Give the People What They Want?
October 13, 2014 --
Government policies don’t just tumble out of the sky. In almost all countries but for the few unfortunates ruled by tyrants, public policies reflect the policy preferences of citizens—preferences somehow aggregated by whatever government bodies are so empowered. To understand differences across countries in their economic policies, then, it often helps to look for differences across countries in the policy preferences of their citizens.
In a pair of fascinating reports released in the past month, the Pew Research Center has provided us just such a look. Earlier this year, Pew interviewed more than 48,000 adults aged 18 and older in 44 countries. In their public analysis of these surveys Pew aggregated the 44 into three broad groups: 10 highest-income “advanced” economies, 25 middle-income “emerging” economies, and 9 lowest-income “developing” economies.
The first report, “Faith and Skepticism about Trade, Foreign Investment” examines who does—and does not—support globalization. The central message is a striking cleavage in attitudes between advanced economies and all others. In the 34 emerging and developing countries, large majorities of citizens “agree that international commercial activity is a good thing. But not everyone is convinced, especially in advanced economies. Such skepticism is particularly strong in France, Italy, Japan, and the United States.”
Who agrees with the statement, “trade creates jobs?” Fully 66 percent of respondents in developing countries—but just 44 percent in advanced countries. Who agrees with the statement, “foreign companies buying domestic companies is good?” Fully 57 percent of respondents in developing countries—but just 31 percent in advanced countries. Across all questions, in emerging and developing countries the median citizen views globalization as a source of gains. Her advanced-country counterpart thinks the opposite, that globalization threatens.
Why this yawning difference in public opinion about globalization, and what to do about it? Is the solution just to send more advanced-country citizens to the Tuck School to learn about the benefits of globalization? Terrific though that might be, the plausible explanation is more complicated. Research (including some by one of us) has long shown that people around the world tend to be pretty sophisticated “pocketbook” voters; that is, their policy preferences have a lot to do with their personal economic situation. Public support for engagement with the world economy is strongly linked to labor-market performance, and (as we recently wrote about here) for most workers in many advanced countries recent labor-market performance has been poor. In contrast, in many fast-growing poorer countries the rapid growth in jobs and incomes has been driven in large part by connecting to the world—in particular to the many benefits of inward investment by foreign-owned companies.
The overarching concern, then, is that trade and investment policy in advanced countries is becoming more protectionist—or, at the very least, is not becoming more open, per the struggles to negotiate agreements such as the Trans-Atlantic Trade and Investment Partnership—because the citizens of these countries are becoming more protectionist. Thus does a central leadership challenge face advanced countries. Do they simply respond to voter attitudes and foot-drag on trade, investment, and immigration issues? Or do they instead try to shape voter attitudes—i.e., to tell persuasive stories explaining the benefits in jobs and incomes that research shows can come from well-crafted policy liberalizations, stories which change voter attitudes?
Those noted political philosophers, The Kinks, sang a rip-roaring song called “Give the People What They Want.” We acknowledge that this is often the job of elected leaders in democracies. But wise leaders know when they need to sing a different tune. The other Pew report starkly shows how acute this need is today, from its title onward: “Emerging and Developing Economies Much More Optimistic than Rich Countries about the Future.” Pew asked, “When children in our country today grow up, will they be better off or worse off financially?” In the 34 emerging and developing countries, a majority replied “better off.” In the 10 advanced countries? Only 28 percent replied “better off”—versus a shocking 65 percent who replied “worse off.” It is time for a new play list.
Articles © 2014 Matthew Slaughter and Matthew Rees. All rights reserved.
Publication © 2014 Trustees of Dartmouth College. All rights reserved.