7 ms·

The Populist Advantage

34 points by johntfella 3y ago

nathan_compton 3y ago
Extremely weird to call it "the old liberal orthodoxy" when its a system which is hardly even 60 years old.
jjoonathan 3y ago
"Just vote for all of my self-serving policies, the benefits might not be obvious to your tiny brain but they will trickle down, I promise!" https://wtfhappenedin1971.com https://wtfhappenedin1971.com
- tptacek 3y ago
  https://www.reddit.com/r/AskEconomics/comments/sccs74/so_wtf_happened_in_1971/ https://www.reddit.com/r/AskEconomics/comments/sccs74/so_wtf...
  - jjoonathan 3y ago
    Macro: Debt substitutes exports in the balance of trade. Funding government with debt instead of taxes has the effect of pumping assets and dumping exports. Assets = rich people and the finance industry, Exports = people that make shit for a living. "We used to make shit in this country, build shit. Now all we do is put our hand in the next guy's pocket." - The Wire Micro: Cantillon Wealth Pump Mandatory disclaimer: No, I'm not shilling bitcoin. Bitcoin doesn't address the root of the problem which is that if you put rich people in charge of everything they immediately start implementing self-serving policy.
    - tptacek 3y ago
      I'm not sure what that has to do with whether the charts on this page are in nominal or constant dollars, or compare 1950s shoeboxes to 2000s McMansions, or capture the introduction of women into the workforce, or measure total compensation vs. wages, or properly indicate the actual time inequality started growing, or are premised on the idea that the absolute value of the S&P is meaningful across the whole economy. The AskEconomics thread there is a litany of issues with these charts. Ironically, this seems like a pretty good illustration of what the article author is saying.
      - jjoonathan 3y ago
        The trend divergence is interesting. The normalization, choice of inflator, and precise localization of inflection point are less so. > women into workforce Great, when can we start working 1/2 time? 3 day workweeks allow 2-working-spouse families to raise their own kids, you know. Might help with those pesky fertility rates. > total compensation vs. wages Yeah, if you count medical inflation as additional compensation then only 80% of Americans are worse off instead of 90%. Simplicity is a blunt instrument, but devils dance in the details and simplicity can bop them. Contrast to "just think harder," which grants victory to whoever can afford to spend more time thinking on it.
        tptacek 3y ago
        This is a site that supports a goldbug argument that virtually everything that has gone with every economy in the world traces back to the end of the gold exchangeability standard. Thats a simple narrative that is almost certainly not true. Whether it is or isn't, for many of the reasons in that thread (and probably many others), this particular site is not a good argument for that narrative, since many of the charts are simply broken.
    - andrewjl 3y ago
      Who would buy these net additional exports and where would they get the funds to pay for them?
- friend_and_foe 3y ago
  In 1971 the US broke the Breton woods agreement, defaulted on it's debt obligations and depegged the dollar from gold conpletely.
- analog31 3y ago
  The first commercial microprocessor?
- noman-land 3y ago
  https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock
colinsane 3y ago
i’m completely lost as to the author’s intended takeaway. something like “[democratic] systems that are blind to second-/third-order policy effects underperform”? so what do you do about that?
- tptacek 3y ago
  Populist-right economics focus on tariffs and protectionism. The first-order effect of protectionism is support for jobs in the local protected industries. The second-order effect is that all the industries downstream get hammered, because they get hit by the tariffs. Populist-left economics focus on large-scale government spending. The first-order effect is that everybody gets a $2000 check, or a subsidized rail system, or whatever. The second-order effect is inflation and economic instability; you end up paying $10 for a loaf of bread. Populism is the idea that there is a clear will of the people, or a clear set of policies in their interest. Policy debates aren't divided by left vs. right, or by supply-side Keynesianism. Rather, they're a division between the people and the elites. There isn't really room for a synthesis of multiple competing ideas (at least not until the people have taken over from the elites once again). It's the opposite of pluralism. Populist economics, according to this author, is defined largely by ideas that are simple enough to sell to people who haven't studied economics enough to conceive of second- and third-order policy effects. Those ideas all fail in the real world, but we have to re-learn that periodically, because of periodic resurgences of populism. (I believe some of this but not all of it and am really just trying to do my best to articulate what I thought the article was saying).
  - iraqmtpizza 3y ago
    China, while hardly populist, has been failing upward for quite a few years now. Those tariffs, man. And if economics can't account for the monetary value of national security then it's not very useful.
    - pessimizer 3y ago
