Is Populism beatable?

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Still timely.
Still timely.

Populism has been the driving force behind both our political landscape and our economic misfortunes. This trait has marked the misguided economic policies of several administrations, with Chavismo just exacerbating the problem. Because, in essence chavismo repeats a well’worn recipe: continue to fuel the spending binge, among other insane policies, with an unprecedented oil boom backing this profligate party.

But as it happens to every crash generated by a macro-populist agenda, this party is about to end. Is it our fate to keep repeating this noxious cycle?

Regardless of whether the wicked game being played resolves itself via hyperinflation, stagflation, higher scarcity levels, a balance of payment crisis, or an explosive combination of all of the aforementioned, most economists in Venezuela are in agreement: the Titanic is sinking, even if the musicians keep playing the music until the end.

This populist-driven economic crisis requires some revisiting of the much hailed book by the late Rudi Dornbush and Sebastian Edwards,  “The Macroeconomics of populism in Latin America“. In it, Dornbusch & Edwards asserted that populist regimes tend to “help the poor” by pursuing expansionary macroeconomic policies that, at some point, become unsustainable, running massive fiscal deficits and generalized controls of prices and interest rates. This yields a catastrophic result, – after the crash comes the inevitable shock therapy required for stabilizing the economy, with its effects being more onerous to the poorest, and after things have at least settled, a newborn demagogue or rabble-rouser who embodies a reincarnation of these noxious populist policies emerges.

This appalling cycle seems to be inherent to Latin America, as Roberto Laserna, a Bolivian economist, has pointed out recently here. Unfortunately, Venezuela seems to currently spearhead this costly trait. This gruesome depiction of the future begs the question: is it possible to circumvent this pattern, or is populism beatable in Venezuela?

Populism thrives in societies where the rule of law is undermined or non-existent, with sky-high economic inequalities, a weak institutional framework, and polarization among other contributing factors. In other words, Venezuela. If we suffer from all of the above, how can our politicians, economic agents, or the citizenry as a whole redress this hassle?

We know that Chavismo’s legitimacy comes from pleasing el pueblo mejmo with populist measures in order to gain support at the ballot box, but now that the State is starting to learn the meaning of the word “budget constraint”, it will be harder for Chavismo to please its supporters or try to appease its opponents. Here, the opposition is presented with a crossroads in attacking Chavismo: appealing to the people with populism, or fighting both Chavismo and populism.

The first choice entails a simple replay of the “Iron law of the oligarchy”, in which a political elite is supplanted by another but nothing substantive changes per se. This could be fathomed by the recent uproar from the opposition coalition against the hike in the price of the world’s cheapest gasoline. Again, playing the populist card could get you votes and support, but in the end if you’re elected to office, you’ll be facing the same constraints from an economic standpoint and hence repeating and/or worsening this cycle that we’re supposedly trying to overcome.

The latter option is fighting Chavismo by fighting populism. This is where real leadership is needed from all sectors of society, but specially from politicians.

Following this course of action means that people holding position of leadership should lead the way in making the perils of populism crystal clear to the citizenry, linking them to the dire consequences that follow, and that they are living. There are three ways for attaining this:

  1. First, what not to do. Populism isn’t tackled with more populism: if you’re a mayor or a governor of a state, it is impossible to compete against PDVSA or the National Budget. So throwing cash at people, promising the impossible, and portraying yourself as a demigod is not feasible. At best you’ll only promote rent-seeking behaviour or throw pork barrels.
  2. Create citizenship. If you’re in a position of power, contribute to enforcing and strengthen the rule of law. Engender the notion that every member of society has to be held accountable for their actions, including yourself. Begin at home. Show some integrity.
  3.  Be credible. Only promise those things that you know you’ll be able to deliver (like doing your job to the best of your abilities). Don’t presume that all of the problems are going to be solved during your tenure in office. Establish believable goals, and prioritize the areas in which you can make a lasting impact. More importantly, reject and deride politicians that promise the Earth and the moon, even if they come from your own side. Give populism a bad name.

There are of course many ways of implementing these simple precepts, and the fight against this dreadful behemoth is for the long haul.

But if the opposition really wants to vanquish chavismo and change the country for good, it needs to define what they really stand for, and not yield to the tempting sirens of the populist approach. A smart approach to the debate on the price of gasoline … may be a good place to start.

24 COMMENTS

  1. Should Populism Be Beatable?

    Why are politicians/governments elected?

    To represent the people. To attempt to satisfy the desires of the people!

    Punishment for not meeting the desires of the people, not be voted in next time!

    You are confusing private, minority interests with public, majority interests!!!!!’

