Principled Populism
TO READ David Brooks on populism is to learn less about populism than about the milieu of New York Times columnists named David Brooks. Which, while not particularly informative, remains entertaining in its own right.
“When I worked at National Review and on the Wall Street Journal editorial page, some of my New York neighbors would give me the Hitler salute when I got on the elevator. It used to make me want to join the John Birch Society just to spite them.”
David Brooks: Can We Please Stop Calling These People Populists?
*I know that this is played for sympathy, but it’s honestly pretty funny.
Questioning the authenticity of populism has rarely yielded any analytical or practical impact. The whole exercise mirrors the intense game of credentialism within elite circles, and accusations of hypocrisy fail to resonate when the accusers seem blissfully oblivious to their own. When liberal institutional parties fail to defend democratic and institutional norms they rely on to govern, they don’t start identifying as illiberal anti-establishment parties.
Populism and institutionalism are better understood as types of appeals, in the same way Aristotle identified logos, pathos, ethos as three strategies for persuasion. It is more powerful when the form matches the content, when populist rhetoric matches populist policies, but they do not have to align. Politics, after all, is rarely consistent because people are not.
This definition is also more useful from a practitioner’s perspective. Populism is a type of energy that can come in flavors of left, right, neither, both. To analyze the level of populism within a political movement or coalition is to comment on the nature of the political fuel that the populist consumes in pursuit of their political objectives, to sustain it and grow it.
What is this appeal then?
In every era and iteration, populism is the negative belief that the people are treated unfairly by a system that is rigged against them and the positive belief that a collective movement can fundamentally restructure that system so the rigging goes away.
It is not only that the system is unresponsive, but that it is functionally incapable of responding.
Different populist movements have different definitions of the people, often by class, race, ethnicity, or nationality.
They also identify different sources of rigging. It can be malicious elites, faceless forces such as free trade and automation, or immigrants. The only commonality is that these are structural factors that will not go away naturally on their own.
Populists are often partisan, but the most interesting examples are skeptical of buying too much into existing political fault lines. Partisans are often locked in gaining more ground within the confines of a game, bending rather than upending the system of rules that enables the game in the first place. The game tends to swallow movements rather than the other way around.
So yes, Trump and Vance are no Gracchi. Nevertheless, to deny them their populist credentials is to out oneself as an elitist. Why should populists care about what non-populists think what populism should be? Why should the people believe that David Brooks knows who the people actually are, and what they actually want?
IF POPULISM as a term is morally neutral, what does a successful principled populist movement look like today? I’d like to start with an emerging voice, Gary Stevenson, known for his YouTube Channel Gary’s Economics, which blends a working-class cachet with fairly conventional elite credentials of an economics degree, which he wields to attack the very economics he was taught, and the wealth of a former Citibank trading career.
His message, delivered in a measured repetition, is quite simple.
Living standards are decreasing because…
the rise of wealth inequality means the rich can use paper wealth to win the allocation of more real resources…
which can only be reversed by taxing the rich heavily…
which we will achieve with advocacy in a long generational fight like our post-war forebears were able to fight for themselves.
This core message is amplified by drawing the battle lines of what the two sides are and are not:
The normal people Gary stands for are fundamentally separate from the elites that stand to gain from wealth inequality. They are doing better while you are doing worse. They think differently than you, and speak differently than you. They have no qualms about lying, not as a moral issue, because words are entirely instrumental to them, a language game in the purest sense.
People stand to gain more when they unite across the political spectrum, in opposition to political, cultural, and media forces that split them apart.
The problem is decidedly not immigrants, whom anti-immigrant populists rely on, once in power, to sustain wealth inequality.
It is no surprise that the financial meritocracy (and to a lesser degree, including medium-small enterprise entrepreneurs) is a hotbed for populism. Reading financial history and actually trading assets are deeply corrosive to orthodox economic belief. And in a heavily financialized world, even a basic understanding of investment lends an aura of authority. The poorly-named democratization of finance has greatly expanded attention to the importance of fiscal and monetary policy, without necessarily educating the masses on the basics of its mechanism. The average person has about as hazy an understanding of the workings of quantitative easing as they do of electricity, both extremely vital things plagued by plenty of misconceptions.
Gary has a bit of the vibe of a small-time criminal or stockpicker influencer. After all, his pitch is essentially the same. Follow me for my smarts, and we can get rich together. It is a gamble, but a collective one where we will definitely win if we stay strong together.
Appropriate, when the covid and post-covid world has been a Gilded Age of gambling.
As commentators noted at the time, the bubbles in cannabis and meme stocks were expressions of desperation rather than hope. As one who participated enthusiastically, they were also quite fun. I quipped at a leftist who joined the apes holding AMC 0.00%↑, aiming for a target price of $15, that this was another “fight for $15” (for a $15 minimum wage). As they quickly became cargo cults, you could also see the influencers pivot to MAGA-dom. Whether or not they were Trumpers all along, you could see a natural progression. Even before Trump was a coin, Trump was just another gamble to get rich. The ballot was a free lottery ticket to escape.