      "Populism" is only defined by its self-declared enemies, and they define it as any policy that they oppose. Just as we're still avenging the Czar in Russia, and Batista and the mafia in Cuba, everybody is still slandering the People's Party. Never let go of a grudge. So somehow, China's economic policies can be identical to what is domestically ridiculed as "populist." On the other hand, everything authoritarian that Westerners do gets referred to as like what they would do in China.
DerekBickerton 3y ago
> one of my younger colleagues at the International Monetary Fund found it hard to get a good job in academia, despite holding a PhD from MIT’s prestigious economics department, probably because her work showed that trade liberalization had slowed the rate of poverty reduction in rural India. While theoretical papers showing that freer trade could have such adverse effects were acceptable, studies that demonstrated the phenomenon empirically were met with skepticism. You don't automatically get a 'good job' because you've earned certain credentials. IMHO PhDs and other credentials are a dice roll and you could potentially work very hard on your studies for nothing. This is why people research their chosen profession before studying so that, at least, it wasn't all in vain, and even then, the job market could be swayed against you when you've completed your studies. People also need to look out for credentialism where people are overqualified for positions, or that PhDs etc are not even needed. Sometimes a simple aptitude test can filter out people who will lose you money when you've employed them.
- jjoonathan 3y ago
  Here's a more quantitative analysis of bias in academic economics. It should be slightly more difficult to dismiss with cries of "entitlement! entitlement!" https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stanley%20Publication%20Selection%20Bias%20in%20Min%20Wage%20Research-A%20Metaregression%20Analysis.pdf https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...
Barrin92 3y ago
>It is hard not to be pessimistic nowadays. In industrial countries, the pendulum has swung from excessive faith in the liberal orthodoxy to faith in populist policies, until their deficiencies become obvious once again. The deficiencies are as obvious as they always were and people should communicate this more stronlgy. It's actually insane how well the US economy is doing. Growth rates in countries that have a fraction of the per capital income of the US are now converging on similar rates before ever having gotten rich. Birth rates in most of those countries are tanking. People were claiming China will overtake the US economy in 2030, now that's being revised further and further back with 'not at all' becoming a distinct possibility. In Russia they're unironically bringing Kalashnikov lessons to school students, Soviet style. Liberal societies had their problems in dealing with Covid but behavior was responsive and driven by more and more data coming in, in China they bolted people into their homes for a year and then pretended the virus didn't matter from one day to the other. Convincing people that liberalism still works basically only means pointing them to how the world factually really looks.
- Panzer04 3y ago
  A surprisingly large amount of people just don't believe the world looks this way, though. They are so wrapped up in some minute anecdotally supported factor (energy prices went up 20%! Inflation is running wild!) They don't recognise how well everything else is going.
- paganel 3y ago
  > y. It's actually insane how well the US economy is doing. The economy is doing insanely well while its people are doing insanely bad. The life has been dropping for two years in a row [1] and there were around 110k deaths of despair between February 2021 and February 2022 [2]. If those are the signs of an economy doing "insanely well" I dread to see what a recession will bring. [1] https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/... [2] https://www.scientificamerican.com/article/rising-physical-pain-is-linked-to-more-deaths-of-despair1/ https://www.scientificamerican.com/article/rising-physical-p...
  - 3y ago
hax0ron3 3y ago
I think it's worth pointing out that the 2008 financial crisis came on the heels of another event that had already done much to discredit elites and elite-adjacent "experts": the Iraq War. More specifically, the discrediting was caused by a combination of the deliberately dishonest or at best wildly inaccurate intel, the sense that pro-war elites in government and media were manufacturing consent for the war, and wrong predictions about how the war would go. The Snowden revelations of a few years later did not have as great of an impact as I would have wished, but I think that they too played some role in further discrediting elites. Given how much Trump's criticism of the Iraq War did to make criticism of that war a bi-partisan phenomenon, I find it unfortunate that he was too authoritarian to pair his criticism of that war with criticism of the NSA and that instead, he hinted that Snowden should be executed as a traitor.
- tptacek 3y ago
  There really is an elite consensus. The trouble is that you can't build an economic policy around that idea. Some things "elites" (of any stripe) believe are wrong, but some of them are right.
- DerekBickerton 3y ago
