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Is Populism the End or Salvation of Liberal Democracy? · Trumponomics

• 0:03
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:06
  Speaker 1: global economy to you. Now. Listening to this, you might
• 0:14
  Speaker 1: have wondered whether we would ever feature a journalist who
• 0:17
  Speaker 1: didn't work for Bloomberg. The answer is we'll talk to
• 0:20
  Speaker 1: anyone if they're interesting enough, and Martin Wolf of the
• 0:23
  Speaker 1: Financial Times definitely fits into that category. He's been the
• 0:27
  Speaker 1: Financial Time senior economic commentator for as long as I've
• 0:30
  Speaker 1: been involved with economics. We even worked together there back
• 0:33
  Speaker 1: in the day. What he writes gets read by most
• 0:37
  Speaker 1: of the people who count, and lately, like a lot
• 0:40
  Speaker 1: of us, he's found himself writing less about economics and
• 0:43
  Speaker 1: more about politics and populism, how it's shaping the economic
• 0:47
  Speaker 1: landscape today and what policymakers might do in response. So
• 0:52
  Speaker 1: I was delighted to have a conversation with him about
• 0:55
  Speaker 1: this on stage earlier this week at the Resolution Foundation,
• 0:58
  Speaker 1: a London based think tank, at an event organized by
• 1:02
  Speaker 1: the British Society of Professional Economists. It was such a
• 1:05
  Speaker 1: wide ranging chat we decided to devote this program to it.
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  Speaker 1: I started by pointing out there were quite a lot
• 1:11
  Speaker 1: of different definitions of populism out there. For some economists,
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  Speaker 1: it seemed to be just anything political and non mainstream
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  Speaker 1: that might cause trouble for others. It was a tool
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  Speaker 1: kid of techniques for unscrupulous politicians, not really an ideology,
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  Speaker 1: of course. Marxist would say, it's when the ruling elite
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  Speaker 1: persuades workers to vote against their own self interest. I
• 1:34
  Speaker 1: asked Martin which definition of populism he found those useful.
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  Speaker 1: I think there are two ways of thinking about this.
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  Speaker 1: One is popularism is what politicians whom we everybody would
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  Speaker 1: agree a populist do, and that's quite a wide range
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  Speaker 1: of things. But I would argue that there is one
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  Speaker 1: common thread to all populism, be it of the left
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  Speaker 1: or the right, which is the mobilization of people politically,
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  Speaker 1: often in response to various economic social stresses, against existing elites.
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  Speaker 1: The essence of the common element of this is anti elitism,
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  Speaker 1: and that allows you and the policies that are seen
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  Speaker 1: and the systems that are seen as to favoring elites. Um,
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  Speaker 1: that's what populace argue they're doing. So the main point
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  Speaker 1: to make about this is when we think about the
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  Speaker 1: political direction of an origins of populism, it's very complicated
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  Speaker 1: and you have to anchor your ideas about it. I
• 3:00
  Speaker 1: think very much in the context of your own society country,
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  Speaker 1: and work out whether the forces are unleashed here are
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  Speaker 1: on the whole going to prove to be or could
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  Speaker 1: be made beneficial, or going to be utterly destructive of
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  Speaker 1: existing functioning, valid and important institutions. And there's plenty we
• 3:22
  Speaker 1: can unpack on that. But just to insert a few facts,
• 3:26
  Speaker 1: because I've got economists at my disposal, this is an
• 3:29
  Speaker 1: audience of economists. They have done various studies thinking about
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  Speaker 1: just what share of G twenty g d P is
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  Speaker 1: currently in the hands of populist governments, and they actually
• 3:43
  Speaker 1: have that there's a catchule which as they actually talked
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  Speaker 1: about populace and non democratic regimes have put them together,
• 3:50
  Speaker 1: which is startling. But you can also look at the
• 3:52
  Speaker 1: populace together, So the populace or non democratic regimes. Even
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  Speaker 1: in twenty sixteen, about thirty three percent of G twenty
