Economists and politicians are defining a vague label in the confusing age of Donald Trump, Bernie Sanders, Marine Le Pen, and Nicolas Maduro.
By Peter Coy, Jan 9, 2018
“Populist” is a funny word. It sounds like a compliment—someone who respects the will of the people!—but it’s used as a put-down. The label has been applied to characters as different as President Donald Trump, the late leftist Venezuelan President Hugo Chávez, the French far-right leader Marine Le Pen, and Bernie Sanders, the liberal U.S. senator from Vermont.
So are you a populist? And if you are one, is that a good thing or a bad thing?
On Saturday, Jan. 6, in Philadelphia, scholars wrestled with how to define populism in a session of the American Economic Association’s annual meeting called Economic Effects of Populism. The panel featured some heavyweights, including Dani Rodrik of Harvard University and Raghuram Rajan of the University of Chicago. But the most interesting presentation was by someone who isn’t even an economist: Cristobal Rovira Kaltwasser, a political scientist at Diego Portales University in Chile.
A populist, Kaltwasser says, is someone who believes that society is split between the pure people and the corrupt elite. The moral judgment is a key part of his definition. Lots of people can agree that society contains both masses and elites, but populists explicitly associate the masses with purity and elites with corruption.
What follows from populists’ belief is that politics should express “the will of the people.” The job of the leader is to channel and express the people’s will. But that can be a slippery slope toward autocracy. In the extreme, anything that blocks the will of the people is seen as a useless or harmful impediment—even courts and legislatures. Last year, Venezuela’s high court dissolved the opposition-led legislature and seized its powers. (To be sure, most populists are not autocrats.)
Populism has two opposites. The one everyone thinks of is elitism, which doesn’t have a lot of (open) support. The other, Kaltwasser says, is pluralism. Pluralists believe in democracy but reject the populists’ idea that there is a single “will of the people.” Pluralists see lots of overlapping interest groups competing for influence and reject anyone claiming to speak for the undifferentiated masses. “I am your voice,” Trump told the “forgotten” American people on accepting the Republican presidential nomination in 2016.
Populism is a low-calorie, “thin-centered” ideology, so it needs to be allied with another ideology to have any strength, Kaltwasser says. Populism that’s allied with socialism identifies the pure people as the poor, while populism that’s allied with the right identifies the pure people as the native-born. Leftist populism is thus more economic, while rightist socialism is more ethnic.
Populists often rise up in times of economic dislocation, but a bad economy isn’t a prerequisite, Kaltwasser says, pointing to the anti-immigrant Swiss People’s Party, which is the biggest vote-getter in Switzerland, even though Swiss unemployment hasn’t gone above 3.3 percent since 2010. Populists also don’t have to win elections to have influence, he says, pointing this time to the United Kingdom Independence Party, which was instrumental in pushing Britain to leave the European Union—yet has precisely zero seats currently in the House of Commons.
Rodrik, who spoke after Kaltwasser at the session, has his own taxonomy of politicians, based on the kinds of restraints on power that they reject. Some reject political restraints, including courts, legislatures, and the free press. Others reject economic restraints such as powerful central banks and global trade rules that limit national sovereignty.
Bernie Sanders is a populist democrat who rejects economic restraints but is comfortable with political restraints, Rodrik says. Augusto Pinochet, the late Chilean dictator, is just the opposite—an authoritarian technocrat who was fine with economic restraints but rejected political ones. Turkish President Recip Tayyip Erdogan rejects both kinds of restraints, while the European Union rejects neither kind, Rodrik says. He said he wouldn’t try to put Trump on his grid.
Political populism is uniformly bad, but economic populism can be beneficial in certain cases, Rodrik says. Elites can “capture” the technocrats who write the rules for banking or international trade, twisting the terms in their favor. In some cases, a populist approach to banking or trade could actually serve society better, Rodrik says—while forestalling political populism, which is more damaging.
Populism’s erosion of trust in authorities creates a vicious circle, said Sergei Guriev, a panelist who is chief economist of the European Bank for Construction and Development. Governments require trust to enact and implement reforms; without the reforms, the economy performs poorly, so trust is lacking.
Raghuram Rajan, the former governor of the Reserve Bank of India and former chief economist of the International Monetary Fund, wrapped up the session by trying to explain populism’s current rise, so long after the global financial crisis that seemingly triggered it. One explanation, he says, is that what happened after the crisis deepened people’s anger toward elites: Bankers did not go to jail, and the putative economic experts weren’t able to ignite a strong recovery.
In the U.S., Obamacare may have been a third factor, says Rajan, a professor at the University of Chicago’s Booth School of Business. He cites an example from Arlie Russell Hochschild’s new book, Strangers in Their Own Land: Anger and Mourning on the American Right: White men perceived that Obamacare, by subsidizing health insurance, was allowing people to “cut in line” ahead of them. A fourth factor, he says, was social media, which have allowed “unfiltered airing of grievances.”
The unstated takeaway of the session is that it’s not much fun being part of the forgotten masses, but it can be quite enjoyable to be the person who speaks for them.