  > The Snowden revelations of a few years later did not have as great of an impact as I would have wished Saying Snowden's either a pariah or a hero is a very political stance either way, and I don't want to spout politics here on HN (That's not what HN is for, although political rants still slip through the cracks on HN). That said, the leaks did leave some aftermath[0]. All the tinfoilers, pre-Snowden had their suspicions confirmed in real, tangible ways. Yeah we knew abut ECHELON[1] but the Snowden leaks were far more substantial IMHO, and leaked at a time when The Internet was really starting to ramp up (in terms of all the services/tooling now available, and social media making leaps and bounds). [0] https://en.m.wikipedia.org/wiki/Snowden_Effect https://en.m.wikipedia.org/wiki/Snowden_Effect [1] https://en.m.wikipedia.org/wiki/ECHELON https://en.m.wikipedia.org/wiki/ECHELON
- Aunche 3y ago
  >More specifically, the discrediting was caused by a combination of the deliberately dishonest or at best wildly inaccurate intel, the sense that pro-war elites in government and media were manufacturing consent for the war, and wrong predictions about how the war would go. IMO, this is what people tell themselves now because they don't want to admit that they genuinely supported to the war to begin with. The Iraq War and the War on Terror were very much populist wars motivated by American's wanting to get revenge on brown people. That's why Bush's approval skyrocketed after 9/11 and the capture of Saddam. Yes, a nonzero amount of elites supported or benefited from these wars, but you can say that about anything. You're not going to convince the government to spend trillions of dollars without a few experts on your side and others who profit off of it.
friend_and_foe 3y ago
I find it funny that when we talk about something like the constitution and how you can't change it even with popular support people talk about democracy, how democracy is important, how a people should be able to change the rules with a 51% majority, but as soon as they don't like wyat the people want its no longer democracy, its populism.
- tptacek 3y ago
  That's not what populism means. If we're restricting ourselves to the United States (the article is overwhelmingly not about the US), it's a 50/50 polity. The people want an incoherently overlapping set of ideas from an incoherently-left-liberal party and an incoherently-conservative-right party. It's what you'd expect as an organically reached steady state based on Duverger's Law. Populism is a philosophy that looks at that set of circumstances and says, nah, fuck that. It's obvious what the people want: precisely X, Y, and Z set of policies. If the people are voting in obstacles to policy X, it's because the system is corrupted by elites. There aren't competing ideas of the good of the people; there is only the good of the people and the interests of those elites. If you could put 200 people selected at random for all around the country in a room and expect them to work out the principles of an economic system and come up (1) with something coherent and (2) without bruises, that would be evidence of a valid populist argument. But you can't do that, because those 200 people will disagree sharply on everything from economic protectionism to the importance of university educations.
  - colinsane 3y ago
    > If you could put 200 people selected at random for all around the country in a room and expect them to work out the principles of an economic system and come up (1) with something coherent and (2) without bruises, that would be evidence of a valid populist argument. i read this as saying not that populism is bad, but that it doesn't _exist_. to someone trying to intuit the meaning of "populism", encountering the word for the first time, it looks like "populism" means "the will of the people". both from its root and from the things which it's used to label (movements with popular support). and there's no correction for this misunderstanding. you just see more and more leaders critiquing popular movements simply _for being popular_ ("populist") and that _amplifies_ the impression that those in power wish to suppress the will of the people. it's just a bad phrase. another commenter positioned populism as contrary to pluralism, which was helpful for me to understand the negative connotation. the actual problem with these "populist" movements is that they _appear_ to represent a unified will of the people, but the unification doesn't really stand up to scrutiny. if (following your example) you could put the whole populace in a room and hammer out policy from start to finish without disagreement or compromising, then we could have an actual unified will of the people; populism would be true, and good. populism doesn't really seem like a thing i should be against in the extremely rare circumstance i find it, _illusory_ populism seems to be the actual thing i should fight against.
miguelazo 3y ago
The South Korean economist Ha-Joon Chang did an excellent job of documenting how protectionism was what allowed all industrialized countries to achieve their status. This rambling missive is just wrong and not insightful at all, based on cherry-picked examples and ignorant of history. In short, a classic piece from a conventional economist.
- tptacek 3y ago
  The article points out that if you erect steel tariffs, you impose costs on car companies. That's not complicated academic economics; it's common sense: you're making steel more expensive, and steel is a major input to car companies. You've read Ha-Joon Chang. Maybe you can teach us what he has to say about why this observation is wrong.
  - SenAnder 3y ago
