How to Overcome the Populist Paradox?

To defeat populism requires coming to grips with a fundamental reality: bad economic policies no longer necessarily result in a government losing power.

In fact, it is now entirely possible that irresponsible populists may actually strengthen their chances of being re-elected by making wilder and more impossible promises - and by causing more economic damage.

How did we get to this point, and what steps can we take to escape it as quickly as possible?

Powerful structural economic factors in recent decades - including automation, trade and financial crisis - have left many people feeling neglected or ill-treated by those, on the right and the left, who have had control over economic policy.

When anti-establishment populists come to power, however, they implement a range of policies that create uncertainty and discourage investment. And less investment means lower economic growth and fewer good jobs.

Ordinarily, this would lead to a feedback mechanism in which the responsible government would be held accountable, ultimately at the ballot box.

But populists are effectively circumventing this mechanism by encouraging the belief that the media are biased, the experts are always wrong, and the facts are not the facts. The angrier people become, the easier it is to persuade them to accept this narrative.

Brexit is a good example. If you ignore or disbelieve the economic data (as well as what any credible analyst has to say), then your personal experience in the United Kingdom over the next 12 months may be this: the new Conservative government withdraws from the European Union without an agreement, which disrupts trade and discourages firms from investing in the UK. Either unemployment will go up, or there will be fewer good jobs...

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