    • Kids want candy. It’s their natural desire. Some parents give children what they want and raise spoiled, overweight and unhealthy individuals. Kids don’t want a healthy and balanced diet of fruits and vegetables, protein, fats and carbohydrates. They don’t even know what a healthy balanced diet is. They want candy. Parents have the obligation to provide their children with a healthy diet, not because their children want it but because they need it.
      Who decides what people need? Democratic institutions do. Why do democratic institutions exist? To represent the majority of people in the decision making process. Why do you need representatives and not listen to “all the people”? Because this is practically impossible to do, and democratic institutions over the last century or so have been evolving in a handful of countries around the world to improve the way they represent the interests and needs of their people. The voice of “all the people” is supposed to be heard during election times, but autocratic regimes manipulate elections in their favor. What else do autocratic populist regimes do? Give people what they want, based on their understanding of what their supporters want and irrespectively of whether this is good or bad for the majority of people in the long run. Obviously not all people can see their desires satisfied, because this would be impossible to do, but it’s possible to satisfy the desires of a large enough group of people that will return the favor voting for autocratic rulers, especially when combined with a good dose of intimidation, propaganda and coercion. Add to this the aforementioned election rigging and you will get the complete picture.

      • Not all people can see their desires satisfied, but, for the Chavista nomenclature, it is enough to make them think they can. Out of, say, 350 families, maybe one can get their solución habitacional regalada, their casa bien equipada, etc, but all of them think they can, if they behave. Chavistas spend tremendous amounts of advertising and propaganda money to make people think they have a chance. They have to, because that trick is precisely the only thing they have excelled at in fifteen years: making fairy tales look real to the wretched masses.

  2. But as it happens to every crash generated by a macro-populist agenda, this party is about to end. Is it our fate to keep repeating this noxious cycle?

    I don’t know… If there are still believers of government driven economy, and these believers happens to be in the majority then yes, we are bound to repeat the same mistakes forever.

  3. That’s the question of the 64 mil lochas. That’s something inherent in latin american societies. I think it’s a matter of our social contruct. As you mention economic disparities are part of the problem, and that comes from colonial societies; which o think can explain some of the conflict. Don’t want to play the race card but even in Venezuela it’s something that’s had some influence. The heterogeneous society has some bearing in the distrust of power structures, if compared to let’s say norway, we have had a too structured society that as mentioned on previous post didn’t have conflict because habia pa todos.

  4. Venezuelan political life is not peopled by conscious responsible citizens , but by power mad leaders and slogan ridden/cliche crazed electoral herds .!! Populism is an inerradicable part of our political landscape . Populism is one with Lantam democracy , all that can be done about it is to control its excesses and allow a bit of margin for responsible government to be exercised from time to time .

    Chavez represented a methastatized specially virulent form of populism , but all prior governments have been deeply subservient to the populist model of governance , The govt is the generous patron of a child – like people who want free candy and exciting shows. The thing is to do the country good by getting yourself reelected and to do that you need to give or promise people what they like best , even if thas done at the expense of forward looking responsible governance.

    There are of course some isolated pockets of citizens , they are always a minority and mostly assumme their citizenship status on a part time basis , preferring to dedicate themslves to the pursuit of their private agendas and ambitions . From an electoral point of view they never represent a substantial portion of the voting body. I’m told some of them even read books and reflect on public issues , but their favourite passtime is to talk, endlessly talk about what good governance would be like and about how disspointed they are with practical pols and their entourage of followers .

    Atempting to teach ordinary people about the virtues of responsible governance is like talking to a gorilla about horticulture ,a very very difficult task . Still, hope burns eternal in the heart of the pure !!

  5. Thatcherism as an antidote to populism leads eventually to more populism.

    The trick is to offer something to the poor even within a fiscally-responsible budget.

    Otherwise, they will never be reconciled to a system which keeps them poor. If that’s what fiscal responsibility promises, then radical alternatives will retain strong appeal.

  6. “Again, playing the populist card could get you votes and support, but in the end if you’re elected to office, you’ll be facing the same constraints from an economic standpoint and hence repeating and/or worsening this cycle that we’re supposedly trying to overcome.”

    I’m afraid the #1 priority is not to overcome anything, the #1 priority is to maintain self or get self into power. The rest is not relevant.

  7. Very well-written post!! Venezuela’s terrible conundrum, more so than many states, having been blessed with the Devil’s Excrement. Do not see any easy way out. Needed is a messianic leader who can lead the lemmings away from the cliff, not toward it. Also, many many years of high-quality education at all levels. The colonial-era dependency is part of the Pueblo’s psyche. The outlook is not promising.

