Populism and economic prosperity
58 comments
·October 20, 2025Frieren
> The information and knowledge that populism severely damages the economy is there and is in the public domain, but the media increasingly acts to hide that from the public or distort that information so that much of the public never gets to understand it.
Billionaires, that own newspapers and TV stations, are not trying to maximize the size of the economy of their countries. They are maximizing the percentage of that economy that they own, even at the cost of its size.
For people at the top of economic power that set as their personal goal to accumulate as much money/power as possible will tweak the system to that goal. All the economic machine of the country gets fine tuned to move money from the general economy to their own pockets.
It would make sense to set some limit to that transfer of wealth so the economy does not suffer the worst outcomes. But once all institutions are focused on wealth transfer, to grow the economy is no more in their goals.
You may have better health care, better technology, and many advantages than a King from the middle ages. But many billionaires want the absolute power of the King even if we go back to the middle ages.
exceptione
Indeed. The article did mention that in a succinct way, but you do a good job of laying the machinery more bare.
This dynamic is hard to break, because this concept is so foreign to 'regular' people, they can't spot it, even if it is in front of their own eyes. Their have an ingrained concept of cooperative and constructive behavior in a social context, they derive their sense of dignity in part from it, they learn it is their path to success.
nabla9
It seems that you make a populist argument.
Populism: the idea of the "common people" in opposition to a perceived elite. Frequently associated with anti-establishment and anti-political sentiment.
CGMthrowaway
Yes. The funny thing to me is that Plato, who did much early and deep thinking in this area captured in his Republic, contrasted the democratically elected populist demagogue with the Philosopher-King.
vkou
Okay. What's the counter-argument to it? A restoration of the divine right of king and lord? Sit down and shut up, the oligarchs know best?
Should we take the fallacy of the middle, split the difference, and just behead half the nobility?
Or should perhaps instead engage with the idea, as presented?
> Populism: the idea of the "common people" in opposition to a perceived elite.
The elite certainly act like they believe it to be true. Does that make them populists, or..?
nabla9
> What's the counter-argument to it?
Don't bring elites into every discussion. Inequality causes problems, it's not directly relevant to every thing, like this discussion. Populism is the insanity of the masses.
loxodrome
This article is a classic example of bogus and misleading statistical analysis published by a leftist academic.
IT4MD
As opposed to the rigid facts, based entirely in reality that the Right-wing posts?
rofl..
kridsdale3
Don't read either.
stackskipton
Author danced around it but does Populism lead to reduced economic growth OR is Populism the result of economic issues that causes reduced economic growth?
the_pwner224
He explicitly mentions it in the 3rd paragraph
> There are obviously countless issues in any analysis of this type, like ... how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable.
margalabargala
From the article:
> There are obviously countless issues in any analysis of this type, like how a populist government is defined, how you do the counterfactual, how you ensure you are not getting reverse causality (i.e. bad economic times encourage the election of populists etc) and so on. For those interested in those issues the paper is very readable.
Did you read the paper in question?
stackskipton
Yes, but this is a major problem I have with Economists, they are more historians but speak like they are scientists.
>"Mainstream political parties normally claim that populist parties, if they ever got to power, would damage the economy. We have clear evidence that they are right, and right in a big way. A paper in the American Economic Review (one of the top economics journals) published nearly two years ago, looked at the macroeconomic consequences of populist regimes coming to power. The results can be summed up in the chart below (from this working paper version)"
Rest of blog goes on talking about the paper mostly accepting the premise when first paragraphs admit entire premise might be wrong.
juancn
Right or left wing populism have the same effect. Populism is bad. Period.
The problem lies in that populist governments essentially make irrational decisions just to stay in power (appease the public), which makes most forms of government populist in one form or another and democracy in particular extremely susceptible to it.
This usually manifests as short-term actions with negative long term effects (i.e. taking too much debt, rather than being fiscally sound).
I always wondered if a random-cracy wouldn't be better in the end, just pick anyone that cares to have a position by lottery and have a limited term and basic checks and balances.
At least it statistically makes a mediocre government more likely, not just as an upper bound.
PaulHoule
There are asymmetries. Right wing populists have an easy time getting elected and left-wing populists don’t, at least not in the core.
Studies now show that an overwhelming majority Americans don’t believe the economic system is fair
https://www.ipsos.com/en-us/most-americans-think-economy-rig...
some of the problem the Democrats have is that they’re supposed to be a left wing party that is responsive to those kind of concerns but they’ve gotten trapped in a “protect institutions no matter what the cost” mentality which has the cost of losing.
For instance people really want to believe that the recent spike in house prices has been caused by private equity or a monopoly of home builders or some other “other”. I don’t know what the truth is but when so many people feel this way politicians have to do something about it and I can tell you one of the things I learned about activism early on is that if you tell people that they’re feeling the wrong way they will react even more violently against you than if you tell them they are thinking the wrong way.
