"When Populism Is Sound"

Simon Johnson says there's good populism and bad populism, and we could use a bit of the good populism that has worked so well in the past:

When Populism Is Sound, by Simon Johnson, Commentary, NY Times: “Populism” is a loaded term in modern American politics. On the one hand, it conveys the idea that someone represents (or claims to represent) the broad mass of society against a privileged elite. This is a theme that plays well on the right as well as the left – although they sometimes have different ideas about who is in that troublesome “elite.”

At the same time, populism is often used in a pejorative way – as a putdown, implying “the people” want irresponsible things that would undermine the fabric of society or the smooth functioning of the economy.

In Latin America, for example, there is a long tradition of populists’ falling into bed with a corrupt political elite...

In North America, however, the populist tradition has proved much more constructive. More than 100 years ago, hot-button issues included direct election of senators and a federal income tax. None of these demands seem irresponsible today, and achieving those goals through constitutional amendments in the period before 1914 in no way jeopardized American prosperity....

In their new book, “Why Nations Fail: The Origins of Power, Prosperity and Poverty,” Daron Acemoglu and James Robinson suggest that most economic and political collapse is caused by overly powerful elites — which bring on a wide variety of pathologies....

Important parts of our financial elite, particularly the people who ran large financial institutions, went out of control in the period leading up to 2008. Powerful bankers wreaked havoc with our economy, destroyed millions of jobs and directly caused a huge increase in the national debt. These people and their successors are now poised to get out of control again. ...

Dean Baker adds:

Simon Johnson had a nice blogpost in the NYT arguing that populism has often been a source of good economic ideas in U.S. history with a focus on populist sentiment for breaking up too big to fail banks. At one point Johnson notes some of the constructive measures pushed by populists, noting that the direct election of senators and the income tax were both populist ideas.

One other item that should be on this list is ending the gold standard. This was a rallying cry for the populists throughout their history. It was also good policy, as going off the gold standard laid the basis for the recovery from the Great Depression.