Economists and “populism”

My son is doing the Scholarship history exam this year and the topic is something like “populism in history”.  It got me interested and I’ve been reading various books and talking the issue over with my son trying to get straight in my own mind just what “populism” actually is.

It seems like one of those elusive terms where each user means something subtly different, usually –  at least when it is quasi-academic usages –  things/beliefs/actions the author themselves disagrees with, often almost viscerally.  I’m still left unclear that it means anything much different than “things/views which are popular with a significant share of the population, perhaps even a majority, but where those views cut across or defy those held by the contemporary elites of the society in question”.   Since there is no particular reason to suppose that contemporary “elite” opinion is any better or closer to being right, to the truth,  than anyone else –  especially where competing values are at stake – any use of the term derisively seems to mostly tell you more about the user than about the merits (or otherwise) of the particular cause/movement at that moment bearing the label populist.     Is there any real difference between, say, Brexit and, say, the climate strikers, but one often bears the label “populist” and the other typically doesn’t –  even though the latter often seem considerable more fevered, even messianic (“the end of the world is nigh”) than the former?

What prompted all that was the latest survey from the IGM panel of European economists which turned up in my in-box the other day.   I find these surveys interesting, but the reason depends a bit on the question.  Sometimes the answers genuinely tell you something about the balance of the literature and expert opinion on some relatively technical aspects of economics.  At other times, the answers tell you more about the political preferences and inclinations of the (European) elite economics profession than anything else.   The latest survey was about populism, undefined of course.

Here was the first question.

IGM 1

As a group they seem pretty confident of that answer.  I’m a bit sceptical that one can be quite that confident (hardly anyone was even uncertain), but that question wasn’t the one I was mainly interested in.

Here is the second question.

IGM 2.png

Taking the right-hand panel (where answers are weighted by the relevant experts’ confidence in their answer), 62 per cent of this expert group believe that more government spending (or more tax and spending in combination) would be likely to “limit the rise of populism in Europe”.  Only 5 per cent of respondents disagree.

And here is the third question

IGM 3

A similar proportion believe such fiscal measures should actually be taken.   This time, a larger proportion (15 per cent) disagree, but (a) no one disagrees strongly, and (b) the net balance favouring more such measures is still huge: 65 per cent in favour, 15 per cent against.

I found these results pretty extraordinary.   They are frustrating in a way because one can’t quiz the respondents on why they think government spending/tax can make such a difference, but perhaps they reflect that old line that the solution you propose is often influenced by the tool you happen to have, regardless of whether the tool and the problem are well aligned at all.    Economists tend to think primarily in terms of economic instruments  (tax/spending) and perhaps to economic diagnoses.  I suspect the results also tell you something about just how centre-left oriented (a big place for smart government and clever interventions) economists as a group (whether in government or academe) have become.

Because it is not as if Europe doesn’t already have quite a lot of government spending.   Here is the OECD measure of general government outlays as a share of GDP (in the Irish case, it is as a share of modified GNI –  a measure the Irish authorities use to adjust for the international corporate tax distortions to reported Irish GDP).

gen govt 2018.png

There are a few small European countries down the left-hand end of the chart but every single one of the top 22 government spending OECD countries are European, and not one of the non-European countries has government spending in excess of 40 per cent of GDP.   Where do people worry about European “populism”?  Well, one reads stories about France (Le Pen), Italy, Austria, Germany, Hungary, Poland and so on.  A few years ago the concern was Geert Wilders in the Netherlands.  And, of course, there is Brexit.  Every single one of those countries is in that top-22 group of really rather large spenders.

Perhaps those big-spending Europeans are, in many cases, spending a bit less (share of GDP) than they were 25 years ago  but it is hardly a climate where government spending is at minimalist-government levels (even Korea is now over 30 per cent of GDP).  And yet these expert economists want even more taxes and spending?  Perhaps doing so wouldn’t dash longer-term growth and productivity prospects –  some of the countries with the highest average labour productivity are also among the group of largest spenders – but when your starting point is the highest rates of government spending anywhere, it is hard to believe that more spending, more tax, could be more than a very short-term palliative, buying off the symptoms of discontents for a few months or years with more bread and circuses, without actually dealing with the root causes (whatever they are) behind the various phenomena the economists had in mind when they use that “populist” label.  Brexit sentiment will dissipate because a UK government chooses to spend more like a Continental?  Seems improbable.  The popular support for Viktor Orban will dissipate if Hungarian governments increase government spending from 10th highest in the OECD to, say, 5th?  Again, it doesn’t seem to get to grips with what bothers voters, or Orban. (Or, outside Europe, Trump as a phenomenon of insufficient government spending? Really?)

In fairness, I guess the questions don’t invite the respondents to offer a menu of possible responses.  Perhaps many of them think things other than more government spending are equally, or more, important.  But the overwhelming support for more government spending/tax gives a pretty strong hint that they think simply spending more money, perhaps more smartly, is an important part of responding to those concerns they so much dislike.  My own suspicion is that is more a case of “physician heal thyself” –  that today’s “elites”, with no particular claim to legitimacy (can’t point to God, heredity, sustained military virtue or anything more traditional), might look in the mirror and reflect on themselves, their values, aspirations and behaviours.  Perhaps they lay claim to having “technical expertise”, but it doesn’t (probably shouldn’t, other than as advisory input) count for much –  even if sound –  if conflicting values are at stake.   Do today’s establishment leaders invite trust and confidence?  It doesn’t look that way to me (in New Zealand either) and so it seems unlike that simply tossing more money at the situation is anything like a big part of “the answer”.

But Europe’s top economists, rightly or wrongly, see things differently.

