They aren’t heard as engineering concerns. They’re heard as character flaws. You can’t raise energy security without being coded as a climate denier. You can’t raise trade logistics without being coded as anti-sovereignty. You can’t raise integration capacity without being coded as racist. The historicist frame converts every practical question into a character test.
And so the bill keeps compounding.
The United States: the America First signal
Trump’s tariff program was historicism in its right-wing costume: a vision of national destiny that treated trade as a battleground and manufacturing return as inevitable, if only someone with sufficient will would force it.
The signal was “America First.” The assumption: levy enough tariffs and factories will come home, trade deficits will shrink, American workers will prosper. There’s a persistent belief that complex systems bend to executive authority, that trade-offs are problems of will rather than features of a dispersed and interdependent global order. The practical objections (tariffs function as consumer taxes, supply chains don’t reroute by decree, retaliation damages export sectors) were dismissed as globalist hand-wringing.
Soybean exports to China collapsed seventy-five percent in a single year. American farmers required twenty-eight billion dollars in emergency bailouts. The overall trade deficit grew by forty percent as imports rerouted through other countries. Manufacturing entered contraction before COVID arrived to take the blame. The second term doubled down: “Liberation Day” tariffs in April 2025 imposed duties on nearly all imports, and markets shed trillions in value within a week. Allied nations, treated as adversaries in trade negotiations, became less cooperative on defense and diplomacy. The signal said strength. The bill was paid by soybean farmers in Iowa and consumers in every state.
What does “America First” mean when America’s allies stop answering the phone?
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Germany (again): the moral signal
In August 2015, Angela Merkel said “Wir schaffen das” and opened Germany’s borders. More than 1.2 million asylum applications followed in two years.
The signal was moral leadership: Germany, given its history, would demonstrate that a wealthy democracy could absorb the displaced. The practical questions (housing capacity, language training, labor market integration, the pace at which communities can absorb change) were coded as moral failure. Raising them meant you lacked compassion. I remember this coding well. I felt the pull of it: the sense that asking “how many?” was somehow the wrong question, that the only legitimate question was “how do we help?”
“How many?” was a real question. Germany now faces a housing shortage of 700,000 units. The AfD, which managed 4.7% in its first election in 2013, took 20.8% in the 2025 federal election and became the country’s second-largest party. Merkel’s own party, under Friedrich Merz, has reversed her immigration policies, breaking the political “firewall” she herself insisted on.
The strain of bearing an open society is real, and Popper never pretended otherwise. When people’s communities change faster than they can process, when their concerns are dismissed as bigotry, they don’t become more tolerant. They find someone who will listen. Often, that someone is worse than the problem they named.
When you make the practical question unspeakable, who benefits from the silence?
Australia: the signal cycle
Australia has been through three cycles of energy signaling in fifteen years. Labor signals climate ambition. The Coalition signals affordability and energy independence. Labor returns and signals again. Each government defines its energy policy against its predecessor’s signal rather than toward a coherent strategy.
The result is investment paralysis. Who builds a power plant when the policy environment reverses every election cycle? Who commits capital to a twenty-year project in a country that can’t hold a policy for four? Australia missed its window for nuclear, which remains banned by federal law. Its grid lurches between renewable targets and emergency coal extensions. It exports massive volumes of LNG while domestic gas prices climb.
The signal, whichever direction it points at any given moment, is always confident. The grid, which doesn’t care about confidence, is increasingly fragile.
The country with antibodies
Poland crossed one trillion dollars in GDP in 2025, entering the world’s twenty largest economies. In 1990, it was thirty-eighth, behind Pakistan and Algeria. Since joining the EU in 2004, its economy has grown at an average of 3.8% per year against the EU average of 1.8%. It was the only EU country to avoid recession during the 2008 financial crisis. GDP per capita has risen from roughly half the EU average to over eighty percent in two decades.
The numbers are striking. But the numbers aren’t the interesting part.
In 2015, Poland opened an LNG terminal at Świnoujście, years before Russian gas dependence was a crisis. In October 2022, the Baltic Pipe from Norway came online, timed to coincide with the expiration of Poland’s Russian gas contract. When Russia cut off gas supplies in April 2022, Poland’s storage was over seventy-five percent full and its alternatives were already built. The country spends 4.7% of GDP on defense: more than any NATO member, including the United States. It is building Westinghouse nuclear reactors, with the first now projected for 2036.
It absorbed nearly a million Ukrainian refugees with a seventy-eight percent employment rate, the highest in the OECD. Practical integration infrastructure, built quietly before it was needed, did the work that grand moral declarations could not.
President Lech Kaczyński warned in 2008 that “today it is Georgia, tomorrow it may be Ukraine, then the Baltic States, and later, perhaps, Poland.” Defense Minister Radek Sikorski compared Nord Stream to “a new Ribbentrop-Molotov Pact.” Western leaders dismissed them. Poland built the LNG terminal anyway.
Poland is not a clean case. Under PiS, it ran its own signaling operation on cultural issues: attacks on judicial independence, “LGBT-free zone” declarations, media pressure campaigns. Poland paid a virtue premium there too, in EU funding freezes and institutional credibility. But on the questions that determine whether a country can feed and heat itself, Poland built before it announced.
Why? Because Poland spent forty-four years inside the ultimate historicist experiment. Marxism was historicism turned into daily life: history has a direction, the Party knows it, resistance is irrational, present suffering is justified by the destination. Poles know, in their bones, what happens when the signal becomes the policy. The country has scar tissue where Western democracies have theory.
Popper called this piecemeal social engineering: small, testable reforms rather than utopian redesign. Fix what’s broken. Test the fix. Adjust. The work is unglamorous and doesn’t earn keynote invitations. It builds LNG terminals before you need them.
I wrote earlier that the skills that win elections have nothing to do with governing. This is that mechanism scaled up. The signal that earns magazine covers and honorary degrees is rarely the signal that prepares a country for what’s coming.
The virtue premium is what you pay when you optimize for applause instead of resilience. It compounds quietly. The leader who earned the praise is gone by the time the bill arrives. And the bill always arrives: in fuel reserves measured in days, in factories relocated to other continents, in young people leaving for countries that still have functioning grids and economies.
I feel this pull in myself. The desire to be on the right side of wherever history is going. It feels like wisdom. It feels like moral clarity. But Popper’s warning keeps surfacing: once you believe you know the destination, everyone who raises a practical objection becomes an obstacle. The distance between “I know where this is going” and “get out of my way” is shorter than any of us would like to admit.
Pragmatism has blind spots of its own: it can mistake caution for wisdom and lose the capacity to mobilize when mobilization genuinely matters. But the failures in this essay share a common feature, and it isn’t pragmatism. It’s that leadership optimized for the destination and forgot to check whether the road could hold.
Everything a modern society does to feed, heat, and heal its people sits on top of energy.
The applause fades. The grid either holds or it doesn’t.
Sources and Inspiration
The Open Society and Its Enemies - Karl Popper