Petar Stankov THE POLITICAL ECONOMY OF POPULISM Comment

Petar Stankov: THE POLITICAL ECONOMY OF POPULISM Comment by : Oleh Havrylyshyn YES SEMINAR Dubrovnik , June 4, 2017 1

HIGHLIGHTS OF PAPER • Novel, excellent effort at empirical analysis of how economic crises generate populism • Uses several alternative measures of populism from polisci. literature • Regressions suggest recession episodes, unemployment best predictors of populism • Degree of fiscal austerity, inequality less clear , sometimes yes, sometimes nodepending on measure of populism used 2

WHAT I LIKE BEST … • Just fact of effort to investigate econ. Sources of populism is excellent start • Using sound econometrics to do political economy also relatively new • Putting some case-study “meat ‘; on the econometric “skeleton” very illuminating • Wittingly or unwittingly Stankov results appear to vindicate Washington Consensus –fiscal prudence + more liberal economy give best results 3

WHAT I FIND PROBLEMATIC &/or INCOMPLETE… • No variable for immigration levels/trends? ( surely available ) • No variable for Import penetration either in theoretical model or in econometrics ? ? (surely too important to ignore , probably separate from immigration xenophobia) • Too little said on differences EUR-US • Ignores current debates on truthfulness of populist campaigns 4

IMMIGRATION VARIABLE A MUST … • Immigration rise/surge emphasised as a key factor, yet no dependent variable to measure this ---study not really complete without this • Such measures would seem to be available : e. g. International Organisation for Migration, Migration Policy Institute (US) • Interestingly such data will reinforce Stankov argument on xenophobia: Germany rate of immigration 1990 -95 not very different from 20002015 , BUT first was blood-Germans from FSU (esp. Kazakhstan !)-so no xenophobia; even pride! 5

IMPORT PENETRATION EFFECT • Populist claims generally include negative effect of globalisation, import penetration and loss of manufacturing jobs , etc. --- this too should be considered in a more complete analysis • Arguably, immigration and import penetration trends highly correlated, but good econometrics can sort out whether same effect or different • One hypothesis could be interesting : in EUR immigration dominates; in US both effects play a big role 6

FACTS, ALTERNATIVE FACTS , MISINTERPRETATIONS ? • MARK TWAIN said it best: “Lies, damned lies and statistics” • Debates on recent populism generally touch on possible misuse of statistics –or worse- by populist campaigns. Study cannot completely ignore this –at minimum have a brief discussion • For future extended research it may in fact be possible to put numbers on some of this , at least for some countries, using e. g. “fact-checking” websites as in US (you could call it the TRUMP variable ? ? ) 7

SUGGESTIONS (1 Ø For present paper § Some editing : clarify what countries are covered in which regressions; expand comparison of USEUR ; add a SUMMARY section; be more explict on implications for Wash. Consensus –that’s a saleable (if NON-PC) conclusion. § To enhance publishability – if data can be collected with some effort: try immigration variable, try import-penetration variable. 8

SUGGESTIONS (2 Ø For future research § For sure : later work should add immigration , import –penetration § More comparisons(similarities –differences ): US, EUR, LA § Recent populism in post-Communist economies –surely NOT due to immigration surges, and probably not econ. crises as most have had better performance than Western Europe—then what is explanation ? 9