As we are currently in the midst of the most potent populist U.S. president ever, this post is timely. Yet, I don’t want this to be a Trump-is-bad rant. The populist policies of the left (from AOC to Sanders to Mamdani and the entire DSA) deserve equal criticism. Populist planning fails no matter the political orientation of the populism.
Representative democracy has a natural tension with populism and an obvious reinforcing stimulus. The common man fails to see the distinction between being popular and being populist—confusing support from (all or most of) the people with following the will of (all or most of) the people.1 And distrust of elites is a good American impulse. Hence, most all presidents have courted if not fully embraced populism.
Trump isn’t unique in this regard. He is just more populist than those before him. In some cases much more. So examining Trump, which I do a lot of around here, can expose the best examples of the problems with populism especially in contrast to other central planning.
Biden’s industrial policy was mostly driven by the traditional central-planning conceit. His Inflation Recovery Act (IRA) was a top-down plan (and a misnomer). It was government spending picking winners and losers—in both senses as it gave money to particular projects and firms as well as favored certain policy solutions (“good” clean energy like solar) over others (“bad” clean energy like nuclear).
Trump added blatant and magnified corruption to the mix while running with whatever was in the political winds. This included reversing positions (his own as well as his party’s) when needed to maintain populists’ support.
None of this ends well. Just ask Richard Hanania who wrote the book on it.
The National Version
Central planning is adopting the views of certain experts and elites and throwing the power and purse of the federal government behind them. Importantly this favoritism in the form of subsidies and friendly regulation lacks the discipline of the market—failure is rewarded until it can no longer be. Examples like Solyndra come readily to mind.
The problem isn’t that experts and elites are always wrong. It is just that they are fallible—capable of being wrong—and, thus, in need of the corrective discipline the market provides. The core of this failure is misalignment of incentives and the impossibility of the knowledge problem.
Populist planning is this same problem compounded by a bad first step. The difference is rather than relying on actual experts and elites, it leans on false experts who lack meaningful credentials—actual expertise—and elite selection as determined by popular opinion rather than successful achievement.
And proven bad central planning can later be further poisoned by populist influence aiming for a solution. Consider one example from history. The food pyramid was a central-planning failure due to regulatory capture only to be replaced by a populist-planning failure due to regulator dogma. Dr. Jeffrey Singer captures this history and its implications well in this post.
Populism is motivated greatly by emotional sentiment. Afterall, when you don’t have expertise, all you have is emotional instinct. Populists key off of this listening to the unqualified masses and reinforced by their own bad instincts. When it comes to Trump, this process is directly cronyistic—no regulatory capture required. He himself becomes the beneficiary.
There is a great irony building in all of this as Trump is setting the stage for “real” socialism by himself being some version of a socialist or fascist. In a political landscape that embraced good elites this would be quickly checked. That is not our current world. Rather than rally an admirable opposition, he is making the world safe for central planning by people whose history books begin around 2008 and economics books are written in crayon.
The Local Version
The political world of Tip O’Neill has been turned on its head as now all politics are national. One knock-on effect is that today more so than before federal policies reach down to what were previously local issues. Again, this is a hallmark of socialism as the planners in the USSR, et al. had to get down to the local farm and factory.
To wit: The populists are seeking national solutions to perceived local election problems as well as affordability issues from housing to food. Setting the national approaches aside, the locals are doing plenty on the populist planning front.
Urban planning and development in America today is basically rule by mob. From housing policy to zoning to HOAs to development of all kinds with data centers being the item du jour, the inmates are running the asylum.
While the U.S. isn’t alone in this madness, we have one of the most regimented and locally controlled real estate development markets. It would seem that every American believes they both have the right and the expertise to dictate how everyone else’s property should be used.
While federalism and subsidiarity is generally a positive force, it is only as good as it accommodates exit and voice—people need to be able to easily leave a bad situation, which is very much not the case in the housing market we have today, and people need to be able to effectively communicate back to rule makers and enforcers about what isn't working. This last point is always hard when dealing with a government, and it is especially hard in this case as the cognitive dissonance is extremely high. The very people who need to be asking, “Is this working?” are greatly convinced, “This is working!” without actually putting any critical thought to it.
When one assumes without doubt that the solution put forth will be successful, its implementation alone is a sign of success—no need to verify actual results. What’s more, often the initial, measurable results do indicate improvement with central planning. Partly this is due to adjustments before and immediately after made by those who stand to be impacted by the new policy—I am not saying they make the changes desired for policy success; I’m saying they take actions that falsely propagate as policy success while the underlying (often now worsened) problem remains. Beyond these head fakes is the bigger issue of the seen versus the unseen where the more difficult consequences reside.
Central planning reliably fails. Populist planning does too for the same reasons plus the overhang of bad influences and bad reasoning. It doesn’t get better when “the people” are in control of it. The Soviet Union didn’t fail and fall because it lost connection with the proletariat. It was doomed to failure from the start for listening to them.
Substacks mentioned:
I am avoiding the important digression that there is no such thing as the “will of the people”. Individuals have will. Groups do not. Groups take on characteristics of the individuals that comprise them, but that doesn’t create a will or opinion or otherwise of the group itself. Even a unanimous and exactly matched characteristic of all members of a group does not give that group said characteristic. That is a category error and abuse of the term. “That group is <blank> because every member of that group is <blank>” is an untrue statement. The correct statement would be, “That group is entirely comprised of individuals who are <blank>.” We shorten it to the prior version out of convenience, but it is fundamentally incorrect—something that ends up mattering when we devolve into group identity thinking. Thus, populism rests on a fundamental error in reasoning.