Monday, December 24, 2007

The Trouble with Populism as Campaign Strategy

Krugman recently argued that populism is the right campaign strategy for the Democratic candidate:

There’s a strong populist tide running in America right now. For example, a recent Democracy Corps survey of voter discontent found that the most commonly chosen phrase explaining what’s wrong with the country was “Big businesses get whatever they want in Washington."

And there’s every reason to believe that the Democrats can win big next year if they run with that populist tide.
The "every reason" that Krugman cites amounts to two focus groups that declared Edwards the winner of a single debate.

While with the Dean campaign in 2003-04, I became convinced that "populism" as Krugman uses the term here, meaning blaming big business for the country's woes, was a loser campaign strategy. The reason is due to phenomena of identity, a concept that has recently gained currency in economics. People identify very strongly with their employers, and many people work for big businesses. Consequently, many perceive attacks on business as attacks on themselves.

I don't have any hard evidence for the second part of the argument, but evidence for the fact that people identify strongly with their employers can be found in a 2005 Journal of Economic Perspectives paper, "Identity and the Economics of Organizations," by George Akerlof (a Nobel laureate) and Rachel Kranton. Here's a working paper version.

The paper describes the following findings from an analysis of the General Social Survey:
Employees were asked their degree of agreement or disagreement with the following statements: “I feel very little loyalty to this organization”; “my values and the organization’s values are very similar”; and “I am proud to be working for this organization.”

In the Survey, 82 percent of employees disagree, weakly or strongly, with having little loyalty toward their work organization; 78 percent agree that their values and those of their organization are similar; 90 percent say they are proud to be working for their organization; and 86 percent are very satisfied or moderately satisfied with their jobs.

These fractions differ only marginally across such divisions as gender, race, and blue collar vs. white collar occupation.
These results are from GSS in 1991. It's of course possible that things have changed, but my guess is that it people identify even more strongly with their employers now than they did before.

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