The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era

"Eichengreen starts in the world of Trump and is very clear about his intention in writing this book. This is a book trying to demonstrate why Trump-style populism is wrong. The basic message is that populism can be tempting because it is indifferent to reality, it creates an imaginary world. And this is, of course, a general problem in economic nationalism, the actual economic reality has to be changed to fit with the nationalist concepts. “Populists are good at spotting grievances, but very bad at proposing policies that actually address them” This book has chapters and analyses about Trump’s policies and rhetoric, but Eichengreen touches on several moments of modern history to try to demonstrate the perils of populism and what really happens when you turn to populism. He covers everything from Mussolini’s Italy to Argentina under the Kirchners and Brazil under different populists. Well, I think what makes him interesting is that he helps us to form a better understanding of populism, and especially economic populism. It is basically economic populism that he writes about. That’s his forte. You can see the connections to other books that I’ve recommended, like Heckscher’s Mercantilism , or Adam Tooze’s treatment of nationalist economic policies in the inter-war period. He shows that populists are good at spotting grievances, but very bad at proposing policies that actually address them. You cannot be an economic populist unless you are good at searching people with a grievance and freeing them from guilt. That exculpatory part of populism is what it’s all about. Eichengreen is a progressive economist himself, just like Tooze. He looks at periods of history when politicians have had some degree of populism to their character, but have devised policies with a clear effect on the problems that they wanted to address—for instance, Franklin Roosevelt and the New Deal. He points to anti-establishment rhetoric and populists’ very simplistic idea of economic policy, which is that you can redistribute away a problem. So, you can address inequality by—if you’re more of a leftist populist—taxing the rich and giving the money to the poor. Or, if you’re like Trump, you can focus on policies where, implicitly, you are blaming other countries and other people for your own economic misery. Trump’s view of what’s wrong with the American economy is basically about blaming others for it—it’s the fault of immigrants, or it’s the fault of the Chinese or those Mexicans that have been stealing jobs. Trump’s standard line was that other countries have taken advantage of America. Get the weekly Five Books newsletter Eichengreen is very good at showing that indifference to reality. It is as if they’re living in a fantasy world, with very simplistic notions about solving problems and where solutions do not require trade-offs or involve any other risks. So you can actually say that you’re going to solve inequality by taxing the rich and giving to the poor without acknowledging that, if you’re taxing the rich, you may also create a long-term problems, like reducing the tax base and having much smaller tax revenues in the future. So there may not be much to redistribute. Trump’s version of populism is, for instance, that you can close borders and that won’t have any effect at all on consumer prices, on firms being able to import, on jobs. This, of course, is pure imagination. Yes, he does. I think Eichengreen is pretty progressive in his political views. So he comes out pretty strongly in favour of different types of market and redistributive policies, but ones that are adjusted to the real world. He’s closer to being a Rooseveltian, New-Deal-type of person, who thinks that many of the economic problems that are confronting America can be addressed by smarter government policies."