    It's not wrong - it's incomplete. There is almost nothing a non-industrialized country can make more efficiently than an industrialized one. Except food and raw materials. Without protectionism, their industries don't stand a chance against advanced foreign incumbents, so they'll remain stuck doing farming and exporting their natural resources. A victim of economic colonization. If you erect steel tariffs, initially steel will be more expensive and of lower quality, but it will allow your smelting industry to develop until it is eventually on par with foreign offerings. Otherwise you'll be stuck exporting ore and importing steel. This is even more true of industries where the added value is higher, such as automotive and semiconductors. That is what the simple analysis misses - a country's efficiency at some economic endeavor is not static. Protectionism is what allows fledgling industries to develop to a point where opening trade won't see them immediately crushed by foreign competitors. More convincing is perhaps the simple empirical observation that none of the most successful trading countries reached their status through liberal trade rules: https://news.ycombinator.com/item?id=37229422 https://news.ycombinator.com/item?id=37229422
    - tptacek 3y ago
      Right, but protectionist populist economics are mostly a phenomenon of large developed countries, not fledgeling economies. I think everyone gets that if you don't have car companies, the fate of car companies under steel tariffs isn't a big consideration. I'm not an AskEconomics anti-Chang person (I don't know enough about economics to have a real opinion about any of this; I can just read stuff and make some sense about it). AskEconomics bristles at the idea that developing economies should use protectionism as a tool to establish industries, and liberalize only when they're situated to capture the advantages of free trade. But that seems totally reasonable to me. But that's not the proposition this article is really talking about!
alephnerd 3y ago
To give some context around RR's essay, India recently initiated licensing requirements, mandating that all laptops sold in India need to be manufactured within India [0]. This comes on the coattails of bipartisan economic populism as 2023-2024 are election years in India. RR was the reason India's banks didn't collapse in 2017 when a bunch of massive infrastructure loans were defaulted on, as the reforms he initiated during his tenure at the RBI helped banks like the IDFC, HDFC, ICICI, PNB, etc fix their balance sheets. I've also had the fortune of attending a couple talks and lectures of his before he went to India. The man is definetly one of the sharpest economists at UChicago currently. During election years with close margins, Indian parties succumb to populist tactics to ensure their victory. The last time India saw a similar economic and political climate as 2022-Present was in 2011-2014 under the INC. The economic decisions made during the 2011-14 period were not the greatest (turning into the 2017 banking crisis), and a similar crisis could be accidentally enabled as parties battle to the death (sometimes literally) in 2023-24. Furthermore, RR has recently been arguing that an East Asian style mass manufacturing revolution wouldn't help India succeed in becoming an upper income country, as Indian manufacturing skews either high value (eg. Cars, Pharmaceuticals, ONG) or low value (eg. Textiles, Cheap goods). According to RR, as Indian farm wages are high enough to meet middle income needs, there isn't an outside factor to push rural workers in most states (UP and Bihar excluded) to decide to become migrant low income workers in factories. In all honesty, I tend to agree. Agricultural income is tax free in India, so assuming you are not landless (ie. Most rural residents in most Indian states that did land reform), you can net around $2-4k/yr in agricultural income, which means you'd need to earn $4-8k/yr in wage labor. These salaries are too high to support mass manufacturing, meaning supporting small businesses along with subsidizing high value manufacturing (with high profit margins to tax) would be better served. This is the same path to industrialization that Thailand took, and the results have been positive: 0.8 HDI in 2023 - higher than China, Brazil, or Mexico, all countries that were in a similar boat to Thailand in the 2000s-2010s. The above is a very heterodox argument in top economics programs in the US currently (excluding MIT), and RR and plenty of others have been facing flak for it, but has been gaining traction within ASEAN, China, and India ime, and is similar to FDR's New Deal and LBJ's Great Society. [0] - https://www.reuters.com/world/india/india-restricts-import-laptop-computers-govt-notice-2023-08-03/ https://www.reuters.com/world/india/india-restricts-import-l...
isaacremuant 3y ago
> Argentina, an addict to populism, seems to be shifting its affections from the left-wing Peronists to a right-wing libertarian, who promises to cure inflation by, among other actions, adopting the US dollar (again!). I knew it. Just one more ignorant poor sod who will talk about Argentinian politics without actually understanding the context at all. Stop trying to fit your left-right Anglo worldview to everyone else. It's pathetic and incredibly tiring. Go throw temper tantrums about your Tories and your republicans like you love to and leave the south American country politics to people who actually know them in depth or live their realities. Edit: pointing out Milei as populism while implying the "so called left peronism" isn't is laughable to the extreme. The quip about "adopting the dollar (again!) Shows a fundamental misunderstanding of the maneuver by Carlos Menem to force a constant parity between the ARS and the USD.

