Saturday, October 24, 2020

Plutocratic populism

The book by Jacob Hacker and Paul Pierson, "Let Them Eat Tweets", explains the presidency of Donald Trump in the US as an endogenous development. Specifically, Trump would be the result of at least two decades of efforts by the very very rich minority of individuals who benefit from an increasingly unequal economic system, to keep alive the economic and political program that consolidates inequality in a democratic context. This program in itself is unpopular, so to save it from democracy, the plutocracy must develop other dimensions of political mobilization, such as ethnic grievances and outrage. The development of these dimensions means sustaining a number of organizations, of which the Republican Party is just one of the tools. A fair proportion of these organizations are very mobilized radical groups, that are vocal on issues that have little to do with inequality. By talking about many other things, the very rich manage to keep alive the political machinery that sustains inequality.
The alliance with radical groups and the priority of keeping unpopular inequality alive even justifies in the eyes of the very rich the attack on, or the erosion of, democratic institutions.
This is not new, as Hacker and Pierson dig into the history of other places such as Germany or Latin America, to find examples where the very rich also decided to abandon attempts to find compromises with democratic forces.
The book goes into the historical details of how this has been possible in the US, and how, as economist Paul Krugman often says, the Republican Party has become the Trump Party, but not because the current president has bought the machine, but because the machine had become desperate enough to look for a character like Trump.
In this way, modern right-wing national-populism is just another mechanism by which the very rich manage to make at least the forms of democracy compatible with increasing inequality benefitting the top 1% or less, which is one of the paradoxes of our time.
The only thing I missed from the book is a development of the title, since social media, and Twitter in particular, is one of the preferred tools of plutocratic populists such as Trump. But besides this, the authors do a great job at showing that if populism is an attack on élites, it is only a superficial attack, because the real economic and financial élites are the ones promoting the movement and benefitting from it.
Altough in the US context, things are clearer than in other places because both inequalities and the radicalisation of the populist leadership are so extrem, the devolpment is not circumscribed to America. In the case of Catalan national-populism, the big increase of support for the secession movement around 10 years ago, also came as a result of supply side efforts of traditionally center-right wing nationalists who where under big pressure to defend themselves from attacks for their support of austerity policies and their involvement in very serious corruption scandals.
We must take Trump very seriously, even if he loses the US election in 10 days (which he might not). Not only because of the individual, but because the individual has roots into something that is deeper and more disturbing, and that will survive him. And not only in the USA.

Sunday, October 11, 2020

Integrating modern populism into modern political economy

One of the most important political phenomena of our times, with important economic implications, is populism. The fact that it is difficult to define, and that it comes with many forms, is not stopping many researchers in social sciences from approaching the topic as scientifically as possible. 
In my course on applied microeconomics in the Master of Applied Research in Economics and Business (MAREB) in my university, I include a chapter on political economy where we discuss traditional social choice results such as the Condorcet Paradox, Arrow's Impossibility Theorem, and the Median Voter Theorem, together with modern developments on corruption and incentives in the public sector. I frame this in terms of a balanced approach between market imperfections and government imperfections, to justify its inclusion in a Micro course. These are some random thoughts as I prepare for this session, which should take place soon.
Almost all social choice theory, which is still very useful to understand the challenges of democracy, starts with exogenous and given individual voter preferences, and the role of the supply side in politics is quite passive.
A recent article by Dani Rodrik on populism emphasizes the role of supply, and the distinction between levels and changes in the support for populism. Although cultural issues may explain some constant aspects, economic changes related to globalization may mobilize some of the cultural prejudices. 
The survey by Guriev and Papaionnou in the CEPR covers definitional aspects, evolution and the economic and cultural drivers of populism, as well as a brief overview of seminal theoretical models most of which incorporate behavioral aspects.
These behavioral aspects contribute to explaining the Paradox of Voting through social norms and civic duty, or identity group voting as suggested in the book by Achen and Bartels "Democracy for Realists."
A dynamic view of exploiting political rents to shape the preferences would be more realistic for political competition. Bonica et al.'s article on why democracies do not stop concentrating income and wealth on the 1% should add a section on how emotions and identities are mobilized to make new dimensions salient and try to manipulate the perception of voters that otherwise would vote for their redistributive preferences.
And one final note: the fact that some rich regions have top academics supporting secessionist national-populist movements should not stop other academics from developing case studies about these cases, alongside references to Trump, Brexit, Salvini, Orban, Modi, Erdogan… Because the parties supporting these movements are classified as clearly populists according to modern measurement efforts.
When the future of human societies as we know them is at stake, the traditional view that public policies and economics should stay away from influencing preferences perhaps could then be revised.