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  Speaker 1: g d P was in the hands of populace or
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  Speaker 1: non democrats, and that's up from about ten percent around
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  Speaker 1: the time of the crisis um but most recently it's
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  Speaker 1: now gone up to sixty eight percent, So sixty eight
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  Speaker 1: percent of global of G twenty g d P in
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  Speaker 1: the hands of non democratic regimes or populace. Now, of course,
• 4:27
  Speaker 1: for our pus of purposes, we might be interested in
• 4:29
  Speaker 1: just the populace. And that's forty three percent now versus
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  Speaker 1: eight percent. And as if you look at the European elections,
• 4:38
  Speaker 1: actually the share of populist parties was a bit smaller,
• 4:40
  Speaker 1: and the last European that's gone up eight percent. But
• 4:44
  Speaker 1: we're still we're talking a sort of slightly smaller number
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  Speaker 1: when you just look across the European political scene. But
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  Speaker 1: it is certainly we're not We have not seen what
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  Speaker 1: I think some people were hoping to see in the
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  Speaker 1: last few years, that somehow there'd been a sort of turnaround,
• 4:59
  Speaker 1: a peak popularism, the moment that you still haven't seen
• 5:04
  Speaker 1: a populist government being defeated in subsequent polls. If you
• 5:07
  Speaker 1: look in the Czech Republic, Romainia, Hungary and Turkey, they've
• 5:10
  Speaker 1: all been re elected, which I think is telling. Serrita
• 5:14
  Speaker 1: is the exception to this, but you can argue that's
• 5:16
  Speaker 1: because they stopped being very popular they started actually following
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  Speaker 1: the rules of the system. Um. But this is including
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  Speaker 1: lots of different things in the mix. You know it is,
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  Speaker 1: including Bodemoss and City and Trump, and also the right
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  Speaker 1: wing populists tend to be a bit Do they include
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  Speaker 1: Modi as a populist? They do, so it's getting part
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  Speaker 1: of the problem. How are you so I may actually
• 5:44
  Speaker 1: check that. I'm not sure about Moody. I think we
• 5:46
  Speaker 1: have we did. I had debate with them even about Trump,
• 5:48
  Speaker 1: because you could argue he's part of a he's in
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  Speaker 1: the mainstream party whether you like it or not, but anyway,
• 5:53
  Speaker 1: or he's taken over a mainstream party. But that all
• 5:57
  Speaker 1: does run together a lot of left right wing lists.
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  Speaker 1: And it sort of seems to me that the right
• 6:02
  Speaker 1: wing populace these days are doing a lot better than
• 6:04
  Speaker 1: the left wing populace. But does it matter the difference?
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  Speaker 1: Should we think differently about them? Right wing populace will
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  Speaker 1: emphasize the nation and or the ethnicity against other nations
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  Speaker 1: and ethnic groups, and the left wing political and tends
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  Speaker 1: tends to be conservative and hierarchical within this structure and
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  Speaker 1: quite happy with extreme inequality as Trump is showing, and
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  Speaker 1: left wing populace will tend to volk be much more egalitarian,
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  Speaker 1: as I said, class base and in the Latin American
• 6:39
  Speaker 1: history they've had both equally, but in this in European history,
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  Speaker 1: and particularly in the recent times, the right populace have
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  Speaker 1: basically done much better than the left wing populace. It
• 6:51
  Speaker 1: is relevant, I mean, when you get onto the differences
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  Speaker 1: of right and left, obviously, then it becomes relevant for
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  Speaker 1: thinking about whether there could be positive consequences from pulism
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  Speaker 1: or or not. And it did strike me when I
• 7:03
  Speaker 1: was thinking about this that the populace, when you look
• 7:06
  Speaker 1: back in the history, are a bit like that difference
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  Speaker 1: between freedom fighters and terrorists. It sort of depends on
• 7:11
  Speaker 1: whether the system ended up better at the end or not.
