[HN Gopher] The Populist Advantage ___________________________________________________________________ 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... ___________________________________________________________________ (page generated 2023-08-22 23:00 UTC)