The fatal flaw of the populist approach

The world is awash with populists. From Ireland’s independents to President Duterte of the Philippines, from Germany’s anti-immigrant AfD party to Norbert Hofer of the far-right Freedom Party of Austria, from Ukip and Jeremy Corbyn in Britain to Donald Trump in the US, populists are on the rise. And we’re not talking just a few random demagogues here, though personality does go a long way. (Trump-related Pulp Fiction pun intended, by the way.)

We are seeing a rise in populist parties getting and holding onto power in several European countries including Finland, Hungary, Latvia, Lithuania, Norway, Ireland and Switzerland. Iceland is about to elect the Pirate Party (no really) to power. The French Front National may well take power in France, riding a wave of anti-immigrant sentiment there.

Populists come from both sides of the political spectrum: Greece’s Syriza party and Spain’s Podemos party consider themselves of the left, while Germany’s AfD and France’s Front National are on the far right.

So it’s a problem. Old, established, centrist parties have lost their grip on power – spectacularly so in Greece – while newer parties are standing mostly on a basis of what they are not – Corbyn is not a Blairite, Marine Le Pen is not Nicolas Sarkozy, and so forth. The 32nd Dáil contains 19 TDs who are nominally ‘independent’, with 12 more in left or far-left groupings. Ireland does not produce far-right TDs that often, though it does produce some very right-wing policies from time to time.

Where does populism come from? What is it, and why does it matter? It should not surprise anyone that I think the answer lies in the economy. Political parties exist because they can aggregate the preferences of a vast number of very different individuals. Every party is a coalition of these interests. When parties wield power, they do so partially on behalf of these interests.

Other people who are not in this constituency typically don’t mind if they get pretty good governance. They know their turn will come eventually. Centrist parties play on this and so suppress any ideological heterogeneity they might have in order to appeal to the most people. This makes them indistinguishable in the long run and vulnerable to attack from either end of the political spectrum.

The problem is that in the run-up to the crisis of 2008, existing parties were unable to stop the rise of credit-fuelled booms around the world. During the crisis, as existing parties were either electorally decimated or forced to bail out corrupt banks and impose austerity measures on their people, others offered an alternative: not that. In particular, far-right and far-left parties had the same policy stance: we’ll forsake austerity, jail the bankers, clean up the system, increase investment. All of this sounds great, but does not fit within the constraints those who actually hold power work within.

Every policy idea, like ‘jail the bankers’, has to fit three key constraints. First, it has to be technically correct. Are they guilty of anything? Second, it has to be administratively feasible. Are the banks going to collapse if the people who know where the bodies are buried get the sack? Third, it has to be politically palatable. All politicians serve many masters. Those in power serve more, not fewer, masters, including the media. So does this ‘jail the banker’ policy work? Not in general, because the white-collar-crime laws aren’t there for them to break, or the bankers themselves are guilty of nothing more than rampant stupidity.

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Take another policy – the introduction of water charges in Ireland. Technically correct? Of course. It costs money to produce clean water, and vast sums to invest in water infrastructure which the state hasn’t done for decades. So tax those who use the water to pay for that water usage.

Administratively feasible? Yes, every other country in Europe does it, so it’s not rocket science. Politically palatable? Not at all. Why? Because of austerity, and because of the manner in which Irish Water was set up. It screamed of elitism and corporatism.

The ‘greatest’ moment of the global populist movement was June 23 when, on the basis of lies promulgated by populist frauds like Nigel Farage and Boris Johnson, Britain voted to leave the European Union.

Elitism is the oxygen of populism. A populist needs an elite of some kind to bounce off, to fight against. In each of the cases I’ve mentioned, the elites have failed to do the one thing they were able to do since the 1990s – deliver increased economic growth and from growth, increased living standards for the general population.

This ongoing economic malaise where rich, ageing, developed countries are trapped with large household, corporate, and sovereign debts, with little inflation, low interest rates and even less growth, as the figures below show. As the economy stagnates after the crisis, so the message of the populists gets more and more attractive. We are not like the thing that caused this, that causes you to suffer. We are different. Give us the power and we will make things better for you.

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(An aside: perhaps one of the reasons Ireland’s populists aren’t anti-immigrant is that we have yet to see hundreds and thousands of them on our streets. If Ireland were to take an amount of refugees proportional to the amount Germany has taken, they would fill the Aviva Stadium. We might have a different, and uglier, set of messages coming from our populists then. We also have strong and real economic growth here in Ireland, where growth has collapsed almost everywhere in the developed world. We aren’t feeling it in Ireland. So our populists say different things.)

pic2.png

Back to the main populist message: give us the power and we will make things better for you. It turns out when populists take power, as they have done in Greece and elsewhere, they don’t typically do different things. Why? Because populists face the same constraints when implementing their policies as the ‘elites’ they displace. If it is not technically correct, administratively feasible, and politically palatable, it won’t work.

Syriza sold the Greek people a set of fictions. They promised they would relieve the burden of austerity. Instead, today they impose it. It was Frankfurt’s way, not Labour’s way. Podemos would have been no different. Populists tell people comforting lies and half-truths to gain power. This is not to say the people they want to replace are any better. But being honest about the constraints people face while in power is the only way to defeat populism. And this is the one thing those in power can’t do – because it deprives them of much of the very power they’ve spent a lifetime seeking.

In extremis, populism results in people voting against their own interests. Brexit will be a disaster for the very people who voted in such numbers to ‘take back control’. Centrist politics is not perfect. But replacing the elites doesn’t replace the constraints rulers will always face.

Author: Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

48 thoughts on “The fatal flaw of the populist approach”

        1. We voted to introduce them as citizens, they are our constraints now. Not hugely enamoured of them, but they are part of our legal framework.

      1. That is what I was trying to get at with voluntary. I think dropping these constraints is technically correct and administratively feasible. If I had to guess, I would say that populist parties nudge it closer to politically palatable.