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  Speaker 1: And if we thought that they made the system better,
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  Speaker 1: as for example, the populace maybe in the late nineteenth century,
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  Speaker 1: and certainly the populist movements in the US which helped
• 7:24
  Speaker 1: trigger the New Deal or put pressure to produce the
• 7:27
  Speaker 1: New Deal institutions, we look at them and we say, well,
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  Speaker 1: that was kind of good populism. So we think of
• 7:31
  Speaker 1: it in a different category, clearly than the populism which
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  Speaker 1: culminated in national socialism and Hitler's Germany. But that kind
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  Speaker 1: of gets to this point of is it is it
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  Speaker 1: ultimately about changing the system for the better or fundamentally
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  Speaker 1: undermining it. And I sort of it feels like the
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  Speaker 1: jury is the kind of populism we're seeing now seems
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  Speaker 1: to feed on the sort of reduced credibility democratic institutions,
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  Speaker 1: and certainly the case of President Trump often seems to
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  Speaker 1: revel in that. But it is also, as you say,
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  Speaker 1: pointing in the direction of some policies that might be
• 8:10
  Speaker 1: a good idea. I think the in terms of the
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  Speaker 1: benefits of actual potential populous pressures, you can perhaps think
• 8:16
  Speaker 1: about in two possible ways. Historically, so first, in very
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  Speaker 1: dangerous situations where people are very unhappy for very many
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  Speaker 1: different reasons at different points in history, there have been
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  Speaker 1: pretty standard democratic politicians who have responded effectively. In the
• 8:37
  Speaker 1: US case, the two most remarkable cases of the two Roosevelts,
• 8:44
  Speaker 1: the both potentially in American terms, aristocrats who in the
• 8:50
  Speaker 1: case of theater or responded to all this upwelling of
• 8:55
  Speaker 1: pressure against the trusts and the rest of it to
• 8:58
  Speaker 1: introduce some really quite rad call antitrust policies particularly and
• 9:02
  Speaker 1: other similar things. And then, of course FDRUM. So first
• 9:09
  Speaker 1: you can have sensible responses by conventional politicians. I think
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  Speaker 1: the EU has basically handled this terribly because they handled
• 9:17
  Speaker 1: the crisis terribly, and that has tended to make the unhappiness.
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  Speaker 1: You know, why do we have Salvini instead of Mario Monty.
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  Speaker 1: There's no surprise about that. Mario Monty was set up
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  Speaker 1: to fail now, So that's one thing. And and the
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  Speaker 1: worst case of this in the history of the world,
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  Speaker 1: I think is the move. You know, Hitler was in
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  Speaker 1: my view of direct consequence of Brunning. Um, It's quite obvious.
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  Speaker 1: He was written about this many times. There was no
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  Speaker 1: chance of Hitler winning an election at a mini school
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  Speaker 1: share of the vote. I think it's about seven percent.
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  Speaker 1: I can't be exactly something like that, and he was
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  Speaker 1: got a third three years later. Wonder, I mean he can.
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  Speaker 1: Brunning collapsed in the economy, so the way democratic politicians
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  Speaker 1: respond really really matters. Going for Brexit as a solution
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  Speaker 1: to all this was insane, but there we are. This
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  Speaker 1: is where we are. The second thing, of course, camp
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  Speaker 1: populists themselves do good things well, it depends on what
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  Speaker 1: you mean by populists. I'm sure if I think hard
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  Speaker 1: I could think of some examples where populists have tended
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  Speaker 1: had done well. But the usual problem in the populists
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  Speaker 1: in power is they don't recognize because it's something they
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  Speaker 1: don't trust the elites at all. So they don't trust
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  Speaker 1: elite mantra about resource limits, budget treat constraints and all
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  Speaker 1: the rest of it, confidence in business so well that
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  Speaker 1: they basically smashed the economy. I'm trying to think very
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  Speaker 1: hard of whether there's an obvious case where somebody we'd
• 10:53
  Speaker 1: all agree was a populist leader really succeeded in leaving
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  Speaker 1: a much stronger economy. They're that person in herit in
• 11:03
  Speaker 1: a much stronger society. I think it's rather rare. By
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  Speaker 1: and large, successful reformers, including radical reformers, are far more
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  Speaker 1: disciplined and self disciplined than populist leaders tend to be.
