1. How to Respond to the Authoritarian Populist Challenge
Dani Rodrik
June 2018

2. The long history of populism
“…we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” William Jennings Bryan (1896)

3. The Roots of Populism Economic explanations Cultural explanations
globalization, austerity shocks
income distribution, unemployment, economic anxiety
Cultural explanations
nativism, anti-immigrant sentiment, racism
conservative backlash against social liberalism

4. A reconciliation Demand for populism economic stress and anxieties
social, cognitive divisions in society driven by globalization, technology
Supply of populism
right-wing narrative
nativist, ethno-nationalist
left-wing narrative
targeting banks, corporations, austerity, trade deals

5. What’s distinctive about populism?
A claim to represent and speak for “the people”
unified by a common interest, and set against the “enemies of the people”
Rejection of restraints on the use of executive authority
as long as political executive represents “people’s will”
Two dimensions
political
aversion to institutions of political liberalism, independent judiciary, other agencies of restraints
economic
aversion to restraints on conduct of economic policy, such as independent regulatory agencies, independent central bank, and external restraints, such as Brussels’ fiscal rules or global trade rules

6. Not all Populisms are the same
Right-wing versus left-wing
ethno-nationalists believe the dividing line between “us” and “them” is primordial and immutable
left-wing populists aim, in principle, to bridge economic divisions
Political versus economic
all populist regimes (in economic sense) need not be authoritarian
New Deal example

7. Why Are Populists winning in Europe?
We need to understand Europe’s political trilemma

8. Europe’s trilemma You can pick two of these, any two, but only two
European single market
Democracy
National sovereignty
You can pick two of these, any two, but only two

9. Europe’s trilemma Three possibilities European single market
Golden
straitjacket
Fiscal/political union
Democracy
National sovereignty
Brexit,
Euro zone break-up
Three possibilities

10. How real is the tension between democracy and globalization/European integration?
European single market constrains domestic policy space, but this on its own does not undermine democracy
the principle of democratic delegation
External rules can enhance performance of democracies by:
limiting power of special interests
enhancing the quality of democratic deliberation)
But need not do so. How can we tell difference?
Distinguish between
rules designed to address genuine problems of democratic polities (commitment, time-inconsistency)
rules that strengthen bargaining leverage of special (“globalist”) interests over the rest of society, undermining social contracts

11. What does All this mean for Europe’s future?
Either more political integration, or less economic integration
if true economic union remains goal, a vision of political union is a must
but if political union is viewed as infeasible (or undesirable), economic union will not work, and we must begin thinking of a strategic retreat from it
A two-speed Union?
a set of core countries committed to deeper political integration
a set of countries with greater economic autonomy
A planned, strategic retreat much better than a forced, ad hoc, acrimonious one

12. Why Are Populists winning in Europe?
“Because they are the only ones telling the truth about the trilemma”
European popular leaders have long maintained you could eat your cake and have it too
claiming they retain control while periodically hiding behind EU institutions
populists are clear and upfront about their preference for national sovereignty (and popular democracy) over European single market
this preference is matched domestically typically with a nativist domestic agenda
though it could be matched with a progressive agenda as well

13. Conclusions
International economic integration has produced domestic disintegration
Reconstructing healthy polities requires a reintegration of society
unlikely to take place with EU-level policies
A dose of (economic) populism will likely be necessary
e.g., increased public investment, higher corporate taxes, industrial/regional policies, transfers/UBI, employment safeguards, standstill on new trade agreements, financial taxes/regulation,…
Economic populism can sometimes forestall its much more damaging cousin, political populism