  1. Humorously this post itself screamed of elitism. So not really sure you’ve fully bought into what the problem is.

    Politics should work for as many people as possible – at least in a republic. Other forms it just needs to work for the people required to force the rest to stay in line. But in a republic the wealth needs to get into as many pockets as possible.

    A lot of western countries lost sight of that.

    I argued against austerity because I didn’t want populism. It was economically dumb as well and the needless human suffering it caused was clearly immoral, but the longer-term, more dangerous consequence was political. Just as poor economic policies that fueled wealth inequality in the 20s lead to the populism of the 30s in Europe, the poor economic policy of austerity fueled populism over the past 10 years.

    And we’re still doing it. Right now public sector group after public sector group has to fight to get their pay restored. And working conditions are still horrible because very little is done in Ireland about poor management – in the public or private sector. Bankers not being in jail is just another symptom of that. And the defense that “they didn’t break any laws” is actually a problem statement, not the end to the discussion that Mr. Kinsella thinks it is.

    The issue is that people see themselves falling further behind. The small few forge ahead, but the rest just see economic stability disappearing over the horizon. That’s not something people should accept. And in the long term they won’t. They’ll look to anyone who will seek to address that.

    And in case it’s not obvious, they’re not seeing anything on offer from Mr. Kinsella’s post here. Seems like something that should be addressed in future posts.

    1. “in a republic the wealth needs to get into as many pockets as possible”

      For a very large amount of time, this was empirically false. The work of Piketty and Milanovic shows us that wealth and income inequality get substantially reduced by: war, plague, political upheaval, and natural disaster, which wipes out either end of the wealth and income distributions. You’re right to point out that in the last 30 years in advanced economies, the bottom 60-80% or so of people did not see the gains the top deciles saw in either relative or absolute terms. But technological change surely made up for some of that difference in terms of living standards. I am a lot poorer than Enda Kenny, for example, but we have the same phone. But in general I agree that to someone who has a choice between a fairly shit future and a future that is promised by a populist as perhaps being not that, then it makes sense to have a go.

      My point is the populists are cynically manipulating the debates to promise simple solutions to complex problems. They are not stupid people, mostly, and they know they won’t be able to deliver. Then the hapless voter will see nothing more than a set of failed parties and blame democracy, not those who seek to usurp it.

      1. As Black Elk said about the white people “we can’t eat lies”

        The richest 1% of Brits own 55% of everything. Parce que. That’s the why. The beauty of debt.

        So you have a phone and p#rn 24/7. But your income is down 10% in real terms since 2008. And there is no app for #payrises.

        Do you cut back on beer or the kids new gear? It’s a big decision in a town call malice.

        Of those who are forced to choose some will choose a populist. The rational agent.

        And economists can’t model any of this

      2. The future is not necessarily crap. If the money was spread around it could be a lot better. But you can’t make an omelette if debt is risk free. Of course debt was never risk free. The name of the game is power. And people do love their chains .

        Nietzsche said insanity is rare in individuals but par for the course in groups, parties, nations.

      3. And the serious centrists are doing what exactly?

        Your article seems to absolve them, “During the crisis, as existing parties were either electorally decimated or forced to bail out corrupt banks and impose austerity measures on their people”. So let’s discuss that.

        Now when they get voted out and they lose power, fair enough, what happens next isn’t on them. But when they stay in power you say they were “forced” to pursue policies that made wealth disparity worse. Trust me, I know, I was on the winning side of that equation. I got loads of pay rises through the recession (at least until I popped over to the public sector in 2012 and then into Irish SMEs in 2014). So the better off stayed better off. But the rest got screwed.

        All because of those policies you say centrists were “forced” to follow at the time.

        So say instead the following happened:

        1) Instead of bailing out banks directly, mortgages for residential homes were crammed down – reducing the debts of the banks and reducing the burden on homeowners. Meanwhile local businesses would have kept more of their trade as home owners no longer had to spend the bulk of their income/savings on servicing a loan.
        2) Taxes were raised mainly on capital gains, corporate profits and the higher band of income tax.
        3) Ireland actively pushed for Eurozone investment programs for transport, hospitals and schools. We had a nation of unemployed construction workers and the price of raw materials had plummeted. We could have built light rail in Cork, Athlone and Galway, expanded it in Dublin and built out schools and hospitals across the country for cheap. Unemployment would have dropped (less dole cheques) and all of the work would have been done for far cheaper than it’s being done now when the public sector has to compete with the private sector for the remaining constriction labour we have left after 8 years of recession.

        That also would have been as “hard” as austerity. But the cuts would have been more balanced across society and the wealth built up across society would have been more evenly distributed. We would not now have another property bubble – because the property market wouldn’t be as constrained as it is now by negative equity and we’d have more of our construction sector still in the country.

        There was a better way and centrists dismissed it out of hand at the time. And that’s what made the fertile ground from which populism now grows. I would like to believe centrists are learning but your essay makes me think nothing has been learned.

        1. You make a valid point about there being a cohort of winners within the private-sector even through the recession. This is something that’s not well studied in my view. At the height of the crisis it is the case that 85% of the workforce had jobs and even with austerity many had pay increases and of course there was a deflation for two and a bit years. One of the major issues I suppose I have is with in the sequence of events you put forward: in practice the banking constraint began to bind before the sovereign budget constraint began to bind and before the household budget constraint began to bind so really it is only with hindsight that your sequence makes sense. Even then we would have to deal with strategic defaulters, an array of chancers, and all of the previous constraints.

  2. In many ways the growth (or in Ireland’s case the continuation) of populism is captured in something Stephen said. If I paraphrase, it’s more or less like this;

    “The problems the populists describe are real and often well described. It’s just that their proposed solutions are mostly wrong.”

    And the electorate – at some level – knows that the proposed solutions are wrong, which is why populism has actually been slow to grow. This hasn’t been an overnight phenomenon. But the established parties are (i) deeply corrupt and morally compromised and (ii) busily pretending the problems aren’t real in the first place because it’s not in the party interests to admit the problems or to do anything meaningful about the problems.