34 points by johntfella 3y ago

Extremely weird to call it "the old liberal orthodoxy" when its a system which is hardly even 60 years old.

"Just vote for all of my self-serving policies, the benefits might not be obvious to your tiny brain but they will trickle down, I promise!" https://wtfhappenedin1971.com https://wtfhappenedin1971.com

tptacek 3y ago
https://www.reddit.com/r/AskEconomics/comments/sccs74/so_wtf_happened_in_1971/ https://www.reddit.com/r/AskEconomics/comments/sccs74/so_wtf...
- jjoonathan 3y ago
  Macro: Debt substitutes exports in the balance of trade. Funding government with debt instead of taxes has the effect of pumping assets and dumping exports. Assets = rich people and the finance industry, Exports = people that make shit for a living. "We used to make shit in this country, build shit. Now all we do is put our hand in the next guy's pocket." - The Wire Micro: Cantillon Wealth Pump Mandatory disclaimer: No, I'm not shilling bitcoin. Bitcoin doesn't address the root of the problem which is that if you put rich people in charge of everything they immediately start implementing self-serving policy.
  - tptacek 3y ago
    I'm not sure what that has to do with whether the charts on this page are in nominal or constant dollars, or compare 1950s shoeboxes to 2000s McMansions, or capture the introduction of women into the workforce, or measure total compensation vs. wages, or properly indicate the actual time inequality started growing, or are premised on the idea that the absolute value of the S&P is meaningful across the whole economy. The AskEconomics thread there is a litany of issues with these charts. Ironically, this seems like a pretty good illustration of what the article author is saying.
    - jjoonathan 3y ago
      The trend divergence is interesting. The normalization, choice of inflator, and precise localization of inflection point are less so. > women into workforce Great, when can we start working 1/2 time? 3 day workweeks allow 2-working-spouse families to raise their own kids, you know. Might help with those pesky fertility rates. > total compensation vs. wages Yeah, if you count medical inflation as additional compensation then only 80% of Americans are worse off instead of 90%. Simplicity is a blunt instrument, but devils dance in the details and simplicity can bop them. Contrast to "just think harder," which grants victory to whoever can afford to spend more time thinking on it.
      - tptacek 3y ago
        This is a site that supports a goldbug argument that virtually everything that has gone with every economy in the world traces back to the end of the gold exchangeability standard. Thats a simple narrative that is almost certainly not true. Whether it is or isn't, for many of the reasons in that thread (and probably many others), this particular site is not a good argument for that narrative, since many of the charts are simply broken.
  - andrewjl 3y ago
    Who would buy these net additional exports and where would they get the funds to pay for them?
friend_and_foe 3y ago
In 1971 the US broke the Breton woods agreement, defaulted on it's debt obligations and depegged the dollar from gold conpletely.
analog31 3y ago
The first commercial microprocessor?
noman-land 3y ago
https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock

colinsane 3y ago

i’m completely lost as to the author’s intended takeaway. something like “[democratic] systems that are blind to second-/third-order policy effects underperform”? so what do you do about that?

tptacek 3y ago
Populist-right economics focus on tariffs and protectionism. The first-order effect of protectionism is support for jobs in the local protected industries. The second-order effect is that all the industries downstream get hammered, because they get hit by the tariffs. Populist-left economics focus on large-scale government spending. The first-order effect is that everybody gets a $2000 check, or a subsidized rail system, or whatever. The second-order effect is inflation and economic instability; you end up paying $10 for a loaf of bread. Populism is the idea that there is a clear will of the people, or a clear set of policies in their interest. Policy debates aren't divided by left vs. right, or by supply-side Keynesianism. Rather, they're a division between the people and the elites. There isn't really room for a synthesis of multiple competing ideas (at least not until the people have taken over from the elites once again). It's the opposite of pluralism. Populist economics, according to this author, is defined largely by ideas that are simple enough to sell to people who haven't studied economics enough to conceive of second- and third-order policy effects. Those ideas all fail in the real world, but we have to re-learn that periodically, because of periodic resurgences of populism. (I believe some of this but not all of it and am really just trying to do my best to articulate what I thought the article was saying).
- iraqmtpizza 3y ago
  China, while hardly populist, has been failing upward for quite a few years now. Those tariffs, man. And if economics can't account for the monetary value of national security then it's not very useful.
  - pessimizer 3y ago
    "Populism" is only defined by its self-declared enemies, and they define it as any policy that they oppose. Just as we're still avenging the Czar in Russia, and Batista and the mafia in Cuba, everybody is still slandering the People's Party. Never let go of a grudge. So somehow, China's economic policies can be identical to what is domestically ridiculed as "populist." On the other hand, everything authoritarian that Westerners do gets referred to as like what they would do in China.

