4 ms·

Populism and economic prosperity

48 points by johntfella 1y ago

Frieren 1y ago
> The information and knowledge that populism severely damages the economy is there and is in the public domain, but the media increasingly acts to hide that from the public or distort that information so that much of the public never gets to understand it. Billionaires, that own newspapers and TV stations, are not trying to maximize the size of the economy of their countries. They are maximizing the percentage of that economy that they own, even at the cost of its size. For people at the top of economic power that set as their personal goal to accumulate as much money/power as possible will tweak the system to that goal. All the economic machine of the country gets fine tuned to move money from the general economy to their own pockets. It would make sense to set some limit to that transfer of wealth so the economy does not suffer the worst outcomes. But once all institutions are focused on wealth transfer, to grow the economy is no more in their goals. You may have better health care, better technology, and many advantages than a King from the middle ages. But many billionaires want the absolute power of the King even if we go back to the middle ages.
- nabla9 1y ago
  It seems that you make a populist argument. Populism: the idea of the "common people" in opposition to a perceived elite. Frequently associated with anti-establishment and anti-political sentiment.
  - CGMthrowaway 1y ago
    Yes. The funny thing to me is that Plato, who did much early and deep thinking in this area captured in his Republic, contrasted the democratically elected populist demagogue with the Philosopher-King.
  - vkou 1y ago
    Okay. What's the counter-argument to it? A restoration of the divine right of king and lord? Sit down and shut up, the oligarchs know best? Should we take the fallacy of the middle, split the difference, and just behead half the nobility? Or should perhaps instead engage with the idea, as presented? > Populism: the idea of the "common people" in opposition to a perceived elite. The elite certainly act like they believe it to be true. Does that make them populists, or..?
    - nabla9 1y ago
      > What's the counter-argument to it? Don't bring elites into every discussion. Inequality causes problems, it's not directly relevant to every thing, like this discussion. Populism is the insanity of the masses.
      - vkou 1y ago
        > Don't bring elites into every discussion. They are utterly critical to the discussion of political and economic power, and who shapes public discourse. We aren't talking about spherical cows, here. Ignoring their existence and influence is like ignoring that people need to eat, or that 95% of the mass media you consumed is owned by a monoculture.
      - Frieren 1y ago
        > it's not directly relevant to every thing An increase in populism is a direct result of higher inequality. When people experiences a fair system, populism is rejected. When people lives in an unjust society populist will offer easy but false solutions to problems. > Populism is the insanity of the masses. Populism is taking advantage of unhappy masses. Masses are unhappy for real economic reasons.
        nabla9 1y ago
        > An increase in populism is a direct result of higher inequality. Generally considered false by most social scientists, definitely oversimplification. Inequality is a contributing factor to the rise of populism, but it is not a direct or sole cause. For example, Trump voters are better off economically compared with most Americans. Some recent research: Mutz, D. (2018). Status threat, not economic hardship, explains the 2016 presidential vote. Proceedings of the National Academy of Sciences (PNAS). https://www.pnas.org/doi/10.1073/pnas.1718155115 https://www.pnas.org/doi/10.1073/pnas.1718155115 Norris, P., & Inglehart, R. (2019). Cultural Backlash: Trump, Brexit, and Authoritarian Populism. Cambridge University Press.https://www.cambridge.org/core/books/cultural-backlash/3C7CB32722C7BB8B19A0FC005CAFD02B https://www.cambridge.org/core/books/cultural-backlash/3C7CB...
  - deleted 1y ago
    [deleted]
  - erikerikson 1y ago
    Not necessarily. They describe a scenario that can include greater wealth and plenty by our wealthiest despite a smaller relative percentage of a much larger and more dynamic economy.
- exceptione 1y ago
  Indeed. The article did mention that in a succinct way, but you do a good job of laying the machinery more bare. This dynamic is hard to break, because this concept is so foreign to 'regular' people, they can't spot it, even if it is in front of their own eyes. Their have an ingrained concept of cooperative and constructive behavior in a social context, they derive their sense of dignity in part from it, they learn it is their path to success.
paulsutter 1y ago
