Populism versus Constitutional Democracy

What is the difference between a conservative and a reactionary? A conservative knows when she has lost.

A conservative respects the status quo for the sake of stability. The reactionary rebels against it. Unfortunately, it is the reactionary impulse within Brexit that now threatens to hem in the liberties of British citizens, and threaten the rights of foreign residents, for a long time to come. A looser but productive relationship that Britain could have had with the European Union was lost, first at Maastricht in 1992, then again at Lisbon in 2007. A conservative recognizes this loss and adapts her politics to the new landscape. The reactionary tries to reconstruct those lost pasts in vain as the chaotic debates in Britain and the increasingly disappointing outcome illustrates.

Does this mean that referendums are bad? Do they only embolden radicals and reactionaries? It depends. If referendums are used to rubberstamp the decisions of a party in power, or as a way of deferring political judgement, then they are useless at best, dangerous at worst. By contrast, if they are part of the fabric of a democracy, and act as a real veto on constitutional change, rather than a populist rallying point, then they can be enormously valuable. They act as an additional check on the political establishment that might be irrationally fixated on some new governance structure. It ensures that every major change carries with it some level of majority support.

Ten years ago, I wrote a monograph Total Recall: How direct democracy can improve Britain. I advocated supplementing representative democracy with a norm or statutory requirement for referendums on constitutional issues and new local initiative powers. I focused on direct democracy in US states that mean that US state elections often involve both voting for representatives and on propositions. Referendums are required for state constitutional changes. In some states, citizens can initiate new legislation through propositions.

There are parallel constitutional requirements in force in parts of Europe, particularly in Switzerland, Norway and Ireland. It is hardly a coincidence that direct democratic mechanisms have slowed down European integration wherever they have had statutory rather than merely advisory force. Ireland had to go to the polls several times to get the ‘right’ answer but at least this meant that a majority of Irish eventually accepted the new EU arrangements. By contrast, Switzerland and Norway, against the wishes of their political establishments, took European integration only so far before settling with generous trade relations and much more limited political integration. The cost-benefit calculus of their arrangements are up for debate, but few would deny their legitimacy. Britain’s future position, by contrast, may turn out to look much worse and all because its people never had the chance to say ‘no’ until long after the facts on the ground changed.

It’s the ability to say ‘no’ that’s important, with the implication that the status quo must still be a viable option. A people cannot be legislators. Mass votes can’t add up to complex judgements to inform actionable law. Hence the Brexit referendum for leaving the EU for an unknown alternative was bound to lead to chaos which, in the long run, may undermine the legitimacy of representative government, let alone popular democracy, rather than strengthen it. There is no status quo ante to return to.

At the time I was writing Total Recall, the spirits of referendums never voted on haunted British politics. Referendums were promised on adopting the Euro and the European Constitution. Both were abandoned when the Government realized they would almost certainly lose. So we stayed out of the Euro but signed what became the Lisbon Treaty. This turned out to be a deadly combination that eventually led to Brexit. The Euro is quite badly managed as an economic scheme. As a political mechanism, however, it binds members of the Euro much closer together. Leaving the European Union, as Britain is doing, is perilous and costly. Leaving the Eurozone would be even more difficult as it would involve establishing a new currency from scratch. If New Labour had been serious about putting Britain in a federal united states of Europe, it should have gone all in with the Euro from the beginning.

So Brexit could have been avoided but not by ignoring majority sentiments. If British referendums were constitutionally mandated rather than the random outcome of internal (in this case, Conservative) party politics; if referendums were required to change the status quo rather than a mechanism for a belligerent minority to relitigate past losses, then, like Switzerland and Norway, we would be in a much better position now.

Will our political leaders learn this lesson for the future? That I doubt.

Nightcap

  1. India at the time of the globalization Raj Branko Milanovic, globalinequality
  2. What do earnings tell us? Chris Dillow, Stumbling and Mumbling
  3. Haitian Voodoo art Marcus Rediker, Storyboard
  4. Why are there 2 distinct ways of writing Norwegian? Jessica Furseth, Literary Hub

Canadian Megatrends: Top 1% income share and median age

Statistics Canada just came up with a study on the top income share of the top 1% in Canada. As I have explained elsewhere, my view of inequality is that: a) it has increased; b) not as much as we think; c) a lot of the increase is from desirable factors (personal utility maximization differing from income maximization or international immigration) or neutral factors (demography, marriage); d) that the inequality that is worrisome stems either from birth or government manipulations of the market and; e) that those stemming from government manipulations, direct (like subsidizing firms) or indirect (like the war on drugs which means that a large number of individuals are jailed and then released with a “prison earnings penalty” which stymies their income levels and growth), are the easiest to fight.

The recent Statistics Canada study allows me to make my point again with regards to element C of my answer. As I looked at their series, all I could think was “median age”. A lot of the variations seem to be related to the median age of the population. I went back to the census data I had collected for my book and plotted it against the data. This is what it looks like.

medianage

Why would there be a relation? Well, each year you measure the income distribution, the demographic structure of that population changes. As it grows older, you have more people at the top of their earnings curve relative to those at the bottom. Not only that, but earnings curve seem elongated in recent times – we live longer and so some people work older as witnessed by increased labor force participation rates above a certain age closer to retirement. And the heights of the earnings curve are now higher than ever before while we also enter later into the labor market.

Now, I am not sure how much aging would “explain away” rising inequality in Canada, but there is no point denying that it does explain some of it away. But, I would not be surprised that a large part is explained away. Why am I saying that? Because of this paper on Norway’s age structure. 

In Norway, the median age in 1950 was much higher than it was in Canada back then and today, it is roughly the same as Canada (although Canada has had a steeper increase in inequality). And according to the paper on Norway, adjusting for composition bias in inequality measures caused by aging, eliminates entirely the upward trend in that country. In fact, it may even reverse the trend whereby inequality adjusted for age has actually declined over time. This is a powerful observation. Given that Canada has had a steeper increase in median age, this suggests that the increase in inequality might be simply the cause of a statistical artifice.

Around the Web

1. Stanford’s online encyclopedia of philosophy has a new entry on ‘markets’.

2. Why the Swedes are moving to Norway.

3. John Stossel explains why Washington DC is the richest area in the US:

Lobbyists and taxpayer-funded special privilege won’t go away unless big government does.

4. BRICS planning to build their own development bank. Does this signal the end of the West’s 400-year period of dominance? No. If anything, this is a triumph of the ideal of the West and especially its thinkers’ critiques of central economic planning.

5. The Sectarian Social Democratic Ideal. A very, very good critique of social democracy.

Power and Happiness (President Obama in India)

There is widespread confusion around between two ideas that should be easy to separate from each other. I keep bumping into it. I had several lengthy discussions of it with strangers on Facebook. Some were of the left, some of the right. I found it in my morning paper under the pen of no less than columnist David Brooks of the New York Times (“Midwest at Dusk”11/7/1)).

I refer to the confusion between the happiness of a country’s citizens and the country’s standing in the world. David Brooks wrote:

“If America can figure out how to build a decent future for the working-class people in this (mid-Atlantic) region, then the US will remain a predominant power. If it can’t, it won’t.”

Like this.

President Obama’s post- “shellacking” visit to India is a good time to clear the confusion.

It may be that there is some sort of connection between the happiness of a country’s citizens (or some) and being a “predominant power.” It may be but it’s far from obvious. You would have to demonstrate it. It would be hard; casual evidence does not support the idea. Deeper research does not either. Continue reading