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  Speaker 1: I guess we get back to that question, that sort
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  Speaker 1: of definition around the tool kit we have if you
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  Speaker 1: do see successful quote unquote mainstream leaders who are successful
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  Speaker 1: because in a populist era they've borrowed some of the
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  Speaker 1: clothes or some of the techniques of populism. And in fact,
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  Speaker 1: you might have said that about President Macquin. It made it,
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  Speaker 1: made it pull off the fantastic trick at least for
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  Speaker 1: a while of making profoundly mainstream centrist policies look exciting
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  Speaker 1: and radical. Radical. Well FDR was radical. I mean he
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  Speaker 1: busts the gold standard. That's big stuff in America. But
• 11:53
  Speaker 1: he was radically in an extraordinarily self disciplined or interestingly
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  Speaker 1: disciplined where really great politicians know how to handle these
• 12:03
  Speaker 1: problems in those situations, and they are unfortunately not that
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  Speaker 1: common in recent times. They haven't existed in the worst
• 12:10
  Speaker 1: I think you're right, but I think that's not the
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  Speaker 1: same to say that there's no populist leader who has
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  Speaker 1: remained through and through a populist leader that has achieved
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  Speaker 1: a successful change of regime isn't necessarily the kind of
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  Speaker 1: effect that we're looking for, because it would often be
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  Speaker 1: the case that it's the pressure of populace. Like in Europe,
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  Speaker 1: you have a lot of you know those whatever it
• 12:31
  Speaker 1: is twenty eight percent of Europe of European m EPs.
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  Speaker 1: They actually don't control the europe Parliament. They contribute to
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  Speaker 1: the fragmenting of the system, but potentially they are also
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  Speaker 1: pushing European political leaders in the direction of some positive things.
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  Speaker 1: That's exactly copied. It's how mainstream politicians respond to populist
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  Speaker 1: pressures and the recognition by them that there are real
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  Speaker 1: issues that they've got to find clever ways of dealing with,
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  Speaker 1: even if they're radical. Radicalism is not the same as populism.
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  Speaker 1: And strongly in favor of radicalism, and we obviously need it,
• 13:07
  Speaker 1: but we have to have discipline radicalism. The great thing
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  Speaker 1: about the really important performance Swedish social Democrats in that
• 13:15
  Speaker 1: the dagger Helllander, for example, probably the most successful reformer,
• 13:20
  Speaker 1: was that he throughout that long period of radical reforming Sweden,
• 13:23
  Speaker 1: he knew exactly what he was doing and why. If
• 13:26
  Speaker 1: you look at the main sort of macroeconomic tools that
• 13:31
  Speaker 1: we have in the world today, the sort of default settings,
• 13:35
  Speaker 1: if you like, they're remarkably little changed by the global
• 13:38
  Speaker 1: financial crisis. Our economists a little bit of fault for
• 13:43
  Speaker 1: not producing enough ideas that are future. There's plenty of
• 13:47
  Speaker 1: people running for president on the Democrats side at the
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  Speaker 1: moment who like to think they might be the next FDR.