CGMthrowaway
>Right wing populists have an easy time getting elected and left-wing populists don’t, at least not in the core.
Really, did you mean in the USA?
- Hugo Chavez, 1999 until his death
- Lula, 2003-2011 and again in 2023 after spending 2 years of a 12 year sentence in jail (!)
- Ortega, 1985-1990 and 2007-present
- Kirchner, 2007-present
throwaway48476
Consider a hybrid approach where the winner is randomly selected from the top 10 vote winners.
toomuchtodo
"Politics is not a job, it is the privilege of service."
Anduia
It is called sortition.
HDThoreaun
> I always wondered if a random-cracy wouldn't be better in the end, just pick anyone that cares to have a position by lottery and have a limited term and basic checks and balances.
This seems like a pretty decent idea to me. Instead of making it the main legislative body though Id have it like the house of lords. Expected to pass laws passed by the democratic body but with the ability to say no if things get crazy. No duty to engage with politics, they just get paid to focus on whether the laws actually make sense.
zb3
If I knew I'd die in <10 years then I'd vote for the "short term" solution and believe or not - this would NOT be irrational on my end.
People might have different interests and they vote for themselves.
izacus
Can you define "rational" here?
Most rational people where I live also consider the wellbeing of others and will make decisions (and even vote) to make sure others live well besides them.
Is you defition of rationality basically "maximum selfishness and extraction of benefits from others"?
zb3
I also consider the wellbeing of others (hence I don't harm them but more importantly - I didn't bring them to life), but I see rational voting as voting for myself - since others can also vote for themselves.
mk89
Well, if you have kids you care about, you might rethink that. That's what a lot of people do, or they believe they do.
Would that be irrational then? Or just selfish? Or both, or neither?
BlarfMcFlarf
39% of US adults think they live in the end times, and 10% think Jesus will definitely show up in their lifetime. Given those priors, planning ahead probably seems like the less rational choice for them.
zb3
I care about them hence I didn't make them. "Having kids" is the most selfish thing in my view.
throwaway48476
Boomers seem to hate their children. I dont think it's a strong effect on future planning.
throwaway48476
Individual rational self interest is for the country to optimize for GDP per capita. It's in the interest of corporations and their lobbyists to optimize only for top line GDP. The former would probably be called populism.
PaulHoule
You can’t rule out that worsening conditions might lead to right-wing populists being elected, which shows up in the GDP afterwards. For instance it’s often said that center-left and center-right parties in Europe have had a “austerity uber alles” policy for years and right-wing populists have been the only electorally effective [1] response.
[1] if not effective in policy
zb3
But maybe GDP doesn't equal "prosperity"?
rlander
True, but GDP is often a decent proxy for material living standards, especially across countries and over time (so long as we note what it leaves out).
CGMthrowaway
I suspect by "note what it leaves out" you are referring to, e.g. unpaid work like caregiving and household labor, as well as inequality and environmental costs.
I would point out that GDP also has shortcomings in that it does not measure well-being directly (happiness, mental health, life satisfaction) nor does it account for non-economic quality of life factors like political stability, personal freedom, safety or social cohesion.
izacus
Often yes, but I think we're seeing for years now that in US at least, the GDP numbers for a few years don't really match the living standard as felt by the population. That makes it a less than useful metric for purposes of measuring prosperity.
piva00
It's a simple metric to calculate, it's also gamed a lot exactly because of this assumption.
It's extremely faulty to measure general living standards, a country with expensive healthcare will generate higher GDP while having a sicker population, the same repeats for any essential service to quality of life which is fraught with middlemen, each step in the chain increases GDP. Also for shoddy construction, repairs and renovations will increase GDP.
Using GDP as a proxy for living standards is very poor.
colonCapitalDee
People keep coming up with alternate measures and then finding that they correlate pretty well with GDP
throwaway48476
GDP per capita is far more correlated with prosperity. In western countries GDP per capita is being intentionally driven off a cliff.
grafmax
Right wing populism is a failure so all populism is a failure? But they advocate opposite economic policies.
Even the example of Venezuela blames populism and omits the role of sanctions.
paulsutter
Whats the difference between populism and democracy? Seems like the definition is "when people dont vote the way I like". For example I worry about socialist populism, which is subjective at best or (more practically) just judgemental - democracy means will of the people.
On the other hand, when I look at the recent history of the "elites" in the US, they seem (at a minimum) poorly selected or (more practically) flatly idiotic.
So maybe elitism and populism are just two bad choices?
smileysteve
An interpretation is classic grade school class President runs on "no homework" or "free lunch", things people will vote for because they sound good for them now, not because they have merit.