Whats the difference between populism and democracy? Seems like the definition is "when people dont vote the way I like". For example I worry about socialist populism, which is subjective at best or (more practically) just judgemental - democracy means will of the people. On the other hand, when I look at the recent history of the "elites" in the US, they seem (at a minimum) poorly selected or (more practically) flatly idiotic. So maybe elitism and populism are just two bad choices?
- smileysteve 1y ago
  An interpretation is classic grade school class President runs on "no homework" or "free lunch", things people will vote for because they sound good for them now, not because they have merit. Lower income taxes sounds great today, but greater wealth inequality and no social safety net making wealth meaningless (population level poverty and poor social mobility make life for even the wealthy worse)
  - paulsutter 1y ago
    Right, people can make bad choices, but still how is that different from democracy? Maybe you're saying it means democracy-when-it-doesnt-select-"elites"?
    - owisd 1y ago
      - people made bad choices despite a good faith, deliberative, representative process to make good choices - democracy - people made bad choices through deception or carelessness - populism.
    - deleted 1y ago
      [deleted]
  - exceptione 1y ago
    > "no homework" or "free lunch", things people will vote for because they sound good for them now, not because they have merit. The working class doesn't think that way, on the contrary! They have to live careful as small missteps have long term consequences. There are plenty of cases where people will happily vote for austere measures, and they rather think the government should spend less. For the ultra wealthy, everything is free lunch for them, even if that would mean you will be 10% poorer. If the 0.01% get 10% richer, and the rest 10% poorer, than that is still a win for them. Hence why right wing populists are a great business case to invest in.
zb3 1y ago
But maybe GDP doesn't equal "prosperity"?
- rlander 1y ago
  True, but GDP is often a decent proxy for material living standards, especially across countries and over time (so long as we note what it leaves out).
  - CGMthrowaway 1y ago
    I suspect by "note what it leaves out" you are referring to, e.g. unpaid work like caregiving and household labor, as well as inequality and environmental costs. I would point out that GDP also has shortcomings in that it does not measure well-being directly (happiness, mental health, life satisfaction) nor does it account for non-economic quality of life factors like political stability, personal freedom, safety or social cohesion.
  - piva00 1y ago
    It's a simple metric to calculate, it's also gamed a lot exactly because of this assumption. It's extremely faulty to measure general living standards, a country with expensive healthcare will generate higher GDP while having a sicker population, the same repeats for any essential service to quality of life which is fraught with middlemen, each step in the chain increases GDP. Also for shoddy construction, repairs and renovations will increase GDP. Using GDP as a proxy for living standards is very poor.
    - colonCapitalDee 1y ago
      People keep coming up with alternate measures and then finding that they correlate pretty well with GDP
      - CGMthrowaway 1y ago
        And why shouldn't they? I would expect the components of GDP to correlate with living standards even if GDP does not measure it as accurately as possible. The best-known alternative I am familiar with is HDI, here is a scatterplot vs GDP: https://ourworldindata.org/grapher/human-development-index-vs-gdp-per-capita https://ourworldindata.org/grapher/human-development-index-v...
juancn 1y ago
Right or left wing populism have the same effect. Populism is bad. Period. The problem lies in that populist governments essentially make irrational decisions just to stay in power (appease the public), which makes most forms of government populist in one form or another and democracy in particular extremely susceptible to it. This usually manifests as short-term actions with negative long term effects (i.e. taking too much debt, rather than being fiscally sound). I always wondered if a random-cracy wouldn't be better in the end, just pick anyone that cares to have a position by lottery and have a limited term and basic checks and balances. At least it statistically makes a mediocre government more likely, not just as an upper bound.
- zb3 1y ago
  If I knew I'd die in <10 years then I'd vote for the "short term" solution and believe or not - this would NOT be irrational on my end. People might have different interests and they vote for themselves.
  - throwaway48476 1y ago
    Individual rational self interest is for the country to optimize for GDP per capita. It's in the interest of corporations and their lobbyists to optimize only for top line GDP. The former would probably be called populism.