16 thoughts on “Economists and “populism”

  1. These economists get full marks for asking the wrong question.

    The rise of ‘populism’ in Europe, and those politicians who are labeled as such, is a predictable reaction to the ideology of multiculturalism and mass migration from the third world. People are feeling dislocated in their own towns and cities, and worry about the social and cultural impact of migration on themselves and their families.

    Difficult to see how increasing redistribution is going to address those issues.

    Liked by 1 person

    • Populism appears to be also driven by the current reduction in the middle classes and the fact that we now live in an age of isolation, driven by filter bubbles that prevent each and everyone of us see the information of the world with any uniformity or exposure to how others see the world except for very like minded individuals.

      I suspect over the long term is a strong correlation between the number of PR people employed and the lack of trust in the establishment leaders.

      Liked by 1 person

    • But in many cases the voters for ‘populist’ parties are not where the immigrants are. Brexit voters for example.
      Is it a reaction to a feeling powerless? The feeling that voters are not consulted about govt policies that are imposed on them. Immigration being particularly sensitive because if your govt is issuing residency & citizenship to aliens then it appears to not assign significant value to national identity.

      Like

  2. The Second Question

    Around 1980 a science-fiction book about the future was published with the title FOXCROFT. The story of a single corporation that became so powerful it came to dominate the world and world governments who then became dependent on, or, subject to the dictates of the uncontrollable organisation called FOXCROFT.

    Population was controlled. On their 18 birthday citizens were required to present themselves at a Foxcroft Centre where they were tested and screened. A strict 10% were deemed breeders and were provided with full rights to establish a family unit and breed. Partners were chosen for them. The remaining 90% were deemed not to meet the DNA requirements, became wards of the state, were allocated a living pod (Jucy hotel pods), were given regular weekly supplies of a psychotropic hallucinogenic drug that kept them sedated and docile (Ice, Methampetamine, facebook, instagram, twitter) and lived their lives out that way. Chemical reproduction controls.

    At that time Google and Facebook were unheard of

    Interestingly there is a new book out called the GODS of FOXCROFT

    Published in 2000 it paints a similar future. A time when time is meaningless, when human life is created outside the uterus, and death is a dispensation from The Gods of Foxcroft, not a natural result or individual right

    Still pre-Google and pre-Facebook and pre-Apple. Organisations that don’t manufacture anything but are on the cusp of determining the mind-numbed state of the global populace and are so financially dominant they reminded me of the next step being FOXCROFT

    It’s starting – the Facebook-Apple-iPhone-Google effect – meets all your daily needs

    Liked by 1 person

    • That is why I am rather concerned that our own communist fascist Jacinda Ardern is trying to get the tech firms in one room to cooperate. Controlling freedom of speech is a dangerous path to take.

      Liked by 1 person

  3. Maybe for European elites being dragged through the streets by the pitch-fork wielding masses is more top of mind (in that it has happened plenty of times in European history) and as such occupies more thinking time than other geographies as a risk to be mitigated.

    Liked by 2 people

    • I think we have been undermined through elite institutionalisation. Look at the resources thrown into Maori studies. Ngai tahu “academics” claim Victoria Square was a Maori market place and no one bats an eyelid
      (were Ngai tahu the Incas or something)? They are allowed to position themselves as the senior culture.

      But not only that we have Meng Foon and Susan Devoy decrying nationalism and populism. I have made a complaint to HRC about (one) Meng Foon based on discrimination due to my political orientation. Point being resources flow to political ideology; it is assumed if they are going in a wrong direction they will correct themselves?

      Like

      • We now have council elections in Christchurch and you have white Labour people knocking on doors with the ethnic candidate and that is supposed to have a point to it. It is as though we are trees planted in two inches of soil. In the big picture all the basic issues of our society haven’t gone away: we have just added another layer of complexity over Farmers and Red Feds (Red broadcasters academics vested interests and minorities versus a disenfranchised rump).

        Liked by 1 person

      • It is already clear to me that the $400 million we to towards the Treaty of Waitangi settlements each year is a racist social welfare policy benefitting only one race. Add to that another $900 million on Oranga Tamariki to strip babies from their mothers is also another mostly race specific welfare spending.

        I agree, Meng Foon is a racist and should be sacked.

        Like

  4. The term “populism” would be understood as a euphemism for demagoguery in Europe. Here, the National party appear to have undergone a pronounced shift in that direction, but our only real example has been the fairly mild form practised by Winston Peters. Extremists at both ends of the spectrum have been strongly rejected. In Europe, they do have a permanent foothold, and conditions are ripe for it to grow.

    Poverty, and/or the threat of it, is a much bigger influence than inequality or immigration. By accident or design, it has become an economic tool.

    Liked by 1 person

  5. The survey questions were based on the premise that populism was a bad thing. As a result of this basic assumption then steps have to be taken to reduce / eliminate it. And as the piece rightly says economists will tend to use economic tools.
    The franchise has been extended to all with the understanding that all people, the populace, have a right to be involved in the political process. People will vote for what they see as beneficial to them and their community, and not all these benefits are economic ones. Brexiteers wanted to ‘take back control’ , the voters in Hungary and Poland want to retain their country’s demographic structure; neither of these wishes are economic. Increasing social welfare doesn’t address these requirements.
    Accepting the definition proposed in the piece if the elite want to remain ‘elite’ they need to listen to the crowd and act to either change the crowd’s opinion by both logical and emotional arguments.
    This is when economists have to give way to politicians.

    Liked by 1 person

  6. “They are frustrating in a way because one can’t quiz the respondents on why they think government spending/tax can make such a difference, but perhaps they reflect that old line that the solution you propose is often influenced by the tool you happen to have, regardless of whether the tool and the problem are well aligned at all.”
    Reminds me of the old saying -“if all you have is a hammer then everything looks like nail”!!

    Liked by 2 people

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