Lower income taxes sounds great today, but greater wealth inequality and no social safety net making wealth meaningless (population level poverty and poor social mobility make life for even the wealthy worse)
exceptione
> "no homework" or "free lunch", things people will vote for because they sound good for them now, not because they have merit.
The working class doesn't think that way, on the contrary! They have to live careful as small missteps have long term consequences. There are plenty of cases where people will happily vote for austere measures, and they rather think the government should spend less.
For the ultra wealthy, everything is free lunch for them, even if that would mean you will be 10% poorer.
If the 0.01% get 10% richer, and the rest 10% poorer, than that is still a win for them. Hence why right wing populists are a great business case to invest in.
paulsutter
Right, people can make bad choices, but still how is that different from democracy?
Maybe you're saying it means democracy-when-it-doesnt-select-"elites"?
owisd
- people made bad choices despite a good faith, deliberative, representative process to make good choices - democracy
- people made bad choices through deception or carelessness - populism.
null
CGMthrowaway
A surprisingly decent discussion of populism and backsliding democracy here: https://en.wikipedia.org/wiki/Democratic_backsliding
exceptione
> Seems like the definition is "when people dont vote the way I like".
You should give the message another try, sincerely. It might come across like that if the environment has become a polarized world, where it is not about policy, but about the tribe one identifies with. I guess you are sick of that, and I am sure the author doesn't mean anything like that.
What he talks are real world consequences if politics doesn't concern itself with policy for the people, but rather focuses on the bare quest for maximum of power, often helped by the 0.01%, by deliberately misleading people, usually to advance the interests of those 0.01%, and so getting the populus to vote against their own interests. That phenomenon is known and measurable, as the article demonstrates.
mulmen
> Whats the difference between populism and democracy?
Populism is a type of political messaging. Democracy is a system of government. They’re orthogonal concepts.
maxboone
That's not the definition, the definition of populism w.r.t. this paper is well defined. It is literally on page 2:
> We benefited greatly from the fact that the academic literature of recent years has converged on a consensus definition of populism that is easily applicable across space and time and for right-wing and left-wing populists alike. According to today’s workhorse definition, populism is defined as a political style centered on the supposed struggle of “people vs. the establishment” (Mudde 2004). Populists place the narrative of “people vs. elites” at the center of their political agenda and then claim to be the sole representative of “the people.” This definition has become increasingly dominant, and is now also widely used by economists (see Section 2, and the recent survey paper by Guriev and Papaioannou, 2020). Populist leaders claim to represent the “true, common people” against the dishonest “elites,” thus separating society into two seemingly homogeneous and antagonistic groups.
paulsutter
As definitions go, thats well constructed and easy to reason about.
But that isn't how the word is used by the media. Mamdani and Trump are both described as populists, but resistance to elites is hardly in their platform. Trump would never describe the democrats as "elite", and AFAIK resisting elites isn't Mamdani's platform either.
PaulHoule
Sure as hell the Trump administration is at war with the “elite” Ivy League.
javascriptfan69
Drain the swamp. The deep state. Etc. These are pseudonyms for "The elite".
exceptione
"Deep State, Pelosi is a crook" etc
Come on man.
zb3
Populism is when people get what they vote for, as opposed to "democracy" where parties don't actually implement what they promise. "Democracy" is when the government thinks people are idiots and shouldn't be listened to because the "elite" knows better.
So if you vote based on your happiness and thigs you care about as opposed to voting to optimize the "GDP", then you're a populist voter.
And if you get what you want (instead of increased GDP at all costs) then the government is populist.
And if then you're happy, then you're a fascist.
javascriptfan69
Good faith argument. Well done.
midtake
Calling political newcomers populist is stupid. "Ah this challenger didn't come with the blessing of the DNC and other corporate sponsors, it must be a populist!"
This article is talking about protectionism not populism. It is continuing the trend of forgetting that protectionism was a core Democratic trait until they abandoned the working class and decided to become super cool technocrats.
And now that Trump, of all people, is championing protectionism, the left side is digging its heels in and cursing one of its former values.
I can’t shake the feeling that we are living through a period of growing geopolitical tension. It reminds me of Downton Abbey during the season when everyone senses the approach of World War I. The signs are there, the atmosphere is heavy with anticipation, and yet there is a sense of helplessness. Everyone can see what is coming, but no one seems able to stop it.
We are also going through an economic realignment as major powers prepare, in different ways, for the possibility of conflict. That shift is causing slowdowns, disruptions, and a chain of related effects that are creating significant economic costs around the world.
In the long run, the most important goal is to prevent war. I believe our leaders are focused on deterrence, reducing dependencies, and building contingencies to make a large-scale conflict less likely and long term economic sanctions more likely.
Ever since Russia invaded Ukraine, I have felt this unease deep down. It also helps explain why political parties that would normally prioritize growth are now making decisions that seem to go against that goal.