  - mk89 1y ago
    Well, if you have kids you care about, you might rethink that. That's what a lot of people do, or they believe they do. Would that be irrational then? Or just selfish? Or both, or neither?
    - zb3 1y ago
      I care about them hence I didn't make them. "Having kids" is the most selfish thing in my view.
    - throwaway48476 1y ago
      Boomers seem to hate their children. I dont think it's a strong effect on future planning.
stackskipton 1y ago
Author danced around it but does Populism lead to reduced economic growth OR is Populism the result of economic issues that causes reduced economic growth?
- the_pwner224 1y ago
  He explicitly mentions it in the 3rd paragraph > There are obviously countless issues in any analysis of this type, like ... how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable.
- margalabargala 1y ago
  From the article: > There are obviously countless issues in any analysis of this type, like how a populist government is defined, how you do the counterfactual, how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable. Did you read the paper in question?
  - stackskipton 1y ago
    Yes, but this is a major problem I have with Economists, they are more historians but speak like they are scientists. >"Mainstream political parties normally claim that populist parties, if they ever got to power, would damage the economy. We have clear evidence that they are right, and right in a big way. A paper in the American Economic Review (one of the top economics journals) published nearly two years ago, looked at the macroeconomic consequences of populist regimes coming to power. The results can be summed up in the chart below (from this working paper version)" Rest of blog goes on talking about the paper mostly accepting the premise when first paragraphs admit entire premise might be wrong.
PaulHoule 1y ago
You can’t rule out that worsening conditions might lead to right-wing populists being elected, which shows up in the GDP afterwards. For instance it’s often said that center-left and center-right parties in Europe have had a “austerity uber alles” policy for years and right-wing populists have been the only electorally effective [1] response. [1] if not effective in policy
midtake 1y ago
Calling political newcomers populist is stupid. "Ah this challenger didn't come with the blessing of the DNC and other corporate sponsors, it must be a populist!" This article is talking about protectionism not populism. It is continuing the trend of forgetting that protectionism was a core Democratic trait until they abandoned the working class and decided to become super cool technocrats. And now that Trump, of all people, is championing protectionism, the left side is digging its heels in and cursing one of its former values.
grafmax 1y ago
Right wing populism is a failure so all populism is a failure? But they advocate opposite economic policies. Even the example of Venezuela blames populism and omits the role of sanctions.
loxodrome 1y ago
This article is a classic example of bogus and misleading statistical analysis published by a leftist academic.
- IT4MD 1y ago
  [flagged]
  - kridsdale3 1y ago
    Don't read either.
daft_pink 1y ago
I can’t shake the feeling that we are living through a period of growing geopolitical tension. It reminds me of Downton Abbey during the season when everyone senses the approach of World War I. The signs are there, the atmosphere is heavy with anticipation, and yet there is a sense of helplessness. Everyone can see what is coming, but no one seems able to stop it. We are also going through an economic realignment as major powers prepare, in different ways, for the possibility of conflict. That shift is causing slowdowns, disruptions, and a chain of related effects that are creating significant economic costs around the world. In the long run, the most important goal is to prevent war. I believe our leaders are focused on deterrence, reducing dependencies, and building contingencies to make a large-scale conflict less likely and long term economic sanctions more likely. Ever since Russia invaded Ukraine, I have felt this unease deep down. It also helps explain why political parties that would normally prioritize growth are now making decisions that seem to go against that goal.
- bobson381 1y ago
  This is, IMO, a result of being in ecological overshoot. We've financed our growth as a species on the back of a limited supply of energy, and we're gonna go war-mode in order to win the musical chairs game that will happen as constraints on energy slow down upward economic progress. Global debt is an unfillable claim on future prosperity - We've kept kicking the can down the road until it's become feral and grown teeth. Stupid can is trying to bite our feet.
deleted 1y ago
[deleted]

