Last week I had the opportunity to talk to Elias Papaioannou (who was giving a virtual seminar in my Department), the co-author of an excellent survey about the political economy of populism, which if I understand well is forthcoming in the Journal of Economic Literature. The article summarizes a lot of mostly empirical work on the features, determinants and consequences of political movements such as Trumpism, Brexit, and others that share similar characteristics. It does the best that can be done at this stage to present the state of the art of something that is still happening in front of our eyes.
As I told Elias, my interest in populism (no doubt a polysemic and multidimensional phenomenon) has three sources. First, I am interested in the commitment problem in economics, which I studied in several published articles in the field of economic regulation, where I discussed the advantages and disadvantages of indepenedent regulatory agencies (which are meant to isolate regulators from "populist" forces). Second, in several courses at the graduate and undergraduate level, on microeconomics or public economics, I always enjoy teaching a section on social choice and political economy, and results such as the median voter theorem and Arrow's impossibility theorem. Third, I have a personal interest in populism, as I see the Catalan secessionist movement as an additional example of modern populism in its (frequent) identitarian version.
The article is very good at explaining the different economic and cultural explanations of the phenomenon, and the mostly harming consequences of populists when they reach power. It also has a short part that summarizes useful, though scarce, theoretical work.
Since the phenomenon is on-going (as I write, I hear in the background the CNN with its unending program about the recent US election), new overviews will be needed soon. As I told Elias, in my view there is room for urgent work along two lines. One, although it may seem surprising, is to keep working on the definition. Papaioannou and Guriev settle into what they call the "lowest common denominator" of modern definitions of populism, which revolves into the separation of society between a virtuous people and a corrupt elite. In a way, this definition buys into one of the traps of populism, which constantly tries to disguise its true nature by accusing their opponents of their sins. They try to undermine democracy (now, in front of our eyes, Trump in the USA) in the name of democracy and the will of the people (conveniently defined, if necessary); or they say they are anti-elite and anti-corruption, when it is difficult to think of anyone as more corrupt than Trump and its entourage, or of a social group as more elitist than the pro-Brexit dominant branch of the UK Conservative Party, with Johnson, Gove, Rees-Mogg and others.
The other line of work that seems to me necessary and that would facilitate theoretical work (and therefore setting up meaningful hypotheses for empirical work) would be to connect work on populism with the theory of social choice. Although this theory mostly takes voters' preferences as given, some (such as William Riker on his classical book on Populism and Liberalism) stress that the indeterminacies of democracy are at the source of the evolutionary efforts of political parties to make convenient issues salient. The book by Hacker and Pierson "Let Them Eat Tweets" goes into this direction as arguing that Trump is an endogenous phenomenon.
There is a lot of work to be done. On the topic of regulation, the issue is not dead at all. Jean Tirole has a recent article arguing in favour of a middle ground between global technological monopolies and what he calls the populist temptation of a techlash. And to the extent that the previous research on independent regulators to which I contributed was inspired by the literature on Central Bank Independence, it is promising that there is already work trying to study how populism is affecting Central Banking.
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