August 05, 2018

Populism is not the exclusive domain of politicians and autocrats. Even technocrats practice it and experts fall for it

Sir, Ray Dalio, Bridgewater’s founder, told Gillian Tett “that the proportion of the western world voting for populist candidates had risen to 35 per cent. The figure, from a report by his firm, was starkly higher than at the start of the decade, when it was 7 per cent.” She finds that “unnerving on several levels” “Economics alone does not explain the surge of populism” August 4.

It is now ten years since a crisis caused exclusively by assets that because these had been perceived, decreed or concocted as safe banks could hold against very little capital turned out to be risky. And still so few question the wisdom of basing regulations on the belief that what is perceived as risky is more dangerous to our bank system than what is perceived as safe.

So Sir, I find it even more unnerving that seemingly 99.9% of regulatory experts, economists and financial journalists do still seem to believe, and ever refuse to question, those populist regulators who tell us they know all about bank risks, so as to make our banks safer with their risk weighted capital requirements.

Yes, many voters might fall for nice sounding populist promises, but others too, perhaps even you Sir, can sometimes not be able to resist these. Imagine, safe banks at no cost, does that not just sound too sweet not to believe?