Intellectuals tend to view the term “populism” with derision. Bombastic leaders like Donald Trump in the United States, Marine Le Pen in France and Jair Bolsonaro in Brazil are politicians who irritate the intellectual elite, largely for their stances on immigration and nationalism. Recently, a talking head on MSNBC went so far as to refer to the new prime minister of Italy, Giorgia Meloni, whom many consider to be a populist, as a “fascist.”
While the term “populism” can be hard to pin down, one definition I like is: “a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups.” That doesn’t sound so bad, right? Shouldn’t politics represent the interests of common people, and not just some tiny elite?
The history of politics is mostly not populist. It’s one of elites running things at the expense of the masses. It’s true that we don’t always get ideal populists, in the sense of leaders who truly represent the body politic, but populism is not in and of itself a bad thing. The right kind of populism may even be something to be desired.
Moreover, in at least one area—regulation—the populists in America seem to be doing something right. Meanwhile, it’s the experts that have a less than stellar track record.
Regulatory Reform Under Trump
I should start off with a qualifier: Governments need experts, especially when it comes to issues that are difficult for the uninitiated to understand. This includes science, technology and innovation policy. It is also true with economic policy. Economics is counterintuitive: Open up an article in the American Economic Review and to a layperson it can feel like one is reading scientology.
We should follow the science where it makes sense. With that said, experts are human, too. And there are some good reasons why the public has lost faith in experts in recent decades. The wars in Iraq and Afghanistan—and before that, Vietnam—demonstrated the fallibility of the foreign policy elite. Few saw the financial crisis of 2008 coming, and, well, let’s face it: With public policy during the pandemic, the experts left a lot to be desired.
I think it almost goes without saying that in the media, the academy and the bureaucracy, former President Trump was—and continues to be—public enemy number one. Yet on regulation, he got a lot of things right. His administration was probably more focused on deregulation than any of its recent predecessors. This is not to say Trump and his team did everything perfectly, and many of his reforms were subsequently dismantled by the Biden administration. But you could argue Trump did a better job constraining the administrative state than even Ronald Reagan did.
Let’s look at the evidence: For one thing, Trump instituted the first federal regulatory budget. He imposed caps on the amount of cost federal agencies could impose on Americans with their rules. Joe Biden dismantled the budget, but a cap is an idea that’s making waves in the states and is sure to make a comeback at the national level. States like Ohio and Virginia have both adopted a version of the regulatory budgeting idea and they are even setting aggressive reduction goals on the order of 25 to 30%.
Trump’s most famous regulatory policy was probably his “one-in, two-out” program where for every new rule two had to be eliminated. Intellectuals hated this simple policy, calling it a “gimmick” in the media. However, its simplicity also makes it useful as a communication device. This helps explain why Idaho, Arizona, Texas, Ohio and Oklahoma have all adopted some version of this policy since Trump took office. In Arizona and Texas, the policy has been codified in state law.
Trump, and populists generally, have a reputation for being anti-science. A lot of people don’t know this, but the data behind some of the U.S. Environmental Protection Agency’s most expensive air pollution regulations is not accessible to researchers. So the studies that justify billion-dollar regulations can’t be replicated because no one can access the data. The Trump administration created a requirement for the Environmental Protection Agency to give greater consideration to studies whereby the underlying health data is publicly available and reproducible. So, who in fact is anti-science here?
The Trump administration was, in other ways, also more sensible on energy and climate issues. Trump instituted a National Environmental Policy Act reform to accelerate the approval of energy and infrastructure projects. Biden scaled back Trump’s reforms, but permitting reform will be critical to the implementation of the Inflation Reduction Act, a Biden priority. The progressive dream of a clean energy future won’t be possible if solar and wind farms, along with the transmission lines to connect them to the grid, can’t be built because permitting requirements and lawsuits drag projects out for years.
The Experts’ Track Record
When Trump entered office, there were about 186,468 pages in the Code of Federal Regulations. That number for 2020 was 186,069—so essentially flat. But already the code is growing again under Biden, by more than 2,000 pages in 2021.
But even holding regulation more or less constant, while seeing some reduced burdens in states that were inspired by the federal reforms, is a pretty significant achievement by historic standards. This is one legacy of Trump’s regulatory populism.
Now, let’s change gears for a moment and look at the track record of the expert class. Over the last 40 years, experts’ main contributions in the regulatory arena have been introducing cost-benefit analysis into government, as well as putting rules through a technocratic review process at the Office of Management and Budget (OMB). These reforms were intended to make regulations more efficient by ensuring they are based on sound, credible analysis.
Harvard law professor Cass Sunstein talks about the idea of a “cost-benefit state.” The term makes it sound like a scientific group of experts is checking every regulation to ensure the benefits exceed the costs. But Wayne Crews of the Competitive Enterprise Institute has pointed out that it is a myth that cost-benefit analysis is common for regulations. Only a tiny fraction of rules have anything close to what could be considered a complete cost-benefit analysis.
In a report I wrote a few years ago with Laura Jones of the Canadian Federation of Independent Businesses, we found that only about 7% of rules undergo OMB review, and just under 2% are required to have a regulatory impact analysis, which includes a cost-benefit analysis. About 1% of rules actually have something you could call a cost-benefit analysis, and only about four-tenths of 1% have a cost-benefit analysis that includes both a cost and a benefit calculation expressed in dollars.
It’s Not All Madness in Crowds
Frankly, it boggles the mind that the track record of the expert class is so bad. I’ve seen the caliber of the analysts working at OMB’s regulatory review office. These are incredibly knowledgeable and dedicated people, who often have flawless resumes, went to top schools and sometimes go on to be successful scholars of regulation. And yet the analysis that comes out of the technocratic review process is typically low quality and incomplete.
Moreover, the problems with modern cost-benefit analysis and OMB review are not just about the experts not getting their way. Analysts in the federal government, whether intentionally or not, tend to infuse their own politics into the economic analysis they produce. A few key assumptions are often what’s driving the topline conclusions. These include assumptions about how much weight to give to the future, the social value of saving a life or reducing carbon dioxide emissions and whether to consider benefits that people in other countries receive from U.S. policies.
Each of these inputs in analysis depends on value judgments. And yet if one opens up technical academic journal articles on these topics, they are often full of math, complicated equations and tables. But these studies’ conclusions reflect ethical choices made by the authors, which then get disguised as scientific facts when calculations get used in regulatory analysis. In this case, the man on the street may be right: The science really is closer to scientology.
Contrast this with the Trump administration, which implemented a new—and, I would argue, superior—form of “deregulatory cost-benefit analysis.” That analysis focused on capital accumulation, a key ingredient for economic growth. Few if any experts were calling for this analysis explicitly. Yet its great strength is it stripped out many of the misleading value-laden assumptions found in standard cost-benefit analyses.
Now, there is a danger in taking this idea—this populism—too far. We don’t want to reject good science. We don’t want QAnon running the government. But fortunately, we have an alternative to, on the one hand, experts who, even if out of a desire to do good, nevertheless deceptively report their own opinions as if they are hard science, and, on the other hand, the mob storming the U.S. Capitol. The alternative—the bedrock of a fact-based populism—is right in front of us: letting markets work with less government interference.
At least at the present moment, and at least when it comes to regulatory reform, populist politicians are more on the side of progress than are the experts. I’m not saying populists can be trusted at all times and on every issue. And experts are certainly invaluable in many instances. But free markets demonstrate that it’s not all madness in crowds. There is a great deal of wisdom as well.
A version of these remarks was presented at the Cato Institute in Washington, D.C. on October 6, 2022.