John Quiggin’s amateur political analysis

Last February, fellow economist John Quiggin tried to make sense of political developments by relating those to the economic crisis of 2007+ a.k.a. the Global Financial Crisis (GFC). Quiggin warned about his “amateur political analysis” and proceeded to identify a “three party system“: with leftism, neoliberalism and tribalism (see his definitions). The neoliberals are soft (“reforming” the welfare state) or tough (abolishing it). Dutch readers may check the column by Wouter de Been which alerted me to this, and who argued: “It’s still the economy, stupid.

A first comment is that Quiggin actually has four groups, namely leftism (Bernie Sanders), soft neoliberals (Hillary Clinton), hard neoliberals (Donald Trump) and tribalism (Ted Cruz). See the diagram below.

A second comment is that Quiggin uses the economic term “neoliberalism” as a political label. However, economics is a tool and not an objective. Instead we should categorize politics by values, such as (in-) equality and freedom. It must be admitted that economics has much influence on political discussion but it remains necessary to distinguish ends and means.

  • As discussed before, Emmanuel Todd distinguishes the stable categories of equality / inequality and authoritarian / liberal. A common distinction is between the political “left” and “right”, but this distinction is vague, and it is more informative to distinguish Todd’s two dimensions.
  • For Trump, the label rather isn’t “liberalism” but “neoliberalism” (“freedom”). Trump pursues more freedom but does so in an authoritarian manner. Over time his manner could be more important than his stated goals and then he would shift down.

Quiggin holds that there is instability because of the Condorcet paradox and other reasons. A third comment is that these four can actually be arranged on a left-to-right line and then fit the Duncan Black single-peakedness and the median voter theorem.

  • In the diagram, the conceptual gap between Sanders and Trump is rather large, and they are only comparable in radicalism. Clinton and Cruz are closer on caution and conservatism.
  • In Europe, we might perceive of a coalition that excludes the inequality & authoritarian group and includes the others on liberty, equality and fraternity (in the colour map: exclude green and include the others). This coalition might work if there is gradual change and no French Revolution.

A fourth comment however is that there better be electoral reform, such that parties can collaborate on issues rather than fight about ideology.

2D to 2D

Other charts on political views

Sanders and Trump seem to score higher on their radicalism than on clarity about a position on the scale from authoritarian to liberalism / freedom / neoliberalism. We could include a third dimension of the attitude towards change. There is a range from conservatism to radical adaptation. The term “conservative” itself is ambiguous: it may mean that one wants to maintain the status quo (e.g. with current liberal properties), but it may also mean that one wants to return to some ideal past (reactionary, e.g. with king and aristocracy (billionaires)).

A fifth comment thus is to maintain caution on these dimensions.

The Nolan chart has the axes of economic freedom (low to high) and personal freedom (low to high). This compares to the chart above, when we replace equality / inequality with economic freedom, and replace authoritarian / liberalism with personal freedom. The Nolan chart however again confuses political values with economics as a tool. There is also the problem of balancing opposite effects.

  • A minimum wage reduces the economic freedom of the entrepreneur and the outsider unemployed, but enhances the economic freedom (bargaining position, income) of the insider employees. See DRGTPE for a better approach to the economics of the minimum wage. This is economics and not an issue of political values, though politics are relevant when deciding what policy to adopt.
  • One might presume a natural state and then hold that any measure that is to the disadvantage of someone counts as the reduction of economic freedom, even when it would advantage others. However, there is no clear specification of such a natural state. (Todd’s scheme identifies at least four types of family structure.)

A classification of Dutch political parties by Andre Krouwel (“kieskompas“) still uses the political left-right distinction, but this distinction has been based upon programme details and thus might still be relevant.

The lifestyle consultancy firm Motivaction identifies eight groups in Dutch society, from traditionals to post-modern hedonists. Potentially these link up to political parties.

Mentality_EnglishReturn to economics

I tend to agree with Quiggin:

“But the more fundamental problem is that none of the competing forces has an obviously compelling solution to the problems we face. Neoliberalism has manifestly failed to deliver the prosperity promised by triumphalists like Thomas Friedman in the 1990s. Tribalism is already a lost cause, given the massive migrations that have already taken place, and can at most be slowed in the future. The left needs to rebuild institutions and policies that have been in retreat for decades.”

The true problem is one for economic analysis. The derived problem for the political leaders and parties and their voters is to select which economic advisors to listen to. The sixth comment is that there is censorship of economic science since 1990 by the directorate of the Dutch Central Planning Bureau (CPB). Governments didn’t get proper advice, and the economic crisis of 2007+ a.k.a. GFC is evidence of this. Boycott Holland till this censorship is solved. See the About page. What the censored analysis fully is can only be seen after the censorship has been lifted of course.

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