To fight populism, smell the sheep | Josie Pagani

STRAIGHT AND TRUE

To fight populism, smell the sheep

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.

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