DerekBickerton 3y ago

> one of my younger colleagues at the International Monetary Fund found it hard to get a good job in academia, despite holding a PhD from MIT’s prestigious economics department, probably because her work showed that trade liberalization had slowed the rate of poverty reduction in rural India. While theoretical papers showing that freer trade could have such adverse effects were acceptable, studies that demonstrated the phenomenon empirically were met with skepticism. You don't automatically get a 'good job' because you've earned certain credentials. IMHO PhDs and other credentials are a dice roll and you could potentially work very hard on your studies for nothing. This is why people research their chosen profession before studying so that, at least, it wasn't all in vain, and even then, the job market could be swayed against you when you've completed your studies. People also need to look out for credentialism where people are overqualified for positions, or that PhDs etc are not even needed. Sometimes a simple aptitude test can filter out people who will lose you money when you've employed them.

jjoonathan 3y ago
Here's a more quantitative analysis of bias in academic economics. It should be slightly more difficult to dismiss with cries of "entitlement! entitlement!" https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stanley%20Publication%20Selection%20Bias%20in%20Min%20Wage%20Research-A%20Metaregression%20Analysis.pdf https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...

Barrin92 3y ago

>It is hard not to be pessimistic nowadays. In industrial countries, the pendulum has swung from excessive faith in the liberal orthodoxy to faith in populist policies, until their deficiencies become obvious once again. The deficiencies are as obvious as they always were and people should communicate this more stronlgy. It's actually insane how well the US economy is doing. Growth rates in countries that have a fraction of the per capital income of the US are now converging on similar rates before ever having gotten rich. Birth rates in most of those countries are tanking. People were claiming China will overtake the US economy in 2030, now that's being revised further and further back with 'not at all' becoming a distinct possibility. In Russia they're unironically bringing Kalashnikov lessons to school students, Soviet style. Liberal societies had their problems in dealing with Covid but behavior was responsive and driven by more and more data coming in, in China they bolted people into their homes for a year and then pretended the virus didn't matter from one day to the other. Convincing people that liberalism still works basically only means pointing them to how the world factually really looks.

Panzer04 3y ago
A surprisingly large amount of people just don't believe the world looks this way, though. They are so wrapped up in some minute anecdotally supported factor (energy prices went up 20%! Inflation is running wild!) They don't recognise how well everything else is going.
paganel 3y ago
> y. It's actually insane how well the US economy is doing. The economy is doing insanely well while its people are doing insanely bad. The life has been dropping for two years in a row [1] and there were around 110k deaths of despair between February 2021 and February 2022 [2]. If those are the signs of an economy doing "insanely well" I dread to see what a recession will bring. [1] https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/20220831.htm https://www.cdc.gov/nchs/pressroom/nchs_press_releases/2022/... [2] https://www.scientificamerican.com/article/rising-physical-pain-is-linked-to-more-deaths-of-despair1/ https://www.scientificamerican.com/article/rising-physical-p...
- 3y ago

hax0ron3 3y ago

I think it's worth pointing out that the 2008 financial crisis came on the heels of another event that had already done much to discredit elites and elite-adjacent "experts": the Iraq War. More specifically, the discrediting was caused by a combination of the deliberately dishonest or at best wildly inaccurate intel, the sense that pro-war elites in government and media were manufacturing consent for the war, and wrong predictions about how the war would go. The Snowden revelations of a few years later did not have as great of an impact as I would have wished, but I think that they too played some role in further discrediting elites. Given how much Trump's criticism of the Iraq War did to make criticism of that war a bi-partisan phenomenon, I find it unfortunate that he was too authoritarian to pair his criticism of that war with criticism of the NSA and that instead, he hinted that Snowden should be executed as a traitor.

