Populism and Economic Policy

On 28 September 2018, Lorenzo Forni of Prometeia invited me to give a short comment on the relationship between ‘populism’ and economic policy-making.  Although, I hadn’t thought about that relationship before, I came up with four things I think we might want to consider (in addition to what we might useful think of as ‘populism’ in the context of the question Lorenzo asked).  My argument was that populists bring new people into the policy-making process.  They also bring a healthy dose of unpredictability.  Their messaging on policy issues is not great, which causes problems in a world defined by rational expectations, and they tend to be skeptical toward independent agencies like central banks.  Finally, populists are disinclined to international policy coordination.  The combination is not wholly bad — sometimes change is for the good! — but the results are often below the promises that populists make to the electorate.  The text of the presentation follows.

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Historical Memory and the Crisis in Europe

The fast pace of change in European politics has everyone focusing on current events.  Behind the scenes, however, politicians are manipulating how we view the past. Since change requires some kind of baseline or benchmark for us to appreciate its magnitude, we need to be very careful about how our memories are curated. The new ‘normal’ is only normalised when we forget just how far we have travelled and when we stop remembering (or appreciating) the lessons we learned through harsh experience.

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Reforming Europe Starts at Home

Earlier this week, French President Emmanuel Macron gave a speech outlining his proposals to reform the European Union.  And there were a lot of proposals in that speech.  Surprisingly, though, not many of them focused on the euro area or on the process of European macroeconomic governance.  Macron talked about creating some kind of common budget and naming a European Minister of Finance, but he did not touch on the major issues sketched in European Commission President Jean-Claude Juncker’s State of the Union address or the letter of intent and reflection papers that the Commission has produced as well.

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The Danger of Building Walls in Europe

On 21 August, I was invited to talk about the importance of ‘walls’ in a European context at an annual socio-cultural-political event called ‘The Meeting’ in Rimini.  I sketched these notes as an aide for the interpreters who were supposed to render my unique version of the English language into fluent Italian.  My host, Paolo Magri, insisted that I speak in Italian instead.  What followed was probably more authentic as a set of off-the-cuff remarks using my one hundred and fifty mangled Italian vocabulary words, but it may not have delivered the full message.  My central argument is that we should be wary of identity-based political mobilization.  Any politician who wants to mobilize ‘us’ against ‘them’ is not your friend.  That is as true in the United States as it is in Europe.  Alas, Europe’s history with that kind of politics is a tragic one.  Let’s hope we don’t have to experience it again.

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Equity, Efficiency, and the European Social Model

The Belgian economist André Sapir used a background paper for the September 2005 informal summit of the European Union’s economic and finance ministers to make a provocative claim about the European social model: Europe’s heads of state and government do not need to choose between equity and efficiency or between a welfare state and a market economy; with the right reforms to welfare programs and market institutions, it is possible to have both equity and efficiency at the same time. The British held the rotating presidency of the Council of the European Union and were quick to take up Sapir’s challenge. The quest to achieve both equity and efficiency moved to the heart of efforts to relaunch the Lisbon Strategy and to re-energize the European project. Unfortunately, these efforts were soon overtaken by events.

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We Are Asking the Wrong Questions about Populism

The upsurge of populism in the United States and Europe has us asking the wrong questions. The issue that should concern us is not what populists have in common. The similarities between Donald Trump and Marine Le Pen or Nigel Farage are unimportant. We also should stop wondering why voters on both sides of the Atlantic are so easily beguiled by political messages that combine rejection of the ‘establishment’ with some kind of appeal to identity politics. There has never been a shortage of voices calling for the overthrow of the elite or disgruntled voters willing to follow them and any slogan that promises that a history of victimhood can be replaced wth a future of privilege is always going to be attractive. Such mobilization against ‘the system’ is a hardy perennial of democratic politics.

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A Very European (British) Election

If there was a moment when it was possible to speculate that the British election would send a clear signal about Britain’s relationship with Europe, it was short-lived.  The British people may well deliver a decisive majority to Theresa May and, in the best-case scenario for her next government, she may be able to leverage that majority to win a good deal for Britain and to lay the foundations for Britain’s new role in Europe and at the global level.  Even if that all came to pass, however, future historians would be hard-pressed to say those outcomes were a clear message from the British people.  Britain’s relationship with Europe is at best peripheral to a contest that is much more about leadership style, domestic policy, and the complex web of security that surrounds terrorist violence.  Leaving aside the peculiarities of the British electoral system, you could easily imagine this contest playing out in any one of a dozen different countries on the Continent.  Britain is not having an election about Europe; it is having a very European election.

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