    Punt and pretend has been the policy reaction to the developed world’s problems for years and it’s led us to a pretty bad state. What was it that Junkers said? “We all know what to do, we just don’t know how to get re-elected after we’ve done it.” And still no-one is proposing to do any of it

    Actually, Junkers is a great example of the attitude that drives populism and an example of the lack of any great communicators on the “reasonable” side. He often (not even mostly, but at least often) has a good point, but he almost always makes people want to strangle him…he’s so alienating it’s astonishing. But, it’s easy to be an impactful communicator if you’re mostly knocking things. Harder to put up impactful presentations of complex and nuanced policy, and even harder when your political party represents interests rather than an ideology.

    But this is all politics and not economics. Unless you believe the two are connected 😉

    1. The pols are all afraid of the market. Remember the bond vigilantes in 2010. Give us what we want. They got QE. They don’t care about growth or sustainability. It is all about assets. Deflation is better.
      Working class voters get shafted first. Pied pipers come along and promise to take back control. They don’t offer payrises.

      If you crash your car on the Continent you need to fill in a form. The European car accident form has 3 recommendations.

      1 Don’t get angry
      2 Be courteous
      3 Stay calm

      People who stay calm make better decisions. Such as organising for payrises. People who lose the plot get shafted.

      Because Trumps and Bojos will not fix anything.

      1. ….Because Trumps and Bojos will not fix anything.”

        No, they won’t. In fact they will things a lot worse.

        But, when you believe you have been shafted, its hard to adopt your three ‘car accident’ principles; especially when you know that the driver who has just rear-ended you, just to shunt you out of his way, is likely to do the same next week, unless you get the message.

        The days of ‘don’t get angry, be courteous, stay calm’ while we consign you to an uncertain gig future, and old age poverty, are over.

  3. I agree with the thrust of the article that the ‘populists’ are a pretty useless lot who should be totally shunned.

    In Ireland I would include among their number not only the Independents, but SF and AAA/PSB.

    When these ‘populists’ get into government their record invariably turns out to be worse than that of the despised politicians from mainstream parties who preceded them. For example, Shane Ross is now Minister for Transport. Since he took office road deaths in Ireland have risen 20%. In the previous two decades, under a succession of FF and FG ministers, the number fell continuously.

    Recent opinion polls show a swing back to FF/FG, although not to former levels. Since the February election, most polls have put the combined FF/FG vote at 52%-56%. In the previous Dail, most polls were putting their combined vote at around 45%.

    In the U. States, while I’d see Donald Trump as a ‘populist’ and wouldn’t vote for him, I see Hilary Clinton as being just as bad, a left-liberal fanatic of the worst kind, whose obvious corruption is played down by the left-liberal media precisely because she is a left liberal.

    I fail to see how economic conditions are responsible for the rise of the ‘populists’, In absolute terms people are vastly better off than in the 1950s and 1960s and in relative terms the distribution of wealth is pretty similar to what it always has been. The Left always finds ‘growing inequality’ as the explanation for every nasty social trend. However, there is little evidence that reducing the Gini coefficient would have any effect on those voting for Trump, Le Pen etc.

    Among the reasons for their rise globally, I would say:

    (a) The absence of a major external enemy for western countries that produced social and political cohesion in opposition to it. The Nazis fitted this bill for a decade or so, then the USSR Communists. Its difficult to imagine the USA splintering the way it has done in, say, 1960 when the Cold War was at its height and people saw the need to stand up to USSR aggression. In Ireland the National Question fulfilled this role to some extent

    (b) The liberal assault on traditional values, patriotism, religion, family etc has destroyed social cohesion throughout the western world. Whether one agrees with it or not, its clear that the effect is to produce whole swathes of society that are lacking ties to traditional organisations (whether political parties, religious denominations or whatever) and, as a result, have become rootless and fodder for every populist crank that comes along.

    (c) The belief of sections of the traditional population in many countries that they are on the way out and in the process of being replaced as the dominant ethnic group. The problem is there is a lot of truth in this belief. They are indeed on the way out – although they shouldn’t blame immigrants for it, but instead their own tendency to shun marriage, espouse abortion etc, all of which has combined to produce a calamitous collapse in their birth rate. In the U. States, the white middle-class, traditionally the backbone of the country’s stability and prosperity, is in freefall as a percentage of the total population. In a century’s time, this group will be a small minority. Reaction to this trend is what has produced Trump. In Europe, many cities will have Muslim majorities by the end of the century. Reaction to this trend is what has produced Le Pen et al. As Stephen Kinsella says, Ireland hasn’t been much affected by this one yet, but it might one day.

    (d) The liberal revolution has also destroyed the common bonds that spanned the left-right divide. I see the the rise of the ‘populists’ as part of the trend towards a less homogeneous society in all aspects. Traditionally in western democracies you had a 2-party system, with regular alternation of power and, while there were differences between the 2 parties, there were also common bonds based to a large extent on a shared Judaeo-Christian heritage. Many of the issues tearing the U. States apart in this election (abortion, gun control, gay marriage, transgender rest rooms etc) simply wouldn’t have arisen half a century ago as both main parties would have had a common view on such matters.

    (e) The failure of mainstream parties on the right to resist the liberal revolution has produced a splintering of parties on the right. Germany is a good example. Merkel has run the economy well and could have been totally dominant. But, she adopted an extreme liberal policy on immigration and other social issues and this has predictably splintered her conservative base.

    (f) The general dumbing-down of society and the growth of social media, which allows every crank and nut to have an ‘equal’ voice. Years ago it was possible for intelligent people (such as most that post here) to go through life without having to encounter close up extremely stupid people. Nowadays there is no getting away from them.

      1. It’s probably fair to say every legitimate political actor has populist elements within what they do. It’s taking a populist position with respect to everything that I suppose defines a true populist political actor.

        1. Hmmm…but even pure populists can’t be populist on **everything**. Even – say – Donald Trump is pretty un-populist on things like – say – women’s rights.

          Populists stake out political positions that are popular with an election winning chunk of the electorate without really caring whether or not that position is something that can be implemented in a way that does more good than harm, and they discard whatever principles they might have to suit political expediency.

