Why Populists Neglect Automation: The Political Economy of Economic Dislocation
Abstract: Why do politicians blame offshoring for manufacturing job losses when automation is at least as significant a culprit? Why have voters predominantly responded to automation and offshoring shocks by demanding a retreat from globalization but not transfers to the unemployed? We propose that both questions are explained by the collision of economic nationalism and comparative advantage trade. Economic nationalists, who dislike vulnerability and oppose imports, oppose policies that hamper their own state’s comparative advantage industries, like regulations of high-tech automation. They are more comfortable with tariffs restricting imports. In the United States, which has a comparative advantage in the production of capital intensive automation technologies, this effect undercuts the willingness of voters to support policies that would protect manufacturing jobs by regulating automation. Opportunistic politicians emphasize offshoring because economic nationalist voters are unified in their support for limiting imports but conflicted in their support for limiting automation. We develop a formal model of a citizen’s demand for policy in response to economic dislocation, where citizens form preferences over redistribution plans and a policy response that blunts dislocation (like a tariff or a restriction on automation). The source (foreign versus domestic) and type (labor versus automation) of a shock affects the preferred weights citizens place on each policy. We test the model’s predictions with a survey experiment fielded in the United States. Consistent with expectations, domestic automation shocks increase the weight respondents place on redistribution versus a regulatory response, while globalization shocks place much heavier weight on regulatory (tariff) responses. Altering the source of each shock - by emphasizing foreign-produced automation technology or within-country labor relocation - reweights responses towards regulations in the former case and redistribution in the latter case. Our findings contribute to our understanding of the political consequences of the current populist moment as well as give predictions about the future consequences of automation shocks.