Five Second: Rodrik Defending Politicians

Alternatively, it is a defense of democracy, of transparent and accountable government of all stripes, or of national sovereignty against the internationalization of policy.

My discussant found it self-evident that allowing politicians greater room for maneuver was a cockamamie idea … . Remove constraints on what politicians can do, he implied, and all you will get are silly interventions that throttle markets and stall the engine of economic growth….

Adam Smith may have been right that “the propensity to truck, barter, and exchange” is innate to humans, but a panoply of non-market institutions is needed to realize this propensity. … Well-functioning markets are always embedded within broader mechanisms of collective governance. …

Once we recognize that markets require rules, we must next ask who writes those rules. … Of course, democracies can be captured too. But they are still our best safeguard against arbitrary rule. … It is one thing to advocate external restraints that enhance the quality of democratic deliberation – by preventing short-termism or demanding transparency, for example. It is another matter altogether to subvert democracy by privileging particular interests over others….

So the choice between democratic discretion at home and external restraint is not always a choice between good and bad policies. Even when the domestic political process works poorly, there is no guarantee that global institutions will work any better. Often, the choice is between yielding to domestic rent-seekers or to foreign ones. …

Ultimately, the question concerns whom we empower to make the rules that markets require. … So I readily plead guilty to my economist critic’s charge. I do want to make the world safe for democratic politicians. And, frankly, I wonder about those who do not.