          FF fits the bill pretty well, both now and over history. PPP-AAA aren’t as popular and they seem to have at least a few principles that limit their freedom to be properly populist. I don’t agree with their principles, but they seem to have a few. Maybe I’m wrong on PPP-AAA.

          1. PPP AAA aren’t populist. They are principled. Populism is the opposite.

            FF have akwys been populist. “when I have the money I spend it ” is very FF
            As is thinking everything will work out

            “Asked if any mistakes had been made, Mr Cowen replied: “Of course, mistakes were made. You can only go on the basis of information made available to you at the time and, of course, with the benefit of hindsight all of us can look at various other options that might have been available.’’

            Anyone who had doubts would have committed suicide as per Bertie’s instructions.

    1. The distribution of wealth is at 1929 levels. Brideshead levels. Growth is mathematically impossible in the US n UK.After 8 years monetary policy is a busted flush.

  4. Ultimately everything is negotiable. Debt is a function of power. When the facts change I change my mind. Timing is everything. Syriza were right. But you need to be able to execute.

    Growth is finished under the current system . Unless you can find $5 bn in soya beans down the back of the couch. All the models assume growth. It is a no brainer.

    Groupthink is very hard to pierce. When fiduciary duty means ETFs. What is value?

    . Maybe when pensions collapse things will start to change. It would be better for capital to negotiate now. Or is Auschwitz inevitable?

  5. blogs.piie.com/realtime/?p=1760

    “The likely reason monetary stimulus will be insufficient on its own to bring sustained recovery is the ongoing fragility of the financial system limiting lending to new and small business. Having some day-to-day financial stability due to guarantees is not the same as having a fully functional banking system – the proof of functionality is in lending, not stress tests.”

  6. Populism is useless. So is Draghi . Expecting QE to generate growth is like expecting a payrise if the richest people have all the money.

  7. I was in the Philippines in February 1986 when the dictator Ferdinand Marcos was airlifted from the presidential palace by an American helicopter as huge crowds celebrated on the streets.

    Duterte who won the presidency with 39% of the vote for one 6 year term, has admired Marcos but despite the poor record of the dynastic families that dominate politics, it would not be easy to emulate Marcos. As evidence of the anti-drugs murder campaign piles up, hopefully the International Court will get involved.

    https://www.washingtonpost.com/news/worldviews/wp/2016/11/02/philippines-duterte-discovered-this-week-that-his-actions-have-consequences/

    Racism or fear of being swamped by immigrants is evident in both places hit by economic woes and ones that are not.

    In Europe’s best run countries/ economies, populists have also gained public support by exploiting anti-immigrant sentiment: Switzerland, Sweden, Denmark, Austria, and Germany.

    In the US, white nationalism rather than poverty is a factor in the support of Trump — a man who has rigged the system and publicly said that by paying no federal taxes he’s “smart.”

    Trump has made racism respectable again but according to fact checkers he has been the biggest liar of the presidential cycle. The fact that he can get away with not publishing tax returns, makes a joke of the claim that he would be a departure from the corrupt political class — he would effectively run his business from the Oval Office.

    In the Brexit vote, the Economist has said that “High levels of immigration don’t seem to bother Britons; high rates of change do.”

    Where foreign-born populations increased by more than 200% between 2001 and 2014, a Leave vote followed in 94% of cases. The proportion of migrants may be relatively low in Leave strongholds such as Boston, in Lincolnshire (where 15.4% of the population are foreign-born). But it has grown precipitously in a short period of time (by 479%, in Boston’s case).

    Where local services were cut back through austerity from 2010, some people blamed immigrants for their woes.

    Farage who is married to a German, exploited the immigrant issue, as did Boris Johnson whose paternal great-grandfather Ali Kemal, was a minister in the Turkish government that was created after the collapse of the Ottoman Empire. Another Brexiter, Priti Patel of African-Indian origin who is International Development secretary in May’s government, was born in the UK in 1972 soon after her parents fled Uganda and arrived as refugees!

    Eaten bread is soon forgotten!

    Irish socialists are against property tax and charges, which at least the rich could not avoid or evade!!

    People appear to really prefer stealth taxes.

    In the last century the Irish experienced two demagogues: De Valera in particular before accepting constitutional politics. FF copied the Irish-American political machine system from the big eastern cities where welfare, jobs for the Irish and clientism generally were the main issues in politics.

    The second demagogue was Joseph McCarthy — we ignore him but this odious individual was the most prominent Irish-American of the 20th century until the election of JFK. I have written about him here and the link with Trump:

    http://www.finfacts.ie/Irish_finance_news/articleDetail.php?Legal-hit-man-of-Irish-American-demagogue-was-Trump-s-mentor-661

    There are the ordinary voters who are attracted to populists and the prominant supporters who provide validation and money.

    On Monday Peter Thiel, an early investor in Facebook, co-founder of PayPal and the only Silicon Valley tech chief to support Trump visted Washington DC to explain why.

    b>This clever man who is German-born and gay (Trump demonises immigrants and wants to reverse gains in LGBT rights), did not convince journalists.

    Emma Roller of the NYT wrote:

    Scratch the surface a little, and Mr. Thiel’s stated values start to peel away from reality. He said Mr. Trump would “be quite expansive on gay rights,” and would represent a “sea change” from past Republicans. In fact, Mr. Trump is quite in line with his party’s views on gay rights. He has said he personally opposes gay marriage and has promised to appoint Supreme Court justices in the socially conservative mold of Antonin Scalia. His running mate, Mike Pence, once called for funds to be diverted from AIDS treatment to gay conversion therapy.

    Mr. Thiel spent a large portion of his speech criticizing United States military involvement overseas, and specifically Mrs. Clinton’s hawkishness. He didn’t mention that his company, Palantir, sued the United States Army to make sure the company could compete for a multimillion-dollar contract with the military. A judge ruled in Palantir’s favor on Monday.

    http://www.nytimes.com/2016/11/01/opinion/campaign-stops/peter-thiel-wants-you-to-take-trump-seriously-but-not-too-seriously.html

    With many journalists unable to fact-check on the hoof including top-paid broadcasters in the US and social media creating fact-free echo chambers, we are likely to see more populism and dysfunctional systems.