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  Speaker 1: You know, you get a lot of explicit references to
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  Speaker 1: new Deal. Are they being given the right kind of
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  Speaker 1: ideas by economists to this into a positive a positive
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  Speaker 1: event for um and make for populist forces Actually produce
• 14:09
  Speaker 1: some good on economic policy. I think that we have
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  Speaker 1: been extraordinarily inhibited and conventional in our responses, which doesn't
• 14:22
  Speaker 1: mean that changing things will be easy, but recognizing there
• 14:27
  Speaker 1: are some very very big questions and thinking about how
• 14:30
  Speaker 1: we might handle them, and some of them very uncomfortable
• 14:33
  Speaker 1: for me and others. So what are what are the
• 14:37
  Speaker 1: things that I've been thinking about in the last nine
• 14:41
  Speaker 1: years since the crisis or ten years, thank god its
• 14:45
  Speaker 1: twelve years now since the gressum So, first of all,
• 14:50
  Speaker 1: pretty obviously, I was one of the people and remain
• 14:55
  Speaker 1: one of the people who think that all countries that
• 14:58
  Speaker 1: had the means to do had to get back to
• 15:01
  Speaker 1: full employment as quickly as possible. Um. Second, I think
• 15:08
  Speaker 1: we and I've written this for years, I think that
• 15:11
  Speaker 1: relying on the central bank just to manipulate financial markets
• 15:16
  Speaker 1: rather directly funding government in these situations is ridiculous. The
• 15:20
  Speaker 1: inhibition on direct monetary financing is ridiculous. I understand the
• 15:26
  Speaker 1: risks with it, but I think it's perfectly workable in
• 15:29
  Speaker 1: a recession stroke depression to go for direct monetary financing,
• 15:34
  Speaker 1: and I think it would have made a difference. I
• 15:36
  Speaker 1: think we have to think very very seriously about tendencies
• 15:41
  Speaker 1: in the market economy towards anti competitive structures. I think
• 15:46
  Speaker 1: there's a lot of evidence of declining competition, a lot
• 15:50
  Speaker 1: of evidence in our market economies increased monopolies or quasi monopolies,
• 15:58
  Speaker 1: A lot of them, of course, of far are in
• 16:01
  Speaker 1: American particularly, but I think we have to look at
• 16:04
  Speaker 1: that very very carefully, be much more aggressive on that
• 16:07
  Speaker 1: front um. I think we're going to have to be
• 16:11
  Speaker 1: very radical on acid ownership. We are getting quite extreme
• 16:15
  Speaker 1: concentrations of wealth across the world, and we're that's not compatible,
• 16:20
  Speaker 1: to my mind, with a sustainable democracy. Aristotle said this
• 16:24
  Speaker 1: I discovered, so that means we're going to have to
• 16:28
  Speaker 1: be quite radical about distribution of wealth. Income will follow
• 16:32
  Speaker 1: from that, but actually I think wealth is quite important.
• 16:36
  Speaker 1: The right thing to do is for radical parties to
• 16:39
  Speaker 1: come up with radical ideas. I've been rather depressed by
• 16:43
  Speaker 1: how limited and ill thought out and ill work through
• 16:50
  Speaker 1: such proposals are. In the American case, I think Elizabeth
• 16:55
  Speaker 1: Warren has been quite interesting. But of course there are
• 16:58
  Speaker 1: some things the Americans have to do because what they've
• 17:02
  Speaker 1: got is so crazy, like the health system, that we
• 17:05
  Speaker 1: don't have to do. But I think overall the reaction
• 17:09
  Speaker 1: of policymakers have made this critique in my book, and
• 17:13
  Speaker 1: these arguments and politicians to the obvious problems of our
• 17:18
  Speaker 1: societies have been so limited. There's one final issue which
• 17:22
  Speaker 1: I have a different view for us, which is I
• 17:25
  Speaker 1: think we have to recognize an immigration is a first
• 17:28
  Speaker 1: class political issue and we can't view it as a
• 17:30
  Speaker 1: purely economic issue. Now, the question then is what a
• 17:35
  Speaker 1: sensible immigration policy would look like that is politically acceptable
• 17:38
  Speaker 1: and manageable is obviously very very difficult. But pretending that
• 17:43
  Speaker 1: this is an issue that can just be looked at
• 17:45
  Speaker 1: from the pure labor market point of view is I
• 17:47
  Speaker 1: think politically very unwhite. So there are a lot of
• 17:49
  Speaker 1: big issues out there which the center, if you like
• 17:52
  Speaker 1: broadly defined, has to grapple with. If we're going to
• 17:55
  Speaker 1: have stable democracies, well there's otherwise we get somebody called
• 17:59
  Speaker 1: Boris Johnson as for and then what the hell is
• 18:01
  Speaker 1: going to happen? So you could say this the UK
• 18:10
  Speaker 1: and Brexit is an example of where we it's it
• 18:14
  Speaker 1: is this simplistic to only be looking at economic causes
• 18:18
  Speaker 1: and economic policies. But I think you're you are right
• 18:22
  Speaker 1: when you look at the future. You know, the perception
• 18:24
  Speaker 1: of the response to the financial crisis, and how weighted
• 18:28
  Speaker 1: that was towards asset markets and how beneficial it was
• 18:32
  Speaker 1: towards for the wealthy. I think will come back to
• 18:36
  Speaker 1: haunt the central bankers when we have the next crisis.