tptacek 3y ago
There really is an elite consensus. The trouble is that you can't build an economic policy around that idea. Some things "elites" (of any stripe) believe are wrong, but some of them are right.
DerekBickerton 3y ago
> The Snowden revelations of a few years later did not have as great of an impact as I would have wished Saying Snowden's either a pariah or a hero is a very political stance either way, and I don't want to spout politics here on HN (That's not what HN is for, although political rants still slip through the cracks on HN). That said, the leaks did leave some aftermath[0]. All the tinfoilers, pre-Snowden had their suspicions confirmed in real, tangible ways. Yeah we knew abut ECHELON[1] but the Snowden leaks were far more substantial IMHO, and leaked at a time when The Internet was really starting to ramp up (in terms of all the services/tooling now available, and social media making leaps and bounds). [0] https://en.m.wikipedia.org/wiki/Snowden_Effect https://en.m.wikipedia.org/wiki/Snowden_Effect [1] https://en.m.wikipedia.org/wiki/ECHELON https://en.m.wikipedia.org/wiki/ECHELON
Aunche 3y ago
>More specifically, the discrediting was caused by a combination of the deliberately dishonest or at best wildly inaccurate intel, the sense that pro-war elites in government and media were manufacturing consent for the war, and wrong predictions about how the war would go. IMO, this is what people tell themselves now because they don't want to admit that they genuinely supported to the war to begin with. The Iraq War and the War on Terror were very much populist wars motivated by American's wanting to get revenge on brown people. That's why Bush's approval skyrocketed after 9/11 and the capture of Saddam. Yes, a nonzero amount of elites supported or benefited from these wars, but you can say that about anything. You're not going to convince the government to spend trillions of dollars without a few experts on your side and others who profit off of it.

friend_and_foe 3y ago

I find it funny that when we talk about something like the constitution and how you can't change it even with popular support people talk about democracy, how democracy is important, how a people should be able to change the rules with a 51% majority, but as soon as they don't like wyat the people want its no longer democracy, its populism.

tptacek 3y ago
That's not what populism means. If we're restricting ourselves to the United States (the article is overwhelmingly not about the US), it's a 50/50 polity. The people want an incoherently overlapping set of ideas from an incoherently-left-liberal party and an incoherently-conservative-right party. It's what you'd expect as an organically reached steady state based on Duverger's Law. Populism is a philosophy that looks at that set of circumstances and says, nah, fuck that. It's obvious what the people want: precisely X, Y, and Z set of policies. If the people are voting in obstacles to policy X, it's because the system is corrupted by elites. There aren't competing ideas of the good of the people; there is only the good of the people and the interests of those elites. If you could put 200 people selected at random for all around the country in a room and expect them to work out the principles of an economic system and come up (1) with something coherent and (2) without bruises, that would be evidence of a valid populist argument. But you can't do that, because those 200 people will disagree sharply on everything from economic protectionism to the importance of university educations.
- colinsane 3y ago
  > If you could put 200 people selected at random for all around the country in a room and expect them to work out the principles of an economic system and come up (1) with something coherent and (2) without bruises, that would be evidence of a valid populist argument. i read this as saying not that populism is bad, but that it doesn't _exist_. to someone trying to intuit the meaning of "populism", encountering the word for the first time, it looks like "populism" means "the will of the people". both from its root and from the things which it's used to label (movements with popular support). and there's no correction for this misunderstanding. you just see more and more leaders critiquing popular movements simply _for being popular_ ("populist") and that _amplifies_ the impression that those in power wish to suppress the will of the people. it's just a bad phrase. another commenter positioned populism as contrary to pluralism, which was helpful for me to understand the negative connotation. the actual problem with these "populist" movements is that they _appear_ to represent a unified will of the people, but the unification doesn't really stand up to scrutiny. if (following your example) you could put the whole populace in a room and hammer out policy from start to finish without disagreement or compromising, then we could have an actual unified will of the people; populism would be true, and good. populism doesn't really seem like a thing i should be against in the extremely rare circumstance i find it, _illusory_ populism seems to be the actual thing i should fight against.

miguelazo 3y ago

The South Korean economist Ha-Joon Chang did an excellent job of documenting how protectionism was what allowed all industrialized countries to achieve their status. This rambling missive is just wrong and not insightful at all, based on cherry-picked examples and ignorant of history. In short, a classic piece from a conventional economist.