  8. “All of this sounds great, but does not fit within the constraints those who actually hold power work within.”

    But who decides the constraints? And to whose benefit are those constraints?

    Take a number of the key policy / constraints in vogue since 2008, or lack of constraints.

    Reduction in state debt, meaning states refuse to borrow 10 year money at almost 0%, to fund necessary infrastructure. The policy is not even up for consideration, yet in normal circumstances to admit can you cannot use free money to better oneself would hardly qualify as entrepreneurial.

    There is no constraint to the the ECB one trillion QE and rising, which unashamedly lifts the value of asset prices owned mostly by the wealthy.
    “Elitism is the oxygen of populism.”

    Indeed it is, and that is the problem. Policies pursued, including globalization, are primarily designed to benefit the better off, and have damaged and disadvantaged a sizeable section of western society.

    And yes, “In extremis, populism results in people voting against their own interests. ”

    The object of the exercise is to change the direction of the ship, not to sink it, but that is always a risk.

    1. Voting centrist involves voting against your own interests as well. Anything that perpetuates the system is against ordinary people and their money. Penisons will be destroyed if things go on for much longer. Most Financial assets are overvalued . there is no effective regulation.

  9. Politics has long had very effective populist instincts. What has changed is that the targets of the populism of the mainstream parties have to be renewed over longer time-scales (when you are in power, for long enough, you have to have done something about those you demonised, don’t you?) and are no longer those that suit ‘the elites’ – who are beginning to think the gun might be starting to point a little too close to them for the next cycle.

    1. Where is Mr Quigley?

      Bourdieu said that ‘the dominant retain their position by constantly changing their stance’. “This leads to all sorts of real world contradictions, so the debate has to be structured in such a way as to ensure the ‘nonsensical aspect’ is concealed. This is usually achieved by limiting the scope of the debate, the number of ‘legitimate’ contributors, and shutting down alternative debates by force if necessary.”

      Now the nonsense is unstoppable. Doesn’t matter what controls are in place. Loss of Euro clearing will cost 77bn. Fed growth rate 2.9% not driven by payrises. They found $5bn in soya beans under the remote control. Last week likelihood of rates rise 78%. Today 15%. Trump and grab her by the *****,
      Wall to wall incoherence. And people are not stupid. They see what is happening.

  10. And another.

    http://www.tandfonline.com/doi/full/10.1080/14747731.2016.1229953

    “Finally, the economic profession’s deflationary, liberal finance bias, and the failure to include money, debt, and banks in economic analyses and modelling made it nigh impossible for the profession to correctly predict, prevent, or mitigate the ongoing crisis. Perhaps most symbolically, even the Queen suggested that they did not know what they were doing.”

    The Pirate Party came third in the Icelandic election with 14% of the vote! Somebody is missing a trick here somewhere, the most likely being that the existence of any economic dashboard that can control any free market economy is a myth.

  11. Point 1:

    Taring Independents, SF, AAA/PBP, SocDems as populists is perfectly valid.

    However to not also tar FF (benchmarking, provision of excessive welfare & benefits, taking 50% of the work force out of the income tax net), FG (Alternative Budget Expenditure levels during the boom on a par with FF) and Labour (Tesco campaign pre 2011 election and now back to giving concessions on everything now their back in opposition) is unfair.

    There are virtually no Irish politicians of substance. Politicians of all hues want one thing and one thing only – votes – and they will say whatever the electorate wants to hear to get them. And given the electorate rewards them the Ireland gets the governance it rightly deserves i.e. crap, weak, short term governance.

    It is oft said that the Irish electorate is mature, well informed & socially conscious with the latest evidence being the electorates apparent decision to “turn down tax cuts” in the last budget in favor of “increased public expenditure”. The whole premise of that argument is false.

    Given:
    1. the highly progressive nature of the Irish income tax system whereby average earners pay tiny effective tax rates,
    2. the fact there’s a million workers outside the income tax net entirely, and
    3. the abundance of benefits (childrens’ allowance, medical cards, free travel, non-contributory pension on a par with the contributory pension, HAPS, RAS, FIS, below market Social Housing rents, college grants, social housing for life, state subsidized transport etc) available to (a) the unemployed, (b) those on disabilities AND ALSO those on low to middle incomes,

    an increase in public spending is actually in most of the Electorates financial interest. Given so few pay so much of the overall income tax take a cut in taxes would only meaningfully benefit a small portion of the work force while an increase in expenditure would proportionately benefit a much larger base.

    It is in the financial interest of the majority of the workforce & those living off the state to chose increased public spending over tax cuts. The populist electorate rewards the populist politician hence the rise of far left, SF etc.

    Point 2:
    This brings me to the point:

    Deutsche Bank note yesterday (The Dark Side of QE) highlights the problem of populism.
    http://www.dbresearch.de/MAIL/DBR_INTERNET_DE-PROD/PROD0000000000425308.pdf

    1. Centrist politicians outsourced the “recovery” or “growth” to the Central Bank.
    2. QE’s monetary policy has allowed centrist politicians abdicate responsibility for fiscal reforms.

    FG & Labor in the last govt (i) drove through how many reforms, and (ii) enacted how many large project finance capital projects?
    – FEMPI, Croke Park, Hadington were extended while increments were still paid. Apparently Public Sector pay premium is only temporary???
    – Shatter’s legal reforms got scrapped once he lost his ministry.
    – What big budget long term welfare forms were introduced? Under 25’s get a reduced dole amount – big deal while there’s free education.
    – Water Charges were scraped,
    – The property tax was introduced at a minuscule level,
    – What property reforms were introduced? VAT, levies for projects that will never be built remain,
    – The inability to pay your mortgage no longer means your house it at risk,
    – USC is no longer “universal”

    Conclusion:
    – They’re all populist and we deserve no better.

