Presentation on Economic freedom and populism from the Southern Economics Association Meetings in Ft Lauderdal, Nov 19-21, 2022.

1. Economic freedom and
populism
Andreas Bergh &
Anders Kärnä

2. The basic structure
▪ What is populism?
▪ How does it relate to economic freedom?
– Does economic freedom foster or mitigate populism?
– Do populist parties change economic freedom?
▪ Economic freedom and its five dimensions

3. Defining populism
▪ Large literature
▪ Initially confused
– How do populists differ?
– Are populist necessarily right-wing?
▪ Recent consensus
▪ An appeal to “the people” against the elite, and the idea that politics
should be an expression of the “general will” or will of the people
▪ Cen be right-wing or left-wing

4. Measuring populism
▪ Measuring the ideas of populism/populist rethoric
▪ Measuring the size of parties classified as populist
– Based on rethoric or official documents
– Based on expert classifications
▪ Norris:
– 46 percent of the strongly populist parties are economically right-wing and
socially conservative,
– 42 percent of the strongly populist parties are socially conservative and
economically left-wing

5. Comparison of Heinö (2016) and The Populist
2.0 [NB European countries only]
Comparing Heinö (2016) and The PopuList 2.0
Right-wing populism Left-wing populism
20 10
14
8
15 12 7.5
8
10 7
10
8
6.5
6
5
6
6
0
4
4 5.5
1980 1990 2000 2010
Year
2020 1980 1990 2000
Year
2010 2020
Sources: Heinö (2016) (cont) and PopuList (dashed)

6. Economic freedom and populism
▪ Rode & Revuelta (2015)
▪ Measure based on grading speeches given by leaders in countries
around the world with focus on Lat.Am.
▪ populist governments on average reduce economic freedom.
– erode legal security
– reduce freedom to trade
– tighten economic regulation

7. Government size
▪ Populists can promise lower taxes – or that governments do more
▪ Empirical results are – as expected – mixed.
▪ Kim & Kim (2021): populist regimes in Latin America tend to increase
social expenditure as percentage of GDP (esp health and education)

8. Rule of Law
▪ Almost all authors see substantial incompatibilities between rule of
law and populism
▪ Empirically, populists worsen the rule of law (cross-country and case
studies)
▪ Some authors add nuance,
– e.g. describing populism as the antithesis of constitutionalism and the rule of
law, is “too simplistic” (Blokker & Mazzoleni, 2020)

9. Populism & Sound money
▪ Populist rule tend to lead to inflation
▪ Populist cycle
– Promises of spending, higher wages or tax cuts -> deficits - > BoP-problems,
currency depriciation -> inflation -> price controls (sometimes)
▪ No clear evidence that inflation causes populism (Stankov, 2018)

10. Finally…
▪ We add the five EFW-dimension to the data used in this recent
publication

13. ▪ Panel data with time and country fe 1980-2018 for 26-33 European
countries
▪ One robust pattern:
▪ Rule of law correlates negatively with right-wing populism