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Understanding Economic Populism

Podcasts Aug 27, 2019 Allison Schrager and Elmira Bayrasli

For the last several years, populist leaders have wreaked havoc on the institutions and norms that have underpinned the liberal world order. And their policies are increasingly placing the global economy at risk.

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Allison Schrager

Allison Schrager is an economist and lecturer at New York University, and the author of An Economist Walks into a Brothel.

Elmira Bayrasli

Writing for PS since 2016
3 Commentaries

Elmira Bayrasli is the co-founder and CEO of Foreign Policy Interrupted and the author of From The Other Side of The World: Extraordinary Entrepreneurs, Unlikely Places.

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j. von Hettlingen Oct 12, 2019

In her interview with Elmira Bayrasli, Alison Schrager highlights the aspects of economic populism on both the left and right. In recent years populist parties have made inroads into parliaments and governments across Europe. Right-wing leaders tap into the grievances of disgruntled people, who feel left behind by the political establishment. They scapegoat immigrants, the globalised economy and international institutions for their loss of jobs, dwindling incomes and declining living standards.
Yet technological progress (AI and automation) and societal change create uncertainty too. People who still enjoy job and financial security fear for their future. Some fall prey to the rhetoric that promises a return to the good old days. In recent years “populist leaders have wreaked havoc on the institutions and norms that have underpinned the liberal world order. And their policies are increasingly placing the global economy at risk.”
Venezuela under Maduro is a good example for populism being bad economics, because it evokes irresponsible, unsustainable policies that often end in disaster and hurt most the ordinary people its leaders purportedly aim to help. Last year Italy’s populist Five Star Movement promised to end poverty, but there was no way to finance the social largesse without raising taxes, borrowing heavily and running a higher budget deficit. In the end the coalition government fell apart.
Earlier this year the presidential aspirant Bernie Sanders reignited enthusisasm at a rally in Iowa on the platform of economic populism, social justice and sweeping changes. As a progressive he wants to transform the American political system and create an economy and a government that will work for everybody, not just the one percent. While his progressive platform resonates with his supporters, those who are fiscally more moderate are sceptical, calling it a “socialist” agenda.
In July, at a conservative conference in Washington, Josh Hawley, a Republican senator from Missouri, told attendees that an “economy driven by money changing on Wall Street ultimately benefits those who have the money to start with, and that economy will not support a great nation”. Hence it was quite a sensation that a Republican senator accused his party of failing to protect Americans from capitalism.
One would typically associate this kind of rhetoric with a Republican lawmaker in the pre-Reagan years, when it produced senators such as Bob La Follette of Wisconsin, a populist firebrand who took on railroad companies and defended small farmers. In 1956, the Grand Old Party (GOP) met for its national convention in San Francisco and laid out a platform that won Dwight Eisenhower a second term. The Republican platform boasted about raising the minimum wage, expanding social security and increasing the number of workers joining unions.
Ronald Reagan, a Republicn president, called on a hostile Congress to end wasteful tax breaks for the rich. In 1985 before a crowd in Georgia, he thundered: “We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share.” He added that such loopholes “sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary – and that’s crazy.”
Today, the GOP is the party of the rich, and corrupt to the core, since Republicans abandoned the poor and the middle class in pursuit of their relentless agenda of tax cuts for the wealthiest. But Hawley is breaking from the Republican establishment in real ways.
He has introduced a bipartisan bill to ban the sale to minors of predatory video game “loot boxes”, an addictive technology that is being used by the electronic gaming industry to suck money out of children. His drug pricing bill would ban pharmaceutical companies from charging Americans more for the same prescription drugs than they charge to customers in other industrialised countries.
His college debt legislation would hold well-off colleges and universities directly accountable for offering expensive or mediocre educations to their students; the bill would require institutions to pay off 50% of the balance of loans of students who default.
If a GOP senator embraces economic populism, there is hope that mainstream Republicans might vote for Bernie Sanders or Elizabeth Warren. Nevertheless it does no harm to the GOP to revisit the Reagan or Eisenhower era, when civility in politics was a tradition.
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Lina Srivastava Aug 30, 2019

This was an incredibly frustrating conversation to listen to. Kudos to Ms. Bayrasli for trying to probe into the false equivalencies Ms. Schrager posed between left and right movements -- and for trying to maintain a semblance of equanimity in the face of Ms. Schrager's seeming inability or unwillingness to delve into political context. Theories of economic populism that lack a framing in social justice or an understanding of political or social context ring hollow, and some of Ms. Schrager's assertions (reviving the idea of "trickle down" economics as a driver of progress, for example) are laughable. And without a grounding in lived experience --coupled with Ms. Schrager's obvious disinterest in strains of populism currently found beyond the anglo-saxon strains -- any discussion on economic populism in our current age is simultaneously dull and dangerous. Having said all this, I will differ with some of the commentators below, in that I'm glad this conversation happened on Project Syndicate. First, it's refreshing to hear a debate between women scholars and commentators at all -- it's too rare an occurrence. Second, I don't think I would have heard of Ms. Schrager's work aside from this, and it was certainly eye-opening and bubble bursting on this platform.
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lisa Aug 29, 2019