  12. I’m tending towards the view that current usage of the term “populist” is increasingly more a term of abuse than a well defined description. Throughout the western world, we have political systems dominated by alliances of insider groups and technocrats who espouse more or less a single policy perspective. It seems to me that it is healthy that these regularly be challenged through democratic means, but that the incumbent oligarcho-aristocracies are increasingly fighting dirty by claiming that any opposition outside their paradigm is populist and illegitimate. To be sure, many of the groups labelled as populist have an unattractive side to them, but this is not universally the case, and even where it is the case it is often exaggerated by critics.

    It is in the nature of things that many of these outsider groups do not have well thought through programmes that would allow them to rule significantly differently to the incumbents. However, it is also the case that in many instances they have policies contrary to the existing consensus that are capable of being tried out, even if the impact is unpredictable. It is legitimate, and even desirable, that if they can attract sufficient electoral backing they should get the opportunity to try out untested policy approaches outside those approved by insiders and technocrats.

  13. The key intersection between politics and economics relates to the redistribution of social wealth and provision of public goods. The net result is invariably imperfect. Every generation hosts its ‘ winners and losers’. Hence the politics of protest, of seeking redress and demands for change, are nothing unusual. They don’t threaten the democratic system They are a necessary part of the normal democratic process and act as a wake-up call for policy failure. Occasionally they may be led by self-serving ideologues or demagogues, but they’re not ‘populist’ . Once the main fight is over, the ideologues and demagogues troupe on to their next cause celebre

    Populism is an all-out assault on and rejection of representative democracy. Whether left or right, populists challenge “the dominant political culture by juxtaposing ‘a virtuous and homogeneous people’ with an unscrupulous elite and a set of dangerous ‘others’.”(1) The leftist brand aims to dismantle the institutions of representative democracy, replacing them with ideologically-derived constructions based on their own utopian vision of ‘mass democracy’. Right-leaning populists seek to subvert representative democracy to their own narrow political purposes of a lust for power and self-aggrandisement. Each would suppress all sources of dissent to their singular authority. Both capitalise on primal fears and uncertainty. Populist demagoguery is never concerned about the truth or accuracy of its claims or statements. Facts are irrelevant. In the long march to power and privilege, the sole purpose of speech is to excite ‘feeling’.

    All political organisations have a tendency towards populism; without which your average politician would never get elected to anything. Left to their own devices, they’d indulge themselves if only for the sake of securing re-election. But the institutions, rules and norms of representative democracy constrain their worst inclinations.

    The political culture of western liberal democracy emanates from ideas about representative forms of government bandied about since the 17th century. Principles then established continue to shape its contemporary form. As the UK Government discovered this week, the Glorious Revolution of 1688, and the limitations its settlement placed on exercise of Crown prerogative, still has implications for the legitimate exercise of power in the 21st century. Whoever thought we’d have William of Orange to thank for anything?

    Underpinned by liberal principles of rule of law, justice, individual freedom, and later, universal suffrage, fair elections and freedom of expression, representative democracy has evolved into the ‘regime of choice’ for more than half the world’s population, including a majority of small nation-states. From shaky beginnings, representative democracy has proved resilient and adaptive to change, once its roots are firmly planted. Part of its weakness is that it is state-bound. It is also its greatest strength.

    The twenty-first century poses new challenges for representative democracy. The past half century has seen the relentless devolution of nation-state power to a range of supranational institutions. Although pooling sovereignty within institutions like the EU ostensibly confers more advantage than disadvantage, socially and economically; by the nature of its institutions and functions at several levels removed from national power, the EU democratic deficit is inbuilt and irrevocable.

    At the level of the individual nation-state, representative democracy relies on strongly competitive national parties to work effectively or not at all. Over the past half-century mainstream parties have watched their traditional support base gradually dissipate under pressure from the forces of economic globalisation and more latterly, the Great Recession. For social democrats, the tide has gone out on the old labour movement. For conservatives, economic protectionism is no longer available as a device to stifle competition to favoured industries or their business supporters. Civil society movements are no longer what they were in the mid-twentieth century. Environmental NGOs , for example, are now more akin to professional multinational lobbyists than grassroots’ representative movements.

    All political actors rely on a half-decent functioning media system to carry their message to their electorates and relay public opinion back to them. ICT has put paid to that. Traditional news organisations no longer have loyal consumers who place trust in their individual news brand. News organisations are no longer representative of discrete cohorts in society. Their audience-directed product has been supplanted by news apps’ content for which source and provenance are less important than immediacy. Social media enables politicians of all stripes to communicate their message directly and pseudo-personally to supporters and to create new bases of popular support. It’s a gift for the populist demagogue’s virtual persona , for whom howls of outrage and creation of echo-chambers of the like-minded perform serve the same purpose of accumulating the currency of notoriety.

    Bereft of their traditional base of allegiance within society and with diminishing grassroots membership, 21st century mainstream parties have turned professional. They are ever more reliant on troupes of political consultants, polls and focus groups to get a handle on public opinion and to guide the public and virtual performances of their leaders.

    As for the rest of us, arguably we live in what Bernard Manin at the turn of the century termed the ‘audience democracy’. Spectators at a political vaudeville, periodically there is the chance to boo and hiss our political actors off the stage or reward them for their loyalty to our feelings, if not our best collective interests.

    Hence, narratives suggesting the current surge in left and right-wing populism across Europe, and Trumpism in the United States, is primarily due to ‘winners and losers’ within the system are incomplete. When it comes to Brexit, for example, polling results show that those most likely on the wrong end of job insecurity and the impact of austerity policies – the younger age cohorts – overwhelming voted ‘remain’. It’s not just all about economics. It may yet turn out to be about democratic resilience.

    [(1) See McDonnell, D. (2008) Ch.14 in Twenty-first Century Populism – the Spectre of European Democracy p.200]

    1. “Charisma is a sociological term coined by Weber himself. It refers to the quality of leadership which appeals to non rational motives” . The Republican Party were masters of charisma until the Wolf turned up.

