Demagoguery, Democracy, and Leadership

This is a quick follow up to the the post that I reposted earlier.

The problems underscored by the Republican Party and the rise of Trump (and to a lesser degree, the Democratic Party and the popularity of Sanders) is that democratic institutional are fundamentally flawed.

Democratic politics, fundamentally, is a marketing problem.   The party insiders, in essence, offer a set of disparate group of voters some bundles of goods and prices.  The bundles of goods cost the insiders something:  either they have to find money to finance them (if they are projects that cost money–like dams, etc) or they have to forego support from other groups (it is not easy to entertain both Klan and NAACP–remarkably, the Democrats did it until 1960s).  It is convenient to assume that the former impose no externality (and label it “pork”) and the latter always impose externality (and label it “policy”).  It is an oversimplification, but it is a reasonable theoretical construct to illustrate the argument.

Democratic rule does not require universal support.  Again, the requirement that a mathematical majority is required for rule and no more is an oversimplification, and in this case, a dangerous one, but it is sufficient in the short to medium term.  All coalitions beyond a bare majority, then, is superfluous.  It does not matter whom you alienate, as long as you have put together a coalition of 50% + 1.  This favors a policy oriented coalition rather than a pork oriented coalition whenever possible:  policy goals that do not conflict (much) with each other, such as business friendly policy, nativism, and “social conservatism” can be bundled together to form a fairly cost-effective bare majority coalition, in the case of the Republican Party.  (and a bare majority to capture only the House of Representatives, not necessarily the presidency).  Broadening the coalition requires accepting policy that conflicts with the existing bundle or spending additional money and is resisted.

The coalition becomes increasingly exploitive as the parties polarize.  The prospect of losing power to “the other coalition” whose bundle of policy is undesirable for members of the first coalition becomes the stick with which the insiders can beat down its members.  The insiders need not make policy concessions or offer the members expensive benefits:  they can simply threaten, “Without your support, the other guys might get in power.  You don’t want that, do you?”  Of course, the threats operate the same manner in the other party, too, if in the opposite direction.  (In multi party democracies, the process is more complicated:  the loss of supporters from, say, a socialist party to free market party may be improbable, but from the former to a communist party is not.  Party insiders of socialist parties are known to demonize ideologically similar parties far more than their ideological opposites, presumably to forestall defection.)  At the same time, however, this gives the insiders the means to exploit the members to full hilt.

Let’s think of the party coalitions not in political terms, but in marketing terms.  Each member of the coalition is both a profit center and a cost center to the party insiders.  Catering to their wants, in terms of policy or pork, is costly.  They deliver a profit to the party leaders in terms of support, whether votes, political activism, or campaign donations.  Obviously, party insiders want to maximize the latter and minimize the latter.  Not only does it imply that party insiders want to reduce costs given the benefits, they also want to cut off the troublesome supporters who cost too much and deliver little benefits.  Those who demand too costly programs and do not offer reliable electoral support are first to go:  if they are not ideological (i.e. not conducive to appeals based on policy that are “free” for the insiders), needy (in terms of needing costly programs, i.e. pork), and low in turn out (delivering less profit for the insiders), they are more trouble than they are worth.  These are the voters who happen to be low in income, lacking in “political sophistication,” undereducated, and not well-connected socially (e.g. through churches etc.).

Is there a pattern here?  Yes.  These are the voters who happen to be courted by Trump and Sanders in United States, and also by LePen, Putin, and others in the Old World.  (I don’t know about UKIP or Scandanavian parties enough to say much).  There is no common “ideological”  common denominator connecting them, for they are not voting ideology.  They are supporting whom they do because they feel that they have not been served by the incumbent parties, and they are right.  At the same time, mobilizing them is not easy for most politicians because, if they were valuable in the first place, they would not have been abandoned by incumbent parties so easily.  But, in times of economic and social distress, perhaps with the right kind of demagogues to serve as spark plugs, they can be dangerous to the incumbent parties.

Such insurgencies are NOT a problem necessarily of leadership failure, except if one were to consider absence of an exceptional and farsighted leader a failure.  In normal times, these excluded voters are too inchoate, too inattentive, too lethargic to be problematic.  Simply maximizing profits and minimizing costs requires that they be abandoned.  While retaining their support does serve as an insurance, it is too costly and the potential disaster too improbable.  In this sense, the collapse of democratic parties is a repeat of the Big Short in the financial world:  too much short term greed, too much neglect of long term risk, and the blithe hope that the good times will keep rolling if you keep believing in them.  Insightful leaders who warn against the long term risk and insist on buying the due insurance are booed away as naysayers and old timers who failed to adapt to the new happy age of boundless success build on on big data and clever technology–until the disaster strikes, which “nobody” could have seen coming.



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