• 18:38
  Speaker 1: And I wonder whether you think they're thinking enough about
• 18:41
  Speaker 1: that that if the first thing they do is resort
• 18:44
  Speaker 1: again to quantit of using and the perception of that
• 18:47
  Speaker 1: is it's giving a lot of money to people who
• 18:49
  Speaker 1: already have it, who own these assets. Is that going
• 18:53
  Speaker 1: to cause a further backlash and we will be dealing
• 18:57
  Speaker 1: with further consequences of the response to the next crisis. So,
• 19:02
  Speaker 1: first of all, I think your comment on British policy
• 19:06
  Speaker 1: is just our personal remark. I think I do accept
• 19:11
  Speaker 1: that one of George Osborne's great virtues was that he
• 19:15
  Speaker 1: ignored what he said, so so he while setting this
• 19:20
  Speaker 1: out as a major fiscal crisis, in the end, he
• 19:25
  Speaker 1: ignored his own rules reasonably successfully. Um I still think
• 19:30
  Speaker 1: I still think that he could have done substantially better.
• 19:34
  Speaker 1: There are other things that have happened since the crisis,
• 19:36
  Speaker 1: whose origin who, which I think fall outside this discussion. Um,
• 19:44
  Speaker 1: which I simply don't understand. The collapse of productivity growth
• 19:47
  Speaker 1: in the UK is so extreme and I have yet
• 19:51
  Speaker 1: to read, and please send me anything that you think
• 19:53
  Speaker 1: is relevant a really convincing explanation of why this has
• 19:56
  Speaker 1: happened to such an extreme degree in this country. We
• 20:00
  Speaker 1: jumped from being America to being Italy, as it were, overnight.
• 20:05
  Speaker 1: It's quite extraordinary. UM. On the future, I think that
• 20:13
  Speaker 1: the central bankers I know are fairly frightened, but they
• 20:18
  Speaker 1: vary between being fairly and very frightened about what would happen,
• 20:22
  Speaker 1: what they would do in another significant crisis or even
• 20:27
  Speaker 1: another significant recession on a crisis, because their policy toolbox
• 20:35
  Speaker 1: is pretty constrained. To put it mildly now, there is
• 20:40
  Speaker 1: an argument that if you do enough quee and the
• 20:43
  Speaker 1: standard kind that can be made the equivalent. But given
• 20:47
  Speaker 1: where bondy yields are today, um, where in Germany or
• 20:54
  Speaker 1: Japan you've got nowhere to go. So in the UK
• 20:59
  Speaker 1: you don't have arch the US a little bit more. Um,
• 21:03
  Speaker 1: you'd have to buy the whole bond stock, and then
• 21:06
  Speaker 1: I think you'd have to go and buy pretty good
• 21:09
  Speaker 1: chunk of the equity stock. I once suggested the Japanese
• 21:14
  Speaker 1: solution would be to buy the whole dollar bond stock.
• 21:20
  Speaker 1: If they're going to do kiwi in Japan, the sensible
• 21:23
  Speaker 1: thing is not to buy jgbs. But US treasuries just
• 21:28
  Speaker 1: tweet that Donald Trump, and of course that would solve
• 21:33
  Speaker 1: their problems by crashing exchange rate. But it's not, of
• 21:35
  Speaker 1: course a generalizable policy, and it would be regarded as
• 21:38
  Speaker 1: a war, an act of war in fact the Americans.