48 points by johntfella 1y ago

> The information and knowledge that populism severely damages the economy is there and is in the public domain, but the media increasingly acts to hide that from the public or distort that information so that much of the public never gets to understand it. Billionaires, that own newspapers and TV stations, are not trying to maximize the size of the economy of their countries. They are maximizing the percentage of that economy that they own, even at the cost of its size. For people at the top of economic power that set as their personal goal to accumulate as much money/power as possible will tweak the system to that goal. All the economic machine of the country gets fine tuned to move money from the general economy to their own pockets. It would make sense to set some limit to that transfer of wealth so the economy does not suffer the worst outcomes. But once all institutions are focused on wealth transfer, to grow the economy is no more in their goals. You may have better health care, better technology, and many advantages than a King from the middle ages. But many billionaires want the absolute power of the King even if we go back to the middle ages.

nabla9 1y ago
It seems that you make a populist argument. Populism: the idea of the "common people" in opposition to a perceived elite. Frequently associated with anti-establishment and anti-political sentiment.
- CGMthrowaway 1y ago
  Yes. The funny thing to me is that Plato, who did much early and deep thinking in this area captured in his Republic, contrasted the democratically elected populist demagogue with the Philosopher-King.
- vkou 1y ago
  Okay. What's the counter-argument to it? A restoration of the divine right of king and lord? Sit down and shut up, the oligarchs know best? Should we take the fallacy of the middle, split the difference, and just behead half the nobility? Or should perhaps instead engage with the idea, as presented? > Populism: the idea of the "common people" in opposition to a perceived elite. The elite certainly act like they believe it to be true. Does that make them populists, or..?
  - nabla9 1y ago
    > What's the counter-argument to it? Don't bring elites into every discussion. Inequality causes problems, it's not directly relevant to every thing, like this discussion. Populism is the insanity of the masses.
    - vkou 1y ago
      > Don't bring elites into every discussion. They are utterly critical to the discussion of political and economic power, and who shapes public discourse. We aren't talking about spherical cows, here. Ignoring their existence and influence is like ignoring that people need to eat, or that 95% of the mass media you consumed is owned by a monoculture.
    - Frieren 1y ago
      > it's not directly relevant to every thing An increase in populism is a direct result of higher inequality. When people experiences a fair system, populism is rejected. When people lives in an unjust society populist will offer easy but false solutions to problems. > Populism is the insanity of the masses. Populism is taking advantage of unhappy masses. Masses are unhappy for real economic reasons.
      - nabla9 1y ago
        > An increase in populism is a direct result of higher inequality. Generally considered false by most social scientists, definitely oversimplification. Inequality is a contributing factor to the rise of populism, but it is not a direct or sole cause. For example, Trump voters are better off economically compared with most Americans. Some recent research: Mutz, D. (2018). Status threat, not economic hardship, explains the 2016 presidential vote. Proceedings of the National Academy of Sciences (PNAS). https://www.pnas.org/doi/10.1073/pnas.1718155115 https://www.pnas.org/doi/10.1073/pnas.1718155115 Norris, P., & Inglehart, R. (2019). Cultural Backlash: Trump, Brexit, and Authoritarian Populism. Cambridge University Press.https://www.cambridge.org/core/books/cultural-backlash/3C7CB32722C7BB8B19A0FC005CAFD02B https://www.cambridge.org/core/books/cultural-backlash/3C7CB...
- deleted 1y ago
  [deleted]
- erikerikson 1y ago
  Not necessarily. They describe a scenario that can include greater wealth and plenty by our wealthiest despite a smaller relative percentage of a much larger and more dynamic economy.
exceptione 1y ago
Indeed. The article did mention that in a succinct way, but you do a good job of laying the machinery more bare. This dynamic is hard to break, because this concept is so foreign to 'regular' people, they can't spot it, even if it is in front of their own eyes. Their have an ingrained concept of cooperative and constructive behavior in a social context, they derive their sense of dignity in part from it, they learn it is their path to success.

