STRAIGHT AND TRUE
To fight populism, smell the sheep
03/05/25
Smell the sheep,” Pope Francis used to say. Live and eat with the people. I wonder what he’d make of New Zealand?
Josie's column in the Post looks at the vast numbers of New Zealanders being left behind and it's relationship to populism.
Our politics cater to those who opt in. They see those who have fallen off life’s train, but they don’t know what to do for them. Governments throw them pity, at best, and the gap keeps widening between those who are part of the system and trust it, and the big chunk of people who have opted out and mistrust.
This week the John Bates Clark medal was won by Stefanie Stantcheva. The medal is awarded each year to the top American economist under the age of 40, so I read about her work. One of her studies looked at how well public views align with established economic theories. The study found that Americans think inflation is caused by overseas aid, wars, oil prices and supply chains.
“There is a widespread belief that managing inflation can be achieved without significant trade-offs, such as reducing economic activity or increasing unemployment. These perceptions are hard to move,” it said. People don’t accept that reducing inflation involves higher interest rates, slowing the economy, with more unemployment.
“The widespread misconception that inflation rises following increases in interest rates even leads to support for rate cuts to reduce inflation,” the study found.
Once people believe there are easy answers that don’t have trade-offs, they will sooner or later become attracted to populist movements that seek blame and culture wars. The conditions ripen for blaming outsiders, bludgers, the rich, the poor, or immigrants.
Josie's column in the Post looks at the vast numbers of New Zealanders being left behind and it's relationship to populism.
Our politics cater to those who opt in. They see those who have fallen off life’s train, but they don’t know what to do for them. Governments throw them pity, at best, and the gap keeps widening between those who are part of the system and trust it, and the big chunk of people who have opted out and mistrust.
This week the John Bates Clark medal was won by Stefanie Stantcheva. The medal is awarded each year to the top American economist under the age of 40, so I read about her work. One of her studies looked at how well public views align with established economic theories. The study found that Americans think inflation is caused by overseas aid, wars, oil prices and supply chains.
“There is a widespread belief that managing inflation can be achieved without significant trade-offs, such as reducing economic activity or increasing unemployment. These perceptions are hard to move,” it said. People don’t accept that reducing inflation involves higher interest rates, slowing the economy, with more unemployment.
“The widespread misconception that inflation rises following increases in interest rates even leads to support for rate cuts to reduce inflation,” the study found.
Once people believe there are easy answers that don’t have trade-offs, they will sooner or later become attracted to populist movements that seek blame and culture wars. The conditions ripen for blaming outsiders, bludgers, the rich, the poor, or immigrants.
Choosing competence over populism
19/04/25
As Canada and Australia vote, the pendulum of our times is swinging towards competence and away from chaos and culture wars, away from celebrity politicians and back towards bland technocrats who talk about “hinge moments” and “missions”.
Josie's column in the Post quotes hedge fund manager Ray Dalio’s observation of five forces changing the world from the one we used to know:
- Enormous debt has financed the US stock market expansion while governments are stuck in persistent large deficits.
- Vast inequality in income, education and opportunity is creating political dysfunction.
- Geopolitics are realigning as the post-war US hegemony in the global order ends.
- Natural disasters and pandemics have increased, and amplified population movements.
- AI and technology are reshaping the global economy at warp speed.
Our political culture evolved when the pace of change was more foreseeable, and there was time to adjust. Now, change is abrupt and the familiar is swept away when we reach for reassurance. The trick of the populist is to find a villain to blame for the costs of change. Outsiders usually. Or elite institutions.
Josie's column in the Post quotes hedge fund manager Ray Dalio’s observation of five forces changing the world from the one we used to know:
- Enormous debt has financed the US stock market expansion while governments are stuck in persistent large deficits.
- Vast inequality in income, education and opportunity is creating political dysfunction.
- Geopolitics are realigning as the post-war US hegemony in the global order ends.
- Natural disasters and pandemics have increased, and amplified population movements.
- AI and technology are reshaping the global economy at warp speed.
Our political culture evolved when the pace of change was more foreseeable, and there was time to adjust. Now, change is abrupt and the familiar is swept away when we reach for reassurance. The trick of the populist is to find a villain to blame for the costs of change. Outsiders usually. Or elite institutions.
Trump's tariffs
05/04/25
Those people who said we shouldn’t sign the Trans-Pacific-Partnerships must be happy that America has finally freed itself from the tyranny of being able to buy stuff from other countries.
Joining TPP made us part of a non-tariff bloc comprising 34% of global trade. The US comprises 15%. We are better placed than the Heard and McDonald Islands, which have been singled out for tariffs despite having a population of no-one but rock-hopper penguins.
If I buy a packet of freshly baked hot cross buns for $5, then the US logic says I would be better off if I charged myself $10 for them.
But tariffs might not be inflationary. Following the US stock market crash in 1929. President Herbert Hoover signed into law the Smoot-Hawley Tariff. Trading partners suffered reduced output, and so did the United States. “The Smoot-Hawley tariff ignited an international trade war and helped sink our country into the Great Depression,” President Ronald Reagan said in 1986.
It is foolhardy to believe this will all blow over in four years and normality will be restored.
Read Josie's Post column about America's trade craziness.
Joining TPP made us part of a non-tariff bloc comprising 34% of global trade. The US comprises 15%. We are better placed than the Heard and McDonald Islands, which have been singled out for tariffs despite having a population of no-one but rock-hopper penguins.
If I buy a packet of freshly baked hot cross buns for $5, then the US logic says I would be better off if I charged myself $10 for them.
But tariffs might not be inflationary. Following the US stock market crash in 1929. President Herbert Hoover signed into law the Smoot-Hawley Tariff. Trading partners suffered reduced output, and so did the United States. “The Smoot-Hawley tariff ignited an international trade war and helped sink our country into the Great Depression,” President Ronald Reagan said in 1986.
It is foolhardy to believe this will all blow over in four years and normality will be restored.
Read Josie's Post column about America's trade craziness.
Dear Aunty
22/03/25
Easter is the season for fake reports that have deeper philosophical meaning. To be clear, Father, I’m referring to the Bunny.
Anyway, if they can sell hot-cross buns now, let me get into the spirit of Easter a month early, with my own fake agony aunt column.
Dear Aunty,
I own a Tesla. Why do I feel like I’m driving around 1938 Munich in an open-top Mercedes, humming Ich Liebe Dich?
Aunty: Please indicate your intentions to make a turn by using your indicator. Not by holding your right arm out at a 45 degree angle with the palm turned down.
More here.
Anyway, if they can sell hot-cross buns now, let me get into the spirit of Easter a month early, with my own fake agony aunt column.
Dear Aunty,
I own a Tesla. Why do I feel like I’m driving around 1938 Munich in an open-top Mercedes, humming Ich Liebe Dich?
Aunty: Please indicate your intentions to make a turn by using your indicator. Not by holding your right arm out at a 45 degree angle with the palm turned down.
More here.