      1. Indeed. And one man’s charismatic hero is another’s demon, depending on one’s ideological or cultural loyalties. Cultural Cognition Thesis (CCT), as developed by Dan Kahan and others in a substantial body of work over the past 20 years, questions previously cherished concepts of ‘rational motives’.

        Writing about risks and evidence, Kahn et al (2012) suggest: “The reason that citizens remain divided over risks in the face of compelling and widely accessible scientific evidence,… is not that that they are insufficiently rational; it is that they are too rational in extracting from information on these issues the evidence that matters most for them in their everyday lives. In an environment in which positions on particular policy-relevant facts become widely understood as symbols of individuals’ membership in and loyalty to opposing cultural groups, it will promote people’s individual interests to attend to evidence about those facts in a manner that reliably conforms their beliefs to the ones that predominate in the groups they are members of.”

        1. Thank you, Veronica. This quote sums up a key challenge confronted even by the best-intentioned governing politician or policy-makers – and explains why so many perfectly sensible policies remain in the “too difficult tray”. It explains, for example, the costly farrago of what could be charitably described as a housing policy in the budget. When more than 60% of houses are owner-occupied (with over half with no mortgage) anything that increases economic rents that may be potentially extracted in the future (and increases rents for all of those in the housing supply chain) will be applauded to the rafters – irrespective of the malign impact on younger citizens. The very small handful of economists with the knowledge and competence (and the courage) to highlight this costly nonsense do themselves no favours by stating the bleeding obvious in purely economic terms – while ignoring the equally bleeding obvious in politicial terms that makes their economic recommendations appear so ridiculous to ordinary voters – and thereby invites derision. And this perfectly justifiable derision taints any of the vanishingly few sensible economic policy recommendations they might make make that could be presented in a politically palatable manner.

          Though a few of these economists may be gainfully employed in the public domain and generally functioning in the public interest – and the others surface in the public consciousness as providers of some entertainment (Kilkenomics is a perfect example) – the vast majority of practising economists are inveterate rent-seekers either directly on their own accounts or both directly and indirectly by facilitating rent seeking by powerful and influential interest groups. The vast majority of voters have little detailed knowledge of the minutiae of the activities of this army of functionaries and flunkies (most of them are not economists per se, but they are implementing, advancing, protecting and defending public and private economic policies and initiatives that advance the interests of the powerful and influential vested interests), but they are well aware they are being ripped off. And they know that it’s the quiet pigs that eat the meal. And these are the elites that they are increasingly treating with fully justified disgust, contempt and anger.

    2. “When it comes to Brexit, for example, polling results show that those most likely on the wrong end of job insecurity and the impact of austerity policies – the younger age cohorts – overwhelming voted ‘remain’. It’s not just all about economics. It may yet turn out to be about democratic resilience.”

      I find this poll extrapolation and rationalization, also referred to by Kaletsky, unconvincing. Younger people are generally happy, at the outset, to be just ‘working’, and would naturally have feared for their jobs as they started to get on their feet. Hence their voting pattern.
      But private sector job insecurity affects all people, right up to retirement age, an age when one is more fearful of being dumped out of work; and in addition older people have a memory of how things were, and how job security in particular has deteriorated. Older people are also more equipped to make the connection between a continuation of a deteriorating trend, and the futures of their children, than those children themselves may be able to see that connection.

      But whether it is called populism or reactionary politics, some of it is having a much needed effect on political thinking, as evidenced by the linked Paul DeGrauwe article, where he questions further globalisation.
      https://www.socialeurope.eu/2016/11/far-push-globalisation/

      “Bereft of their traditional base of allegiance within society and with diminishing grassroots membership, 21st century mainstream parties have turned professional. They are ever more reliant on troupes of political consultants, polls and focus groups to get a handle on public opinion and to guide the public and virtual performances of their leaders. ”

      Very true. Politics today is mostly devoid of principle, but perhaps it always was.

  14. I don’t think the centrist view of things is particularly rational either. The EZ has no Lender of last resort, no bank resolution, no bank recap. By design. The whole system is designed to enrich a tiny elite. Who decided that was a good idea?

  15. @Veronica

    I think your reference could be improved by replacing the “and” in the last line by “or”…

    “Populism is an all-out assault on and rejection of representative democracy. Whether left or right, populists challenge “the dominant political culture by juxtaposing ‘a virtuous and homogeneous people’ with an unscrupulous elite [and] a set of dangerous ‘others’.”(1) ”

    Most of the time the “dangerous set(s) of others are picked upon because they are weak, and they just have to put up with it. The new targets of populism, and their sympathisers, are in a position to make more of a fuss about it – much of the time on Twitter…

    I also think the tabloid and semi-tabloid press, particularly in the UK still have a significant and ready audience who are not the sort of people who read about current affairs on their smartphones much.

  16. Interestingly, the first dictionary definition of “populist” that comes up on a Google search is this;

    “a member or adherent of a political party seeking to represent the interests of ordinary people”. Now call me a populist, but that does seem an entirely unobjectionable goal.

    I guess I’d quibble a little bit with the definition and perhaps say that if you want to define a populist then you should generally replace “seeking” with “pretending”, or at least shift the emphasis a long way in that direction. FF, for instance, have often sought to represent the ordinary people but have perhaps more often merely pretended to.

    I wouldn’t agree that populism requires or even clearly implies an all out assault on democracy. Fascism does. Now all the fascists that I can think of have been populists (according to my definition), but the reverse is not (IMHO) true so I disagree with Veronica’s definition there.

    Interesting too that fascism’s rise was facilitated by mass media of the type where everyone was listening to the same radio stations, whereas Trump’s rise has been facilitated by mass media where everyone is NOT listening to the same radio or TV channel.

    Meantime, we’ve got a situation where populism of both the regularly dodgy and the fascist kind is being stimulated by a political system in many countries that really doesn’t seem to be interested in the welfare or interests of ordinary people.

