What’s wrong with populist policies?

Last year Jeremy Corbyn overwhelmingly won the Labour Party’s leadership contest here in the UK, on what is widely regarded as a “populist” platform – a range of policies that are popular amongst those on the left of the political spectrum. These include the renationalisation of utilities and other industries like the railways, and a more pacifistic approach to national defence. Corbyn also had the advantage of not being the “establishment” candidate, the one tainted with previous government, and the one perceived to be a “typical politician”.

This year the next President of the United States of America will be determined in a November election, and as current incumbent Barack Obama has served his two terms, both Democrats and Republicans are currently determining who will be their nominated candidate for the November election.

Last night, both of the non-establishment candidates won handsome victories in New Hampshire, one of the many contests around the US that contribute towards determine who is nominated by each party. For the Democrats, Bernie Sanders won apparently by a 20 percentage point margin – a huge win. For the Republicans, the controversial Donald Trump won, again by a large margin.

What does this mean? The common thinking is that as both candidates are more populist, and appealing to non-standard political audiences (Sanders, aged 74, is massively popular amongst younger voters, something that happened for Corbyn here), that the likelihood is of more populist policies in the future.

What are populist policies? Very simply, they are ideas that are popular amongst a substantial proportion of the population. As such, can this really be a bad thing? Populist policies are often disparaged by mainstream, or “establishment” politicians, because although they may be popular, they are probably quite unrealistic in their nature. Those “tainted” by government likely know the kinds of compromises that need to be made in order for policies to be practical and workable, and the kinds of interest groups and power factions that impact eventual policy outcomes in the political decision-making.

Perhaps as a result such “establishment” politicians tend towards promoting what they view as more work-able policies, which are less popular due to appearing watered down. This maybe explains why many people felt at the last General Election here in the UK that there wasn’t very much between the two major parties.

Hence if populism simply means some candidates proposing popular policies, with others arguing against them, this can hardly, in itself, be a bad thing? Debate about policies is surely important, as is a wider engagement in the political process, since the outcomes of elections do matter so much to many of us. Jeremy Corbyn has ploughed a lonely furrow in recent months arguing in favour of refugees displaced around the Middle East and Europe, even visiting the camps in Calais and Dunkirk – and being mocked in the press and by other politicians, including the Prime Minister, for doing so.

There is an additional element, however. Even if Trump and Sanders become the party candidates in November, only one will win, and even if they win, there is the likelihood they could not enact all the populist policies they wish because of the role Congress plays in decisionmaking in the US – current president Obama has repeatedly be blocked in attempts to take action by a Congress dominated by Republicans. The Labour Party in the UK is widely expected to perform miserably at the next General Election, meaning that for all the time spent developing interesting policy debate, there may really be little actual impact on policies, which will be conceived by and put into place by Labour’s opponents, the Conservative Party.

The big question, as it is often put, is whether politicians should follow their “principles” given that those principles risk making them “unelectable”. If unelectable, then the policies in question will never be put into practice, it is argued, and hence to a large extent any ensuing debate is pointless.

Regardless, these are interesting times when it comes to political events, and given that so much of politics is policies, and so many policies are economic in nature, there’s never been a better time to be studying economics!

Private Sector Space Exploration?!

Last night a space rocket landed back on earth upright. That in itself is hugely impressive (although apparently it isn’t the first rocket to do that), but what’s perhaps most interesting is that this was done by a private sector company, SpaceX. Our instinct when it comes to space exploration is to think about public sector bodies like NASA, or the European Space Agency, yet this is a private company founded by Elon Musk, described on his Wikipedia page as “South African-born Canadian-American business magnate, engineer, inventor and investor”. Musk is also the man behind PayPal, and Tesla, the electronic car manufacturer.

Is there any reason why space exploration needs to be public sector? This is one of the challenging questions as economists we should ask. Why do we think the private sector could not deliver in this area? Why do we also instinctively think that trains should be publicly owned? Why a National Health Service but not a National Food Service? Surely the food we eat is just as important to our health as any actions the NHS takes (maybe after we’ve eaten some bad food)?

We won’t touch on such issues in Intro Macro (EC114) next term, but you’ll have covered many of the building blocks for such an analysis in Intro Micro (EC113) this term – an analysis of markets and market failure. Under what conditions do we expect markets to succeed, and in what ones do we expect markets to fail? Some of the answers relate to information (do buyers and sellers have equal information?), some to power (do buyers or sellers have greater power?), and others still to the cost of mistaken choice (how costly is it?). You’ll get plenty of opportunities to think more deeply about what the state should and shouldn’t do as you go through your three years with us. Challenge yourself on why you think things should be done particular ways whilst you’re with us…