A resolution for the establishment in 2017: No more no-choice politics

This year, we learned the limits of no-choice politics: Telling voters they have to do something they don’t like, or else.

Establishment political parties have been playing a dangerous game – contriving situations in which the only acceptable choice happens to be one favored by elites, and hoping that voters will choose it under duress.

Voters have been revolting against no-choice politics by choosing the unthinkable: Brexit, fringe political parties, rejecting the Italian reform referendum, Trump.

You should be mad at voters for the alarming choices they are making. I certainly am. But you should also be mad at the establishment leaders and political parties who put voters in the position of choosing between the unpalatable and the absurd.

An ever-closer union, whether you like it or not

For decades, the European Union has been officially committed to “ever closer union” – integration that increases over time. But integration in all areas is not necessarily popular with voters.

In particular, there has been resistance to fiscal interdependence – the sort of taxes and transfers that hold the United States together.

Residents of rich countries in Europe suspect (correctly) that fiscal interdependence would mean ongoing transfers of tax revenue toward poorer countries. And residents of poorer countries suspect (correctly) that Germany and other rich countries will seek to tie policy conditions to fiscal integration.

The euro is a device of no-choice politics

Without fiscal transfers to prop up places where the economy is weak, the way countries usually deal with economic imbalances is through exchange rates: The currency of the country in recession weakens, which reduces real wages and prices and makes the country more competitive.

The Euro makes exchange-rate adjustments within the eurozone impossible, meaning that asymmetric economic shocks cannot be addressed with exchange rates or with fiscal policy.

With no good way to adjust, countries of southern Europe have been immiserated since the 2008 economic crash, which hit them harder than it hit countries like Germany.

This was a foreseeable problem. And the elites that foresaw it had a solution in mind: Ever closer union.

That is, the euro without fiscal transfers would prove unworkable, and unwinding the euro would prove unworkable, and therefore Europeans would have no choice but to agree to greater fiscal integration.

No-choice politics have worked poorly for the eurozone

Unsurprisingly, wealthier countries have resisted the creation of the sorts of fiscal transfers that would make the eurozone workable. I call this the “What’s in it for the Dutch?” problem.

That said, richer eurozone members have sometimes agreed to one-off support to struggling countries when it really seemed like they had no choice but to give it.

For example, banks in northern Europe hold a lot of debt issued by the government of Greece, so the members of the eurozone had to bail Greece out if they wished to avoid a catastrophic banking crisis. This did not endear Greece to other eurozone countries.

But it’s not just the richer countries in the zone suffering from no-choice politics. Germany and others have attached stringent terms to their financial assistance, insisting that the laggard countries engage in fiscal austerity and economic reform.

In 2011, Italy and Greece had no choice but to install technocratic governments acceptable to German creditors if they wished to retain access to the credit markets – a situation that surely did not feel terribly democratic to the people of Italy or Greece.

Is it any surprise people all over Europe are pissed off, and feel like they do not have a choice in how they are governed? Should they trust the establishment parties that created the situations in which they had no choice but to do things they didn’t want to do?

Is it a surprise that European voters are resorting to desperate measures to regain control over their countries’ public policy?

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Italian Prime Minister Matteo Renzi saw his constitutional referendum fail.
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REUTERS/Stefano Rellandini

American immigration policy is driven by no-choice politics

In the United States, elites in both political parties favor liberal immigration policies that admit large numbers of low-skilled workers.

Liberal politicians favor these policies for a combination of humanitarian, constituency politics and demographic reasons. Conservative politicians want to ensure a plentiful supply of low-skilled labor so businesses can pay low wages.

For decades, the federal government has implemented a de-facto liberalization of immigration by failing to effectively enforce immigration laws – not just by letting people cross the border undetected, but also by failing to track who overstays visas and by failing to hold businesses accountable for employing people not authorized to work in the United States.

As a result, approximately 12 million people now live in the United States without legal authorization to be here.

Advocates of immigration reform point out, accurately, that deporting these people en masse would be both impractical and a humanitarian disaster, and that many of them have formed deep ties to the United States. We have no choice but to let a large fraction of them stay.

But we ended up in this no-choice situation by the willful action of political elites who wanted Americans to choose high immigration levels. Effective enforcement on the front end would have left American voters with a choice about what immigration policy to have.

Given this history, why would voters trust the parameters of comprehensive immigration reform, which is built on a promise that next time immigration laws will be enforced for real?

Voters are revolting against no-choice politics

The main argument against Brexit centered not so much on the European Union being a good thing, but on the idea that withdrawal would lead to grave economic damage.

The main argument for electing Hillary Clinton, the second-most unpopular major party presidential nominee in the history of American political polling, was that Donald Trump was too unacceptable to be president.

Italy’s failed reform referendum was supposed to be necessary to prevent another banking crisis.

Voters have repeatedly insisted that they do, in fact, have a choice in these supposed no-choice matters. They have called the establishment’s bluff.

I think we are about to learn the establishment was not bluffing about how unacceptable some of these options were, especially Trump. Voters may be about to learn a painful lesson.

But establishment politicians should learn a painful lesson, too: If you want to be sure to beat a terrible option, offer people something they actually like. Don’t tell them they have no choice but to do what you want.