  17. Interesting points.More food for thought. Many thanks!

    @grumpy and Hugh Sheehy

    The definition of populism cited is Duncan McDonnell’s from Turin University, from a book on 21st century populism which he co-edited with Daniele Albertazzi from Birmingham University, and published in 2008.As such I am obliged to use the original wording without adulteration.

    McDonnell and Albertazzi’s work appears to have been primarily motivated by Italy’s experience in the Berlusconi years. McDonnell contributed his own chapter on Ireland. He was (presumably) drafting it in 2006 or so, at the height of the Bertie era, then on course for a third consecutive Fianna Fail election victory, McDonnell infers that Ahern displayed populist traits that belong in a class of their own. I don’t agree with him. I think Ahern was more corporatist than populist in his political inclinations, as suggested in work by Aidan Regan in his thesis on the political economy of Ireland throughout the Celtic Tiger period i find McDonnell’s definition of populism useful though, as it seems to me broad enough to encapsulate the essence of populism in all its seemingly infinite variety of political manifestations, both historical and contemporary.

    As Hugh points out above, the European Fascist regimes of the 1930s were quintessentially populist, but of their time. DeValera’s Fianna Fail party embedded its own version of a popullist nationalist ideology in the irish Free State, in close association with the Dublin Archbishop McQuaid’s narrow Catholic ideology. As McDonnell writes: “Indeed, Irish political culture was nearly unimpeachable with its twin pillars of the worthy plain Catholic people of Ireland on one side and the common enemy (and easy scapegoat for the nation’s ills) of Britain and its liberal culture on the other,” (p.200).

    In a more nuanced analysis by political scientist, Peter Mair (1987) and others of Fianna Fail’s project of ‘economic nationalism’, the quasi-populist ethos of the then ‘semi-constitutionalist’ party (on its own admission) is exposed. Not that Fianna Fail were the only populists on the block – the ‘Blue Shirt’ faction that ultimately combined with Cumann na nGhaedheal to emerge as the Fine Gael party, was a fascist organization. There were other nakedly populist parties – loose alliances of independent farmers and others, mainly rural based – that came and went along the way.

    For sure, the plain people of Ireland, unwittingly impoverished by the prevailing political ideology, but long familiar with the tenets of representative democracy through the local authority electoral system which predated political Independence, by and large laughed the Blue Shirts off the stage. Or worse. I vividly recall my favourite uncle’s graphic description of his own personal encounter with ‘one of them jumped-up Blue Shirts’ at a dancehall in Jamestown, Carrick on Shannon. My dear uncle was a tall man. As befitting one who worked the land for a living, he had large fists…’Nuff said

    My argument is that populism is a persistent feature of all political systems. A particular confluence of circumstances allow it to come to the fore, at least for a time. The rules, established norms, traditions and values of representative democracy combine to prevent its worst excesses and hold it in check. Just as well, since full-blown populist regimes, however short lived they may be, are generally most unfortunate for those societies that have to live through such periodic eruptions.

    Wiser heads claim that if Trump loses next week, it will put a brake on the current wave of European right-wing (and left) populism …except for the Brexiteers of course, whose destructive impulses have yet to reach full throttle..

    1. On Veronica’s point that populism is a persistent feature of all political systems, I’m tempted to say “What else would you expect?”. Even the most repressive regimes can’t evade “popular opinion” for long. Roman Emperors feared “the mob”.

      The path to destructive populism (or “revolution” of any sort) seems to me to be to be paved with persistently ignoring “the interests of ordinary people”.

  18. I’m in New York since yesterday. I must say I’m surprised by the total lack of election fever. Haven’t seen a single election poster or tv ad for a candidate. And all the tvs in the Irish bar/restaurant I was in last night were switched to sports channels. Not a mention of the election. I expect the explanation is that New York isn’t a swing state and that a Clinton win in New York is a foregone conclusion, so nobody campaigns here

    I have no time for Trump, although I note that the majority of Americans with a background similar to myself (white, male) are voting for him. My reading is that the Democrats have pushed America so far to the left, as compared with what its historically been, that Trumpism is the reaction. Who’d have thought an out-and-out socialist would come within a whisker of winning the Democrats nomination? The younger generation of Americans seem to know nothing about the failure of socialism everywhere its been tried.

    If Clinton wins, it will confirm that the old America, dominated by people of European descent, with those of Anglo-Saxon and Celtic descent prominent, is on the way out. The economy of that America was based on capitalism and enterprise, and its morality derived from its Judaeo-Christian heritage. It not only made itself prosperous and stable, but gave the world prosperity and stability. Now its being replaced by a new America, in which the proportion of the population of European descent is sinking fast, and where the dominant ethos is not Judaeo-Christianity, but extreme social liberalism – moreover, an extreme social liberalism that is increasingly intolerant and authoritarian, and only too happy to use the law to force its tenets on the entire population. A Clinton win will probably be the final nail in the coffin of the old America. Clinton as President will not only authorise a huge increase in immigration, but will ensure that the huge number of ‘illegals’ already here are given voting rights. She will rig the Supreme Court with 24-carat liberals and abortionists, and that will be that. Those supporting Trump recognise that they are in the ‘last-chance saloon’, hence their anger – its just a shame they chose the only candidate who’s at the same low moral level as the Clintons.

    As for what follows the demise of the old America? Don’t expect the same prosperity and stability that the old America had. Mexico isn’t prosperous or stable. Neither is the Caribbean. Nor the Middle-east. Nor Pakistan. Why should an America composed mainly of populations from those countries, which it will be in a few decades, be different?

  19. @Hugh
    Point well made!

    JTO previously noted how: ” the growth of social media… allows every crank and nut to have an ‘equal’ voice. Years ago it was possible for intelligent people (such as most that post here) to go through life without having to encounter close up extremely stupid people. Nowadays there is no getting away from them.”

    On reading this, and with a wry smile, I wondered to which category I should consign myself – part of the ‘crank and nut’ brigade or amongst the chosen elite of ‘intelligent people’? Having read the most recent post above, I’m reconciled to be classified as one of the ‘extremely stupid’

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