• 21:43
  Speaker 1: So I actually think it is almost inconceivable if we
• 21:47
  Speaker 1: have another big recession in this situation, that we won't
• 21:53
  Speaker 1: end up with some version of helicopter money. Uh. And
• 22:01
  Speaker 1: as I like to point out, and we've got Steve
• 22:04
  Speaker 1: Keene talking about people's quie, I think he uses that
• 22:07
  Speaker 1: right in Francis Coppola. But helicopter money was invented by
• 22:10
  Speaker 1: Milton Freedment therefore must be respectable, uh, at least from
• 22:16
  Speaker 1: the right wing point of view. UM. I don't see
• 22:20
  Speaker 1: what else we would do in that situation except scatter
• 22:24
  Speaker 1: money everywhere. UM. I have a colleague who believes passionately
• 22:28
  Speaker 1: and going to you know, minus six minus seven interest rates.
• 22:34
  Speaker 1: It's technically possible as long as you completely restructure the
• 22:39
  Speaker 1: way you do banking and you get rid of all cash.
• 22:43
  Speaker 1: That's not where we are now, So it's not a
• 22:46
  Speaker 1: technically possible um policy. So there is a view, and
• 22:59
  Speaker 1: I've seen an economist, many economists will say, Okay, so
• 23:07
  Speaker 1: we have this populist and maybe in the long run
• 23:11
  Speaker 1: it's going to be the end of the democratic system.
• 23:15
  Speaker 1: They wouldn't quite put it this way, but maybe in
• 23:17
  Speaker 1: the long run it's undermining all of our values and
• 23:20
  Speaker 1: our institutions and teaching us all the wrong lessons about
• 23:24
  Speaker 1: what leadership is. But short medium term it produces lucive
• 23:30
  Speaker 1: fiscal policy and slightly looser monetary policy, with central banks
• 23:33
  Speaker 1: a bit more aware of the implications of what they're
• 23:36
  Speaker 1: doing than they might have been in the past, and
• 23:38
  Speaker 1: those two things in the current macro environment, and not
• 23:40
  Speaker 1: such a bad thing. What would you say about that?
• 23:44
  Speaker 1: I mean, I would also I would worry a little
• 23:46
  Speaker 1: bit about the on the one hand, On the other
• 23:49
  Speaker 1: hand implicit in that, but just on the second part,
• 23:52
  Speaker 1: if we're not so worried about the future of the
• 23:54
  Speaker 1: world and the democracy, well here we're particularly really talking
• 23:59
  Speaker 1: about the US. So you can argue, in the real
• 24:03
  Speaker 1: response to this delusion in France has produced slightly lucif
• 24:07
  Speaker 1: fiscal doesn't have to be people in very modestly fiscal
• 24:11
  Speaker 1: policy in Italy because of concern about again very very
• 24:15
  Speaker 1: my I mean, the EU is a pretty remarkably so
• 24:19
  Speaker 1: far this could blow it blow up. I don't know
• 24:22
  Speaker 1: what's going to happen with Italy, but the Eurozone, let's say,
• 24:26
  Speaker 1: which is the has produced a remarkably effective straight check it.
