Non-Country Big Spenders: Is Populism Bad For Business or Does Bad Business Lead To Populism?

[The Gays From LA]

I came across this new research into the effects of populism on business and national wealth:

More political leaders—both left- and right-leaning—have used populist strategies in the past five years than at any time since the 1930s. That is bad news for countries’ economies and businesses.

https://carnegieendowment.org/2023/06/13/how-does-business-fare-under-populism-pub-89908

PART I: THE EFFECTS OF POPULISM ON BUSINESS AND THE ECONOMY
- What Is Populism?
- How Does Populism Affect Economies and Businesses?
- Macroeconomic Costs
- Reduced Trust
- Reduced Rule of Law
- Increased Financial Volatility and Risk
- Damaged Institutional and Data Quality
- Overview of the Effects of Pro-business Populists in Hungary, Brazil, and India
- Could It Happen Here? Populism in the United States

PART II: FULL CASE STUDIES
- Hungary: Government centralization erases the notion of a private sector
- Brazil: Institutional fights increase uncertainty and erode corporate confidence
- India: Personal, centralized policymaking decimates small businesses

Here's the catch: in order to prove that populism is bad for business, she needs to demonstrate that business thrives more under a more stable government, including a multigenerational dictatorship like North Korea or a theocratic monarchy like Saoudi Arabia. On her map she classifies the latter two countries as "non-democratic", which is misleading because her main feature of populism is that it's unstable. If her argument is that business is more stable under a stable or conservative government, than she needs to give examples of more stable economies under such a government.

She's can't prove that, so she analyzes populism in the present in isolation, which is bad science.

If you accept the idea that market volatility is inherent to the capitalist system, then that market volatility is irrelevant of the political system. Politics can perhaps anticipate and offset the effects of volatility, but there are inherently going to be an increasing number of market crises.

This part is really interesting though: she claims that both left wing and supposedly pro-business populist politicians are big spenders:

However, even pro-business populism treats economic policy as subordinate to political goals, which ultimately causes economic harm. In Brazil, Bolsonaro splurged on welfare spending in the months before the 2022 election. Rather than reduce the size of government, Orbán put Hungary on course to be the “East European country with the largest share of the population working in the public sector,” according to Simeon Djankov of the Peterson Institute for International Economics.22 State jobs have had the political side effect of enabling the government to nudge workers who rely on government employment into supporting the ruling party. As a poor country, India arguably needs significant welfare spending, and Modi’s increased social programming could simply be responding to need. But his rebranding of preexisting programs as programs of the prime minister, combined with lax implementation, suggests that there is a political purpose as well. This pattern of giveaway spending, often associated with left-wing populists, turns out to persist among self-styled right-wing populists as well. Around the globe, this kind of giveaway spending causes debt-to-GDP ratios to rise and spurs inflation under populist leaders.23 As of March 2023, Hungary was facing 25 percent inflation, the highest in the European Union (EU).24 In the few cases where leaders employing populist strategies served short periods, the inflationary bill fell on their successors.