paulsutter 1y ago

Whats the difference between populism and democracy? Seems like the definition is "when people dont vote the way I like". For example I worry about socialist populism, which is subjective at best or (more practically) just judgemental - democracy means will of the people. On the other hand, when I look at the recent history of the "elites" in the US, they seem (at a minimum) poorly selected or (more practically) flatly idiotic. So maybe elitism and populism are just two bad choices?

smileysteve 1y ago
An interpretation is classic grade school class President runs on "no homework" or "free lunch", things people will vote for because they sound good for them now, not because they have merit. Lower income taxes sounds great today, but greater wealth inequality and no social safety net making wealth meaningless (population level poverty and poor social mobility make life for even the wealthy worse)
- paulsutter 1y ago
  Right, people can make bad choices, but still how is that different from democracy? Maybe you're saying it means democracy-when-it-doesnt-select-"elites"?
  - owisd 1y ago
    - people made bad choices despite a good faith, deliberative, representative process to make good choices - democracy - people made bad choices through deception or carelessness - populism.
  - deleted 1y ago
    [deleted]
- exceptione 1y ago
  > "no homework" or "free lunch", things people will vote for because they sound good for them now, not because they have merit. The working class doesn't think that way, on the contrary! They have to live careful as small missteps have long term consequences. There are plenty of cases where people will happily vote for austere measures, and they rather think the government should spend less. For the ultra wealthy, everything is free lunch for them, even if that would mean you will be 10% poorer. If the 0.01% get 10% richer, and the rest 10% poorer, than that is still a win for them. Hence why right wing populists are a great business case to invest in.

zb3 1y ago

But maybe GDP doesn't equal "prosperity"?

rlander 1y ago
True, but GDP is often a decent proxy for material living standards, especially across countries and over time (so long as we note what it leaves out).
- CGMthrowaway 1y ago
  I suspect by "note what it leaves out" you are referring to, e.g. unpaid work like caregiving and household labor, as well as inequality and environmental costs. I would point out that GDP also has shortcomings in that it does not measure well-being directly (happiness, mental health, life satisfaction) nor does it account for non-economic quality of life factors like political stability, personal freedom, safety or social cohesion.
- piva00 1y ago
  It's a simple metric to calculate, it's also gamed a lot exactly because of this assumption. It's extremely faulty to measure general living standards, a country with expensive healthcare will generate higher GDP while having a sicker population, the same repeats for any essential service to quality of life which is fraught with middlemen, each step in the chain increases GDP. Also for shoddy construction, repairs and renovations will increase GDP. Using GDP as a proxy for living standards is very poor.
  - colonCapitalDee 1y ago
    People keep coming up with alternate measures and then finding that they correlate pretty well with GDP
    - CGMthrowaway 1y ago
      And why shouldn't they? I would expect the components of GDP to correlate with living standards even if GDP does not measure it as accurately as possible. The best-known alternative I am familiar with is HDI, here is a scatterplot vs GDP: https://ourworldindata.org/grapher/human-development-index-vs-gdp-per-capita https://ourworldindata.org/grapher/human-development-index-v...

juancn 1y ago

Right or left wing populism have the same effect. Populism is bad. Period. The problem lies in that populist governments essentially make irrational decisions just to stay in power (appease the public), which makes most forms of government populist in one form or another and democracy in particular extremely susceptible to it. This usually manifests as short-term actions with negative long term effects (i.e. taking too much debt, rather than being fiscally sound). I always wondered if a random-cracy wouldn't be better in the end, just pick anyone that cares to have a position by lottery and have a limited term and basic checks and balances. At least it statistically makes a mediocre government more likely, not just as an upper bound.