• 24:31
  Speaker 1: So the you know, tant fiscal policy in the last
• 24:35
  Speaker 1: ten years has been astoundingly disciplined. But in the US
• 24:40
  Speaker 1: there's a really interesting case because what most of what
• 24:44
  Speaker 1: people would think of was full employment when they had
• 24:47
  Speaker 1: a structural deficit of about three percent of GDP. The
• 24:50
  Speaker 1: president came along and raised it to five roughly as
• 24:54
  Speaker 1: a big fiscal expansion by the world's biggest economy, which
• 24:59
  Speaker 1: a it has been one of the lowest unemployment rates
• 25:02
  Speaker 1: in his history, I think the lowest for a half
• 25:04
  Speaker 1: a century. Though that measurement there is difficult, and he's
• 25:08
  Speaker 1: browbeating or succeeded in persuading the faith that it's got
• 25:12
  Speaker 1: to start losing again. So that's where you are getting
• 25:15
  Speaker 1: quite a significant expansionary boost there are two or three
• 25:22
  Speaker 1: questions about this. The first is, of course the way
• 25:27
  Speaker 1: the deficit was produced, which is a massively regressive fact
• 25:30
  Speaker 1: tax card. When you can discuss that, and whether you
• 25:33
  Speaker 1: think the corporate that's one question. The second question is
• 25:38
  Speaker 1: is he actually taking quite a more significant risk of
• 25:41
  Speaker 1: inflation than we think now we don't know um. And
• 25:47
  Speaker 1: the third problem, which is there's something else going on
• 25:53
  Speaker 1: which you haven't mentioned, which is really the core of
• 25:56
  Speaker 1: Trance populism as a policy maker, which is he started this,
• 26:02
  Speaker 1: in my view, completely insane trade war. And and I've
• 26:06
  Speaker 1: just been looking at just on a lecture this afternoon
• 26:08
  Speaker 1: to a lot of Chinese people, and I've just had
• 26:10
  Speaker 1: one of my charts, and it shows that if at
• 26:13
  Speaker 1: the end of all this, Mr Trump does impose the
• 26:17
  Speaker 1: rest of the threat darists on China, and certainly that's
• 26:21
  Speaker 1: not inconceivable, then the US overall will have an average tariff,
• 26:25
  Speaker 1: an average tariff, so that because of the tarifties imposed
• 26:29
  Speaker 1: on China and other countries, which puts in well more
• 26:33
  Speaker 1: protectionists than India and slightly below Brazil. Now that's a
• 26:37
  Speaker 1: big deal, right, This is the world's most important economy.
• 26:42
  Speaker 1: That changes the whole system. Do you think you can
• 26:45
  Speaker 1: preserve anything alike an open trading system if the US
• 26:51
  Speaker 1: goes a wall to that degree. So I think people
• 26:54
  Speaker 1: who just focus on America, which is basically business, and say,
• 26:56
  Speaker 1: when he's given us this huge tax cuts and I
• 26:59
  Speaker 1: can increase what I pay myself and my salad, my
• 27:02
  Speaker 1: shares are worth more, are, to put it mouth in
• 27:05
  Speaker 1: very short sighted because he's blowing up the parts of
• 27:09
  Speaker 1: the world system which I regard as beneficial and above
• 27:12
  Speaker 1: all are very franchile. And that's what US households prospectively
• 27:20
  Speaker 1: will lose more from the taris. Of course, most Americans
• 27:24
  Speaker 1: will lose more from the arrists, and they will gain
• 27:26
  Speaker 1: from the tax cracks. I'm not sure that we've established
• 27:32
  Speaker 1: whether a populism is the end of all, the salvation
• 27:36
  Speaker 1: of democracy or either, or maybe the salvation of economics,
• 27:41
  Speaker 1: even if it's not the salvation of liberal democracy. Thank
• 27:43
  Speaker 1: you very much everyone for thank you mine, thanks for
• 27:54
  Speaker 1: listening to Stephanomics. We'll be back next week with more
• 27:56
  Speaker 1: on the ground inside into the global economy and more
• 27:59
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• 28:02
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• 28:11
  Speaker 1: For more news and analysis from Bloomberg Economics through the week,
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• 28:17
  Speaker 1: me on at my Stephanomics. This episode was produced by
• 28:22
  Speaker 1: Magnus Hendrickson, with special thanks to Martin Wolfe and everyone
• 28:26
  Speaker 1: at the Society of Professional Economists and the Resolution Foundation
• 28:30
  Speaker 1: for making that conversation possible, especially Katie Abberton, Liberty York
• 28:34
  Speaker 1: and Kevin Daley. Our executive producer is Scott Landman, and
• 28:39
  Speaker 1: the head of Bloomberg Podcast is francescan The