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Simon Johnson Defends Populism

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Thursday, 15 March 2012 07:19

Simon Johnson had a nice blogpost in the NYT arguing that populism has often been a source of good economic ideas in U.S. history with a focus on populist sentiment for breaking up too big to fail banks. At one point Johnson notes some of the constructive measures pushed by populists, noting that the direct election of senators and the income tax were both populist ideas.

One other item that should be on this list is ending the gold standard. This was a rallying cry for the populists throughout their history. It was also good policy, as going off the gold standard laid the basis for the recovery from the Great Depression. 

Comments (5)Add Comment
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written by MB, March 15, 2012 1:42
I am interested in your opinion about Max Keiser and his thoughts about gold. His show is interesting to me because I think it gives out good information. But I also feel like what do I know. His thing about gold confuses me. So I cannot tell if he is right or wrong, sage or loon.
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written by John Emerson, March 15, 2012 2:14
The Populists were the rational ones in 1896, and the gold fetishists the loonies. But almost everyone thinks that the opposite was the case.

My belief is that the anti-Populist consensus traces back to Hofstadter's "Age of Reform" and other books, and that this book was motivated by Democratic loyalists problems with the isolationist progressives before WWII and the leftist progressives in 1948. A new pro-war, pro-corporate, anti-populist, technocratic, genteel elitist Democratic Party was being built. It crashed and burned in 1968.
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written by Patrick H, March 15, 2012 7:57
In his work on balance sheet recessions, Richard Koo has argued that it's very hard for governments in democratic countries these days to run a significant fiscal deficit for an extended period, because of public opinion.

It seemed to me that this was true and striking. We basically associate populism with loose fiscal policy. For non-economist types, the assumption would be that poplist policy - popular by definition - means fiscal loosening. Supporters of austerity argue that its virtue is a subtle one, not immediately obvious to the masses, though its benefits will emerge in time.

Koo is saying that this is not true. There is empirical evidence, eg in the UK, to suggest he's right. But in that case, what exactly is going on? Should we redefine populism to mean something like: the popularly held but wrong belief that governments should tighten their belts when times are hard and households are hard pressed?
And don't forget the eight-hour day
written by Luke Lea, March 15, 2012 9:58

Time for the six-hour day.
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written by John Emerson, March 16, 2012 1:46
Democrats have effectively defaulted populism over to the Republicans. Roosevelt had populist support during his best years. His return to austerity in 1937 had a lot to do with the loss of it.

The Koch bros. grandfather was actually a railway spokesman in Texas when the Texas Populists (and Knights of Labor) were fighting the railroads. Ron Paul is a goldbug. They represent exactly the anti-populist demographic of 1890 or 1932. There's a huge unrepresented demographic out there. Jesse Jackson tried to reach them, but he got no support.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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