Posts Tagged ‘populism’

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There doesn’t seem to be anything remarkable about mainstream economists’ rejection of the new populism.

Lest we forget, mainstream economists in the United States and Europe (and, of course, around the world) mostly celebrated current economic arrangements. As far as they were concerned, everyone benefits from contemporary globalization (the more trade the better) and from the distribution of income created by market forces (since everyone gets what they deserve).

To be sure, those who identify with different wings of mainstream economics debate the extent to which there are market imperfections and therefore how much interference there should be in markets. Conservative mainstream economists tend to argue in favor of less regulation, their liberal counterparts for more government intervention. But they share the same general economic vision—that capitalism is characterized by “just deserts,” stable growth, and rising standards of living.

Except of course in recent decades it hasn’t. Not by a long shot.

Inequality has skyrocketed to obscene levels (and continues to rise), leaving many people behind. The crash of 2007-08 shattered the illusion of stability—and now there’s a deepening worry of “secular stagnation” moving forward. And, while the conspicuous consumption of the tiny group at the top continues unabated, only rising debt keeps everyone else from falling down the ladder.

No wonder, then, that economic populists, especially those on the Right, are rejecting the status quo—and winning campaigns and elections (often in the form of protest votes).

For the most part, to judge by Brigitte Granville’s survey of a variety of Project Syndicate commentators’ responses to populism, mainstream economists remain blind as to “why so many voters have embraced facile policies and populist politics.”

That’s pretty much what one would expect, given mainstream economists’ general commitment to the status quo.

But even when they admit that “much has gone wrong for a great many people,” as Margaret MacMillan does (“Globalization and automation are eliminating jobs in developed countries; powerful corporations and wealthy individuals in too many countries are getting a greater share of the wealth and paying fewer taxes; and living conditions continue to deteriorate for people in the US Rust Belt or Northeast England and Wales”), we read the spectacular claim that today’s populists—these “new, outsider political forces”—are wrong because they “claim to have a monopoly on truth.”

Now, I understand, MacMillian is a historian, not an economist. But the idea that populists are somehow the only ones who claim to have a monopoly on truth is an extraordinary diagnosis of the problem.

Think of the legions of mainstream economists who have lined up over the years to claim a monopoly on the truth concerning a wide variety of policies, from restricting minimum wages and approving NAFTA to deregulating finance and voting no on Brexit. They are the ones who have aligned themselves with the interests of economic and political elites and who, in the name of expertise, have attempted to trump democratic, public discussion of important economic issues.

It should come as no surprise, then, that mainstream economists—such as Harvard’s Sendhil Mullainathan—are so concerned that economists have been demoted within the new Trump administration. The horror! The chairperson of the Council of Economic Advisers is not going to be a member of the Cabinet.

Yes, it is true, business acumen is not the same as economic analytics. (I teach economics in a College of Arts and Letters, not in a business school—and, as I remind my students on a regular basis, I’m the last person they should turn to for investment or business advice.) But that’s a far cry from claiming a monopoly on the truth, which is only available to those who speak and write in the language of mainstream economics.*

If mainstream economists finally relinquished that claim—and, as a result, spent more time both learning the languages of other traditions within the discipline of economics and listening to the grievances and desires of those who have been sacrificed at the altar of the status quo—perhaps then they’d have something useful to contribute to the larger debate about where the world is headed right now.

 

*According to Andrea Brandolini, the late Tony Atkinson understood this: “‘Economists are too often prisoners within the theoretical walls they have erected’, he recently wrote discussing austerity policies, ‘and fail to see that important considerations are missing”

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Presidential polling and forecasts (such as those from FiveThirtyEight) in the United States have quite definitively moved in favor of Hillary Clinton. And, by the time this gets posted, the gap between Clinton and Donald Trump will probably have grown even more.

We should remember all such polling presumes voters are “sincere,” that is, they will vote for the candidate they think is the “better” choice.

But what if voters are strategic, that is, they make tactical decisions in their voting? Then polling, and the forecasts that stem from them, are going to be deceptive. And the loser in the polls might be the winner in the election.

The obvious strategic choice, for those who don’t want Trump elected but also dislike (for a whole host of valid reasons) Clinton, is to vote for the Green Party’s Jill Stein. The idea is that, at least in states where Clinton appears to be a “lock,” it’s important to run up the numbers to Clinton’s left, in order to put pressure on her electoral campaign and post-election policies. This is presumably the option that at least some, and perhaps a large number, of Bernie Sanders’s supporters will choose in November.

But there’s another strategic choice, which will also lower Clinton’s final numbers: those who are indifferent between Clinton and Trump (because both have moved “too left,” or at least more populist, on economic policy) but certainly don’t want Clinton to win in a landslide. It’s the argument Holman W. Jenkins, Jr. has recently made in the Wall Street Journal:

let’s also remember that even if Trump defeats himself, it would not be the same as reaccrediting the Depublican and Remocrat leadership class of which Mrs. Clinton is so spectacular an example. Our system of institutions is not designed to find us the “right” person to be our national hero/role model. Its job is to harness and constrain the forces and personalities that democratic populism throws up.

Voters are perfectly entitled to ask themselves if one of our major parties has thrown up a candidate unsuitable purely on grounds of personality and temperament, but we also should have some humility about the historical moment we’re living through. A narrow Hillary victory or Trump victory might not be outcomes all that distinguishable from each other in the end—whereas a Clinton landslide that produces, like the first two Obama years, one-party government fundamentally out of sync with the American electorate and out of sync with the national moment could be the larger misfortune.

This is an argument for continued “gridlock,” which may be precisely what American businesses want at the national level. Presuming Clinton is going to win the presidential election, they want to make sure at least the House, if not the Senate—in other words, the result of the down-ticket races—remains in the opposition’s hands. And that’s the reason they may vote strategically for Trump.

I can well imagine both these strategic voting decisions affecting the presidential vote, especially if the polling and forecast gaps between Clinton and Trump continue to grow.

To be clear, I am not trying to make an argument for or against voting (or, for that matter, for or against strategic voting). Precisely because it raises the possibility that the winner might lose (or, alternatively, the loser might win), the case I’m trying to make is that voting in elections is merely the semblance of democracy and that democracy falls far short of the horizon of the politics we actually need today.