Cryptocurrencies retain a mystical bipartisan appeal among normal people, despite the many rugpulls.
This is the zeitgeist. We imagine ourselves, not as Steinbeck thought, a temporarily embarrassed millionaire capitalist, but as participants in other people’s games. And as much as we might like to theorize, we first want to win.
WHY INVEST IN POPULISM? Because populism wins. And that is the core of why populism is so attractive to financial professionals. Because it wins, and when it wins, it wins bigly. Fundamentally, in democracies, whether it is two-party first past the post or some mixed-member proportional representation parliamentary system, there comes a time when there are problems. The immediate instinct to blame another party works, but it stops working after a while when parties switch so many times and nothing seems to happen.
The only critiques that remain credible are populist critiques that emerge from outside the system.
Whether one embraces Gary’s project, it’s worth evaluating one of the central foundations of his message.
Living standards are decreasing
This one is obviously true for the UK, but it’s hard for me to say in the US, as Gary broadly claims.
At a very basic-level, it’s tricky to determine whether real wages are rising, or as some prefer calling it, inflation-adjusted wages (since there is nothing particularly real about taking an actually real number, nominal wages, and applying some corrections to it). The consensus, which I am inclined to agree with, is yes.
“Average wage growth since the pandemic has outpaced inflation, though cumulatively real wages are likely a bit below where one would expect in the absence of COVID-19.”
But even if real wages are real, many economic but non-wage economic factors matter. As examples, Joseph Politano, cites decisions by employers to offer health benefits and the expiration of Medicaid benefits for millions of people.
In many ways, the Biden era was a Obama staffer’s reflection on what wrong in the Obama era. One of those reflections was to go big on stimulus in response to economic disasters because of the asymmetric cost/reward. It is hard to argue that dumping a bunch of money into the economy, including creating a lot of government jobs does not matter.
Hence, there is a strong tendency to dismiss any perceived decline in living standards as either hyper localized or a “vibes-cession.” After all, one can point to a chart about how Democrat vs Republican perceptions of the economy immediately switched sides once the election happened.
I don’t know! Are electoral outcomes a better indicator of socioeconomics versus top-line aggregated macro-economic indicators? They both seem pretty awful proxies. When I think about my own subjective economic experience, it does seem pretty positive but also difficult to entangle from a lot of factors like job satisfaction which does not show up in any economic indicator. Youth unemployment in South Korea has not been great and has created a lot of discontent. But I’m not sure if the number of “Hell Joseon” memes would decrease if youth unemployment were any better. There’s something deeply depressing about running a rat race under dreadful working conditions, while being fully aware that the economy is doing exponentially great. No doubt, glitzy reality TV, music videos, and social media both numb and sharpen this wound.
If one looks at the stark gap between the college and non-college educated, a large part of it is probably a compositional effect. Those unable to attain degrees, are unlikely to do so for the same reasons they are poorer. However, as Marx noted, material categories once formed, generate their own consciousness. Being poor and non-college educated in a large pool of non-college educated is one thing. Being painfully aware you are part of dwindling pool of increasingly poor, non-college educated economic category, is wholly another. While the absolute conditions remain the same, compositional effects being an artifact and all that, can’t an argument be that at an individual psychological level, such relative conditions generate a real cocktail of economic anxiety? Perceived class shifts the range of expected outcomes for your children, even if it is a self-fulfilling prophecy.
When we put metrics to things and give them names, we take them seriously. Inflation expectations, business confidence. For the record, inflation expectations might matter, but they seem to have a very bad track record of predicting actual inflation.
When the same concepts appear, but expressed by people rather than by businesses, we call them vibes and are inclined to dismiss them.
The aggregated expectations of capital owners is real. The aggregated expectations of people are debatable. Maybe one or the other is wrong.
If you believe the economy’s objective is to maximize the economy, to take economic inputs to make more economic outputs, I think the economy is indisputably, objectively doing well.
The other side-quests of the economy, to build military goods to secure the state, to deliver common prosperity to provide stability to society and the state, I’m open to the possibility that it could be underperforming there.
Coda
Ultimately, as populist messaging, it’s not quite important whether the crux of the argument is strictly correct. Even if the core claim “living standards are going down” is wrong for developed economies that are not the UK, it is close enough to “expectations for future economic opportunity are going down” to be politically sound without bending the truth so much.
Am I a populist?
I’ve asked myself that a lot. Being a populist means you have a deep respect for the collective power of people, rather than an instinctive fear when large groups of people assemble together. Being a populist means you have a healthy disrespect for the collective stupidity of people and of being variably disappointed and inspired by people. Being populist means being patient with all these problems, without the comfort of prevailing institutions or revolutionary vanguard philosophies to lean back on.
Because you have no choice.
Because all those comforts of elite politics have never been worn comfortably by you.