zb3 1y ago
If I knew I'd die in <10 years then I'd vote for the "short term" solution and believe or not - this would NOT be irrational on my end. People might have different interests and they vote for themselves.
- throwaway48476 1y ago
  Individual rational self interest is for the country to optimize for GDP per capita. It's in the interest of corporations and their lobbyists to optimize only for top line GDP. The former would probably be called populism.
- mk89 1y ago
  Well, if you have kids you care about, you might rethink that. That's what a lot of people do, or they believe they do. Would that be irrational then? Or just selfish? Or both, or neither?
  - zb3 1y ago
    I care about them hence I didn't make them. "Having kids" is the most selfish thing in my view.
  - throwaway48476 1y ago
    Boomers seem to hate their children. I dont think it's a strong effect on future planning.

stackskipton 1y ago

Author danced around it but does Populism lead to reduced economic growth OR is Populism the result of economic issues that causes reduced economic growth?

the_pwner224 1y ago
He explicitly mentions it in the 3rd paragraph > There are obviously countless issues in any analysis of this type, like ... how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable.
margalabargala 1y ago
From the article: > There are obviously countless issues in any analysis of this type, like how a populist government is defined, how you do the counterfactual, how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable. Did you read the paper in question?
- stackskipton 1y ago
  Yes, but this is a major problem I have with Economists, they are more historians but speak like they are scientists. >"Mainstream political parties normally claim that populist parties, if they ever got to power, would damage the economy. We have clear evidence that they are right, and right in a big way. A paper in the American Economic Review (one of the top economics journals) published nearly two years ago, looked at the macroeconomic consequences of populist regimes coming to power. The results can be summed up in the chart below (from this working paper version)" Rest of blog goes on talking about the paper mostly accepting the premise when first paragraphs admit entire premise might be wrong.

PaulHoule 1y ago

You can’t rule out that worsening conditions might lead to right-wing populists being elected, which shows up in the GDP afterwards. For instance it’s often said that center-left and center-right parties in Europe have had a “austerity uber alles” policy for years and right-wing populists have been the only electorally effective [1] response. [1] if not effective in policy

midtake 1y ago

Calling political newcomers populist is stupid. "Ah this challenger didn't come with the blessing of the DNC and other corporate sponsors, it must be a populist!" This article is talking about protectionism not populism. It is continuing the trend of forgetting that protectionism was a core Democratic trait until they abandoned the working class and decided to become super cool technocrats. And now that Trump, of all people, is championing protectionism, the left side is digging its heels in and cursing one of its former values.

grafmax 1y ago

Right wing populism is a failure so all populism is a failure? But they advocate opposite economic policies. Even the example of Venezuela blames populism and omits the role of sanctions.

loxodrome 1y ago

This article is a classic example of bogus and misleading statistical analysis published by a leftist academic.

IT4MD 1y ago
[flagged]
- kridsdale3 1y ago
  Don't read either.

daft_pink 1y ago

I can’t shake the feeling that we are living through a period of growing geopolitical tension. It reminds me of Downton Abbey during the season when everyone senses the approach of World War I. The signs are there, the atmosphere is heavy with anticipation, and yet there is a sense of helplessness. Everyone can see what is coming, but no one seems able to stop it. We are also going through an economic realignment as major powers prepare, in different ways, for the possibility of conflict. That shift is causing slowdowns, disruptions, and a chain of related effects that are creating significant economic costs around the world. In the long run, the most important goal is to prevent war. I believe our leaders are focused on deterrence, reducing dependencies, and building contingencies to make a large-scale conflict less likely and long term economic sanctions more likely. Ever since Russia invaded Ukraine, I have felt this unease deep down. It also helps explain why political parties that would normally prioritize growth are now making decisions that seem to go against that goal.

bobson381 1y ago
This is, IMO, a result of being in ecological overshoot. We've financed our growth as a species on the back of a limited supply of energy, and we're gonna go war-mode in order to win the musical chairs game that will happen as constraints on energy slow down upward economic progress. Global debt is an unfillable claim on future prosperity - We've kept kicking the can down the road until it's become feral and grown teeth. Stupid can is trying to bite our feet.

deleted 1y ago

[deleted]