tptacek 3y ago
The article points out that if you erect steel tariffs, you impose costs on car companies. That's not complicated academic economics; it's common sense: you're making steel more expensive, and steel is a major input to car companies. You've read Ha-Joon Chang. Maybe you can teach us what he has to say about why this observation is wrong.
- SenAnder 3y ago
  It's not wrong - it's incomplete. There is almost nothing a non-industrialized country can make more efficiently than an industrialized one. Except food and raw materials. Without protectionism, their industries don't stand a chance against advanced foreign incumbents, so they'll remain stuck doing farming and exporting their natural resources. A victim of economic colonization. If you erect steel tariffs, initially steel will be more expensive and of lower quality, but it will allow your smelting industry to develop until it is eventually on par with foreign offerings. Otherwise you'll be stuck exporting ore and importing steel. This is even more true of industries where the added value is higher, such as automotive and semiconductors. That is what the simple analysis misses - a country's efficiency at some economic endeavor is not static. Protectionism is what allows fledgling industries to develop to a point where opening trade won't see them immediately crushed by foreign competitors. More convincing is perhaps the simple empirical observation that none of the most successful trading countries reached their status through liberal trade rules: https://news.ycombinator.com/item?id=37229422 https://news.ycombinator.com/item?id=37229422
  - tptacek 3y ago
    Right, but protectionist populist economics are mostly a phenomenon of large developed countries, not fledgeling economies. I think everyone gets that if you don't have car companies, the fate of car companies under steel tariffs isn't a big consideration. I'm not an AskEconomics anti-Chang person (I don't know enough about economics to have a real opinion about any of this; I can just read stuff and make some sense about it). AskEconomics bristles at the idea that developing economies should use protectionism as a tool to establish industries, and liberalize only when they're situated to capture the advantages of free trade. But that seems totally reasonable to me. But that's not the proposition this article is really talking about!

alephnerd 3y ago

To give some context around RR's essay, India recently initiated licensing requirements, mandating that all laptops sold in India need to be manufactured within India [0]. This comes on the coattails of bipartisan economic populism as 2023-2024 are election years in India. RR was the reason India's banks didn't collapse in 2017 when a bunch of massive infrastructure loans were defaulted on, as the reforms he initiated during his tenure at the RBI helped banks like the IDFC, HDFC, ICICI, PNB, etc fix their balance sheets. I've also had the fortune of attending a couple talks and lectures of his before he went to India. The man is definetly one of the sharpest economists at UChicago currently. During election years with close margins, Indian parties succumb to populist tactics to ensure their victory. The last time India saw a similar economic and political climate as 2022-Present was in 2011-2014 under the INC. The economic decisions made during the 2011-14 period were not the greatest (turning into the 2017 banking crisis), and a similar crisis could be accidentally enabled as parties battle to the death (sometimes literally) in 2023-24. Furthermore, RR has recently been arguing that an East Asian style mass manufacturing revolution wouldn't help India succeed in becoming an upper income country, as Indian manufacturing skews either high value (eg. Cars, Pharmaceuticals, ONG) or low value (eg. Textiles, Cheap goods). According to RR, as Indian farm wages are high enough to meet middle income needs, there isn't an outside factor to push rural workers in most states (UP and Bihar excluded) to decide to become migrant low income workers in factories. In all honesty, I tend to agree. Agricultural income is tax free in India, so assuming you are not landless (ie. Most rural residents in most Indian states that did land reform), you can net around $2-4k/yr in agricultural income, which means you'd need to earn $4-8k/yr in wage labor. These salaries are too high to support mass manufacturing, meaning supporting small businesses along with subsidizing high value manufacturing (with high profit margins to tax) would be better served. This is the same path to industrialization that Thailand took, and the results have been positive: 0.8 HDI in 2023 - higher than China, Brazil, or Mexico, all countries that were in a similar boat to Thailand in the 2000s-2010s. The above is a very heterodox argument in top economics programs in the US currently (excluding MIT), and RR and plenty of others have been facing flak for it, but has been gaining traction within ASEAN, China, and India ime, and is similar to FDR's New Deal and LBJ's Great Society. [0] - https://www.reuters.com/world/india/india-restricts-import-laptop-computers-govt-notice-2023-08-03/ https://www.reuters.com/world/india/india-restricts-import-l...

isaacremuant 3y ago

> Argentina, an addict to populism, seems to be shifting its affections from the left-wing Peronists to a right-wing libertarian, who promises to cure inflation by, among other actions, adopting the US dollar (again!). I knew it. Just one more ignorant poor sod who will talk about Argentinian politics without actually understanding the context at all. Stop trying to fit your left-right Anglo worldview to everyone else. It's pathetic and incredibly tiring. Go throw temper tantrums about your Tories and your republicans like you love to and leave the south American country politics to people who actually know them in depth or live their realities. Edit: pointing out Milei as populism while implying the "so called left peronism" isn't is laughable to the extreme. The quip about "adopting the dollar (again!) Shows a fundamental misunderstanding of the maneuver by Carlos Menem to force a constant parity between the ARS and the USD.