Economics not to blame for rise of populism: Grattan
Populism is on the rise across the globe, from President Donald Trump in the US to Pauline Hanson’s One Nation in Australia. This surge is often attributed to rising income inequality and job losses caused by workplace automation – but the origins may lie elsewhere.
Grattan Institute chief executive John Daley told attendees at the Investment Magazine Fiduciary Investors Symposium, held in Healesville, Victoria, November 13-15, 2017, that “somewhat surprisingly” the economic think tank did not believe economics was the primary driver behind the rise of populism.
“As we are all acutely aware, correlation is not causation,” Daley told the gathering of institutional asset managers. “The mere fact that two things happen at the same time doesn’t mean that one caused the other.”
He warned a poor understanding of any link between populism and its economic drivers could lead to a “very real risk of bad policy” and “implications for the real world that fly back into returns”.
Daley said that after examining detailed analysis of One Nation’s share of the first-preference Senate vote in Queensland in the 2016 federal election, the Grattan Institute has concluded that increased support for the fringe party had essentially been driven by distrust in government.
“It’s not because governments are not redistributing enough or because they’re distributing too much. Supporters just aren’t very interested in that stuff,” he said. “If we look at what minor party voters care about, the conventional wisdom is they are all either radical Marxists busy voting for Jeremy Corbyn or far-right Nazi sympathisers. It turns out neither of those things is true, they are just kind of in the middle.”
Daley said several factors were driving distrust of government. He included: increasing scepticism due to greater availability of information; hopes of housing affordability and jobs being raised and then dashed; less representative democracy with the rise of career politicians; and political decisions in favour of vested interests.
When it comes to blaming a continuing automation of jobs for the surge in populism, Daley said the evidence does not back up that theory.
“There are a lot of consultants who make a lot of money running around saying ‘The world is going to fundamentally change. Robots are going to take your job,’ ” Daley said. “In fact, the track record is that, over 200-plus years, the Luddites were wrong. Individual tasks within individual jobs will change but that has been happening for a very long time. The actual number of jobs that will fundamentally change is not that large.”
The robots may be coming but the number of jobs is increasing, he concluded.
“We think there is a big shift going on in economics, a big shift going on in culture, a big thing going on in trust and government. But we think it’s those trust and government and cultural things [that are] really driving this big shift in populism.”
Regarding Hanson, he said the biggest challenge she presents to established political parties is not, as assumed by many, her focus on race.
Rather, “It’s her participation in a much bigger anti-establishment movement that challenges traditional political parties to rebuild voter trust in government.”