The Buzz of Populism and Its Pull on the Economy

IMF Blog, February 9, 2018

Source details

Title: The Buzz of Populism and Its Pull on the Economy
Author: The Editors
Publication date: February 9, 2018
Context: Seminar at the 2018 American Economic Association’s Annual Meeting organized by the IMF’s Antonio Spilimbergo; podcast featuring political scientist Cristóbal Rovira Kaltwasser and panelists including Dani Rodrik and Raghuram Rajan.

Populism cannot be explained solely by economic conditions; the relationship is "a bit more complicated" than simple economic causation.
Example cited: Switzerland — "the party that gets the most votes is in Switzerland. And the economy in Switzerland is running perfectly!"
Populist politics frame "the people" against "the elite" and put pressure on mainstream parties to adapt.

The concept of "modernization losers" (those perceived to lose from globalization) is commonly cited by economists as a driver of populist voting; Kaltwasser argues this category is not objective.
Relative deprivation, not absolute deprivation, is emphasized as the key driver:
- Voters for populist parties "are not suffering in the sense that they don’t have food in the fridge, but they feel the system is unfair."
Empirical example: "how the hell do we understand 35 percent voting for the populist party?" (Switzerland case cited to illustrate perception-driven support).

Success of populist parties should be measured not only by vote share but by the extent mainstream political parties change their economic policies under populist pressure.
Kaltwasser: "So it’s both sides of the coin," meaning vote shares and policy influence both matter.
Observation: Economists and journalists often overlook the policy-shaping influence of populist parties when focusing narrowly on vote counts.

The seminar/panel included Cristóbal Rovira Kaltwasser, Dani Rodrik, and Raghuram Rajan.
The IMF organized the panel and produced a podcast in which Kaltwasser "delves into populism" and discusses the themes summarized above.
Readers/listeners are invited to "Listen to the podcast for the full conversation."

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Source: The Buzz of Populism and Its Pull on the Economy — IMFBlog (February 9, 2018).