[HN Gopher] The Populist Advantage
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The Populist Advantage
Author : johntfella
Score : 25 points
Date : 2023-08-22 07:17 UTC (15 hours ago)
(HTM) web link (www.project-syndicate.org)
(TXT) w3m dump (www.project-syndicate.org)
| Barrin92 wrote:
| _> 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 wrote:
| 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 wrote:
| > 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/...
|
| [2] https://www.scientificamerican.com/article/rising-
| physical-p...
| tptacek wrote:
| Employment is high, real incomes are rising, the US economy
| is growing faster and with less inflation than any of its
| peers. There are limits to what an economy, over the span of
| 4 or 8 or 10 years, can do to stem "despair". But in the
| sense that we measure economies, "the people" aren't doing
| "insane bad". The last few years of the economy have been
| pretty good for people.
| iraqmtpizza wrote:
| I fail to see the issue with Kalashnikov lessons but ok.
|
| I never see people talk about protectionism in the eurozone.
| Are we just blinded by all the kumbaya rhetoric and hand-
| holding? Why the hell is that considered a triumph of liberal
| economics when the 50 states are not? There is some industrial-
| scale lying going on. It is as if the euro cartel has
| economically sanctioned everyone that isn't them.
| friend_and_foe wrote:
| 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 wrote:
| 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.
| pessimizer wrote:
| My favorite thing is when they demand that democracy not be a
| "popularity contest."
| colinsane wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| "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._
| iraqmtpizza wrote:
| I have not once heard anyone describe the European Union
| as populist despite its wildly protectionist policies and
| its penchant for massive spending on popular social
| programs.
|
| Self-identified populists like Steve Bannon and Nigel
| Farage criticize the EU but would never call it populist,
| for obvious reasons.
| SenAnder wrote:
| > people who haven't studied economics enough to conceive of
| second- and third-order policy effects.
|
| The problem is the effects don't stop at 3rd order, where
| economic models stop, yielding the consensus that trade
| liberalization is always good. The reality is different:
|
| _her work showed that trade liberalization had slowed the
| rate of poverty reduction in rural India._ - the linked
| article
|
| _" ... none of the world 's most successful trading regions,
| including Japan, Korea, Taiwan, and now mainland China,
| reached their current status by adopting neoliberal trading
| rules."_ -
| https://en.wikipedia.org/wiki/Comparative_advantage
|
| It turns out that our evolved instincts can be better guides
| than simplified mathematical models.
| miguelazo wrote:
| 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 wrote:
| 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 wrote:
| 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
| tptacek wrote:
| 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!
| jjoonathan wrote:
| "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
| tptacek wrote:
| https://www.reddit.com/r/AskEconomics/comments/sccs74/so_wtf...
| jjoonathan wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| friend_and_foe wrote:
| In 1971 the US broke the Breton woods agreement, defaulted on
| it's debt obligations and depegged the dollar from gold
| conpletely.
| hax0ron3 wrote:
| 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 wrote:
| 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 wrote:
| > 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
|
| [1] https://en.m.wikipedia.org/wiki/ECHELON
| DerekBickerton wrote:
| > 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 wrote:
| 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&%20Stan...
| nathan_compton wrote:
| Extremely weird to call it "the old liberal orthodoxy" when its a
| system which is hardly even 60 years old.
| alephnerd wrote:
| 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 South
| Korea earlier), 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, and RR and plenty of others have been facing
| flak for it, but has been gaining traction within ASEAN, China,
| and India ime.
|
| [0] - https://www.reuters.com/world/india/india-restricts-
| import-l...
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