November 27, 2006
What Is a Populist? II Posted by John Steele Gordon at 02:30 PM EST The dictionary gives two definitions. The first is “a member of a political party claiming to represent the common people” especially members of the Populist Party (officially the People’s Party) organized in 1891. The second is “a believer in the rights, wisdom or virtues of the common people.” The Populist Party was based on agrarian interests and advocated among other things the “free coinage of silver.” While they never said so, of course, the free coinage of silver at a ratio to gold of 16 to 1 was a sure means of inducing inflation (silver, pouring out of Western mines since the 1870s, was then priced by the market at a ratio to gold of 22 or 23 to 1). Most farmers are debtors, and inflation helps debtors by making dollars cheaper relative to other stores of value, such as land and crops. The Populists therefore were catering to a particular “special interest,” the farmers, at the expense of another special interest, the bankers and creditors generally. The election of 1896 was fought largely over this issue, and William McKinley soundly beat William Jennings Bryan, the Populist candidate (as well as the Democratic one), 50.9 percent to 46.7 percent (minor candidates picking up the rest). So one might say that on the day after election day in 1896, the Populists (in the first sense of the word) were not populists (in the second sense). They discerned no wisdom or virtue in the choice the people had made. All American political parties claim to have the “people’s interests” at heart and to be the scourge of the “special interests” if elected. But in fact, “special interests” might well be defined simply as “the other party’s political base.” Debtors and creditors, labor unions and corporations, drug companies and patients, environmentalists and snowmobile fans, all are special interests. That is why I don’t think it was the American right that changed the meaning of the term (which dates to 1910 and was originally a euphemism for “lobbyists”); it was the people coming to realize that the left had special interests as well. Trade unions advocate what is good for trade unions (and, sometimes at least, their members), not what is good for the economy as a whole. The out-of-sight Medicaid costs in New York State (more than the costs of Texas and Florida combined) and the enormous political power of the Hospital Workers Union in New York are not unconnected. This is why politicians are so lousy at making economic decisions: They don’t really make them. They make political decisions, based on political interests, and economics be damned. Take ethanol. Every presidential hopeful—from the far left to the far right—trooping out to Iowa in the months before the Iowa caucuses has a good word to say for federal mandates regarding ethanol. The fact that ethanol is made from corn and Iowa grows a lot of the stuff has much more to do with their enthusiasm for ethanol than does economics. (As an aside, governments are also irremediably inefficient when it comes to organization and management, thanks to political considerations. The New York Times recently reported that New Jersey has no fewer than 619 school districts, each with an average of only 1,544 students and covering only 14 square miles, but each with a school board and bureaucracy, etc., in place. Of the 619 districts, 22 don’t even have any schools; they send the kids to other districts and pay tuition. Can anyone imagine a profit-seeking company with, say, 619 sales offices in New Jersey, 22 of which do nothing but send potential customers to other sales offices? New Jersey has the highest property taxes in the country. Gee, I wonder why.) One might argue that true populists—believers in the wisdom of the common people—are those, like myself, who believe that economic decisions should be made, in so far as possible, by the free market (the common people in their millions buying and selling). Politicians, of all stripes, are usually trying to make markets unfree to help their own special interests. Fortunately they have limited power to do so, partly because the other side can prevent it and partly because, as a Vietnamese proverb has it, “trying to stop a market is like trying to stop a river.”
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