  8. Compare and contrast that list with the precepts underlying ‘La Salida’… Discuss

    By the way, a bit pedantic I know, but ‘budget constraint’ is two words 😉

  9. Human nature is a given, so i think Populism is a consequence of the voting system (Perhaps of democracy per se).
    I believe the best way to tackle that problem is to find a way to measure “governance performance”.
    And choosing a president could be a mixture of voting and previous “governance performance” (so been Major and/or Governor should be a requirement for presidency), and the ratio of that mixture depends on the “precision” of the performance measurement.

    I still don’t know how to measure that, so maybe this whole idea is unrealistic.

    • Madcol : There are a lot of ideas being put in practice along the lines of what you suggest , for example in Colombia candidates to certain local offices are pressed to register a plan detailing what they promise to achieve in terms which can be measured and verified , an independent board ( funded by REAL civil society organs) then chalks up the failures and sucesses and posts them in internet for everyone to see .

    • In new Zealand public officials may be asked to sign an agreement detailing what they undertake to achieve and if by the end of a certain period they havent achieved it they can be thrown out . In ancient Rome only people who had served as public official for at least 10 yeas could offer themselves as candidates for some high offices , In todays China becoming a high official requires that you follow a succesful career path spanning years where you must achieve certain specific economic goals if you are to be considered for promotion to a bigger job (oh sorry just remembered that China is not a democracy) .

  10. Populism CAN be defeated, because the actual alternative, which is raising the standard of living of all people on the country, is better.

    THE big issues on the country now are crime rates, scarcity and the state of public services. Any politician that offers a credible and solid plan to deal with them, whatever is at local, regional, and national level, will be able to actually lead the citizens of this country. Those three issues are more powerful than all of the free stuff on the world. And the whole “poor people don’t give a shit about any of those issues” attitude, besides being actually condescending, is simply disconnected from the reality of the country.

    And there’s the rub with many oppo politicians, they say “stuff is wrong” [Insert random statement of the obvious by Capriles], but they seem lack on any strategies on how to fix it. Or, at least, there’s a lack of effort (and funds) to promote solutions. VP at least seems to have an actual plan.

    This is a big reason why people won’t bother with the Parlamentary election, no matter what Capriles and Co. say: The oppo deputies weren’t able to stop dumb shit like the Renting Law or the Labor Law or the secrecy surrounding the death of the big bastard, and the former two had a negative effect on the living standard of the citizens of the country, so there’s no reason to believe that they will be more effective now.

    • And even if deputies weren’t so useless thanks to the zero separation of powers on this country, well, why people should vote for candidates unwilling to defend the results?

  11. reading this article one thinks that this view should be easy to understand, but when you read those 3 very simple points and realise how far both sides are from achieving even those 3 stupid basic principles I get really depressed.

  12. I beg to differ, based mostly on a particular distinction. Populist proposals are not by definition bad proposals. I agree that they tend to be, but, for example, if a good policy were to become popular, then proposing it to win an election would be both good and populist.

    In that light, one can fight bad populism with good populism. Based on Venezuela’s current situation, I strongly hold that a good populist proposal is the best way way to beat chavismo without violence or further worsening of the economy in hopes that the disapproval rating will make its supporters vote for someone that promises to be even worse for them. This latter bet makes no sense, at all.

    • a “better” populist offer meaning?

      The one that makes the evaluation of value is the one receiving an offer, and consequently it is evaluated with the values (Utility function) of the receiver. Not the offerer’s. Not the policy maker’s.

      IMO, a “better” populist proposal means “more money, less effort”,

      This offer is not sustainable, perhaps it is not possible to finance even in the short term, given the reality of the public treasury.

      I agree however, that the Realpolitik game is to first gain power, then ….[fill in ]

      People will move away form the populist model only if they understand how it got them to the hardships they are enduring, and after the level of pain is sufficient to modify the behaviour. Also a better future needs to be re-imagined and sold to the people.

      I see there is not enough band width engaged in the two key communications above:

      1- Como el papa estado socialista y su populismo nos salio caro y nos quebro el pais.
      2 Como el desarrollo personal, la libertad economica y la competitividad nos van a rescatar

      • LuisF, no. By a “better” populist offer I mean one that the *offerer* thinks *is* sustainable, yet popular with the *receivers*. I as an offerer believe that a Bonus Unconditional Daily Income would be sustainable (i.e., good for the economy) if done in tandem with a free and competitive market policies, yet it would be very popular, especially with the poorest. This would meet the criteria for a populist offer that is not “bad”.

        What you propose to communicate requires
        A) changing people’s way of thinking,
        B) having the government not communicate the exact opposite, tenfold.

        Your proposal requires changing people. My proposal works without changing people, and the government cannot counter it.

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