A nice little interview with hedgie Michael Hinze today at the AFR raises some good questions:
The Australian hedge fund manager is convinced the effects of QE have helped fuel populist politics. London-based Sir Michael has said the next generation of Brits will be better off after Brexit, and donated to the Leave campaign, although the Conservative party supporter did not actively advocate for the Leave vote during the referendum.
…Sir Michael says that French economist Thomas Piketty, the author of Capital in the Twenty-First Century, has a “serious point”. The bestseller examined how income inequality is exacerbated when the return on capital exceeds the rate of economic growth, and proposes a wealth tax.
“This Gini coefficient has changed remarkably since the GFC. Why? Because QE pumped up assets massively.”
All solid reasoning. But let’s get this populism definition correct. Brexit is not “populist” it is “popular” and will benefit ordinary Brits as immigration falls and wages rise while it hurts British capital.
Populism is “bread and circuses” politics. It is the elite taking on the trapping of working people to make it appear that they are in it for them while they do the exact opposite in reality. It is the difference between appearing to be of the people versus being for the people.
Donald Trump is populist. He championed working class people then slashed tax rates for the ultra-rich and corporations. His later policies may or not benefit working people. Time will tell.
Australia’s so-called “populists” are also, rather, “popular”. One Nation’s agenda, for instance, would lower immigration and increase wages benefiting working Australians while capital would suffer as house prices fall. MB disagrees strongly with race politics but agrees with these economics so we are also in the “popular” camp.
Likewise Australia’s other challenges in the need for reform to competition, energy, finance, productivity, reduced tax concessions etc are all utilitarian “popular” policies aiming to benefit the most possible Australians.
Ironically, those elites that condemn this agenda and label it “populist”, the bankers, miners, rentiers and China apologists of all stripe, are the true populists.