This is a very instructive conversation. It teaches the listener that economists simply have not arrived at any kind of deep, informed understanding of what is motivating economic populism. One sees this in the writing and media appearances of many analysts, including experts in populism like Yascha Mounk (who is not an economist, of course, but he has been a guest on this podcast). I would have respected Allison Schrager if she had simply acknowledged that neither she nor any of her colleagues has arrived at a comprehensive framework for understanding the rise of economic populism in a broad swathe of countries despite very disparate socioeconomic and historical circumstances. Instead of admitting there's a lack of convincing research into the issue, Ms. Schrager offers what sound like self assured, informed responses to Ms. Bayrasli's smart questions and observations, but which are in fact clumsy obfuscations. It's a shame. Clearly Ms. Bayrasli tried to tease out an interesting intellectual conversation about a pressing issue, but Ms. Schrager couldn't or wouldn't engage honestly. One sees this type of obfuscation quite frequently in male analysts, of course. But I find that women who try to play the obfuscation game get criticized more often and more harshly than men. The comments here are a case in point.
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Paul Prettitore Aug 28, 2019

Interesting comments, but I thought the podcast did a service to the debate around populism. I certainly don't agree with everything the guest presented but she did make some interesting points, particularly on economic history. And I thought the presenter raised some equally good points, such as how current pride and past disparagement promotes populism in places like Turkey, India and China. I have many family members that do not fir the economic mold of people who would support populism but they are populists just the same. There is no simple explanation of what causes populism and this podcast definitely threw some new theories into the mix. Helpful to the ongoing debate.
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reachout andtouch Aug 28, 2019

Completely agree with the previous comment. PS posted a great piece previously by Dani Rodrik looking at the research behind increased populism and what causes it. Then we have a podcast which links the pro-immigration Abe with the anti-immigration European populists. As bad as Salvini is, he's not murdering the poor like Duterte. This podcast shouldn't be here.
- Petey Bee Aug 28, 2019
  
  It comes off as a haphazard introduction to the subject, lets say.
  
  An enormous population fraction of the world's democracies are now ruled by right wing populists and/or nationalists, or have been transformed by them or reactionaries into something more distressing - India, Brazil, Russia, US, Italy, UK, Israel, Hungary, Poland, Philipines, Thailand, Venezuela, Argentina, and I am sure many more that slip my mind.
  
  So it is a good idea to ask some questions, but they are hardly a homogeneous collection. The common denominator is tapping into discontent of the lower classes. The discourse has an strong economic component 100% of the time, since the lower classes are by definition the poorest. When their political mobilization succeeds, it is followed in many but not all cases by a bait-and-switch - changes to material status are replaced by consolation prizes having to do with national pride. This is one pattern of nationalist right-populism.
  
  There are also several left-populist patterns. Here in some cases, Robin-Hood type policies are actually carried out. This is often paired with a degree of kleptocratic rule, but entirely real and even dramatic improvements to the lives of the lower classes have taken place. This pattern ends with right-wing reactionaries, either violent authoritarian or imposed by the starvation via international financial system.
  
  Austerity and a crude return of control to defenders of the pre-existing property-rights regime is the common element in both of the above end states.
  
  As an aside, groups claiming vociferously to be neither left nor right are going to be of the right. This is something to remind younger readers and listeners.
  
  More rare, but by no means impossible, is a smooth return to stability after populist rule. The reason it is certainly not impossible is that quite a few populist governments are entirely competent, improve the well being of most of their citizens, and fail due to strong external pressures from international powers who resent the change having been made without their permission (and very often, loss of some exorbitant financial advantage under the previous regime).
  
  In my opinion, Dr. Schrager's refusal to draw distinctions among the many possible variations closes off the most interesting possibilities of discussion .
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Arun Motianey Aug 27, 2019

I heard this podcast, playing back some sections to make sure I got the implications of what was being discussed. In the end I was disappointed with it. I am especially disappointed that Project Syndicate, which is home to some truly sparkling articles and essays on global affairs, should deign to upload this interview. Perhaps it's because it is the end of the summer and people are away and there is a dearth of high-quality thinkers to interview?

Elmira Bayrasli, the interviewer, didn't help matters with her non-probing questions. Surely, an interviewer with her experience, should have found a way to raise the tone of the conversation.

The treatment of populism, left and right, was astonishingly superficial. Both left populists and right populists are against the wealthy, Schrager says at one point. Really? Donald Trump and Boris Johnson and Narendra Modi and Jair Bolsanoro are against the rich? She claims to be a deep student of history. I'm afraid she knows little history and even less current affairs.

Here's her discussion of the effects of innovation. Schrager talked about the disruptive effects of innovation by pointing to the Industrial Revolution and said that we should remember that it took two hundred years for societies to absorb the effect of it. I was gobsmacked. That the world economy (all the depressions, panics, booms and busts, phases of globalization and de-globalization) and world politics--colonialism,revolution, world wars, independence movements--were absorbing the effects of the Industrial Revolution of the 1790s till the end of the 20th century?

Even more annoying was the constant refrain: "an economist like me", "we economists were not happy", "economists would not want that to happen". Again on the Industrial Revolution: "since there were no economists in those days obviously nothing could be done by people's insecurities."

I had never heard of Allison Schrager till this morning. I don't want to be snobbish about the fact that she is an "Adjunct" Lecturer of NYU, but I have to say this: that's not a title or label that carries any cachet on the pages of PS.
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Understanding Economic Populism

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