Reply to Grier on Venezuela
By Bryan Caplan
Bryan: Why in the world would you say my post was “calculated to offend”? In all honesty I find that labeling offensive.
Sorry if the humor didn’t come through, Kevin; my point was just that your argument would displease both Chavez supporters and Chavez opponents.
Now onto substance:
I’d like to ask you exactly what countries with strong economic growth in the postwar period have had populist revolutions and put in constituent assemblies to re-write the constitution?
I don’t know country-by-country growth numbers and constitutional histories well enough to immediately answer. But if you expand your sample a bit, it’s worth pointing out that Russia had very good growth in the decades before the 1917. (And while the Bolshevik victory was hardly what most Russians wanted, a fair election in 1917 would have put the just moderately less radical SRs in power). Pre-Castro Cuba was one of the richest countries in Latin America, though I can’t say for sure if there was a Cuban growth slowdown before the revolution started. And Chilean growth pre-Allende was reasonably good as far as I recall. (Can anyone chime in on these last two points?)
In any case, part of my point was that populist pressures would probably have stopped pro-growth policies from being enacted in the first place. If Venezuela had better growth, maybe Chavez would never have happened; but that doesn’t mean that a Venezuelan politician who advocated pro-growth policies would have been able to win and hold office.
Its a pretty common finding in the empirical literature that regime length and stability is related to economic performance.
So I’ve heard, though I wonder if these results would stand up if we put in revised estimates of economic performance in the Communist bloc – and including things like famine deaths in our measures of “economic performance.”
None of this says that bad policy isn’t often popular all around the world, but there is a big difference between that and the claim you seem to be making, that economic growth doesn’t help incumbent regimes’ popularity or stability.
I can easily believe that growth raises popularity all else equal. But does growth via unpopular policies raise popularity?
In general, the answer is “It depends on the unpopularity of the policy and the amount of growth.” However, in equilibrium, politicians have already grabbed the low-hanging fruit – the mildly unpopular policies that bring substantial growth. At the margin, all we have left are policies that are so unpopular that the added growth they bring wouldn’t compensate politicians who challenge the status quo.