THE INCREASINGLY OPEN EXPRESSION of unvarnished animus toward people of different race, religion, ethnicity, and even gender has become the staple of populist leaders throughout the world.
From the United States to Hungary, from Italy to India, leaders who offer little more than racism and/or bigotry as their policy platform are becoming a defining feature of the political landscape, a ground force that shapes elections and policies.
In the United States, in 2016, the degree to which a person deeply identified as white was one of the strongest predictors of support for Donald Trump among Republicans, much more than, for example, economic anxiety.1The vicious vocabulary our leaders employ daily legitimizes the public expression of views some people probably had already, but were rarely spoken or acted upon. In one instance of everyday racism, a white woman in a supermarket in the US called the police on a black woman whom she suspected, on the basis of a phone conversation she was overhearing, was trying to sell food stamps—and in the process rather tellingly exclaimed, “We are going to build this wall.” On the face of it, the comment made no sense: the accused was an American citizen who belonged on the same side of the hypothetical wall as her white critic.
But of course we all know what she meant. She was expressing her preference for a society free of people different from her, with President Trump’s metonymic wall separating the races. This is why the wall has become such a flashpoint in American politics, an image of what one side dreams of and the other fears.
Preferences, at one level, are what they are. Economists make a sharp distinction between preferences and beliefs. Preferences reflect whether we prefer cake or cookies, the beach or the mountains, brown people or white. Not when we are ignorant of the merits of each and may therefore be swayed by information, but when we know everything we could possibly need to know. People can have wrong beliefs but they cannot have wrong preferences—the lady in the supermarket can insist she is under no obligation to make sense. Yet it is worth trying to understand why people have such views before we sink deeper into the morass of racism, especially because it is impossible to think about the policy choices we will confront in this book without getting a handle on what these preferences represent and where they come from.
When we discuss the limits of economic growth, the pain of inequality, or the costs and benefits of protecting the environment, there is no way to avoid dealing with the distinction between what individuals need and what they want, and how society at large should value those desires.Unfortunately, traditional economics is ill-equipped to help us here. The attitude in mainstream economics has been very much one of tolerance of people’s views and opinions; we may not share them, but who are we to pass judgment? We can shout out the facts to make sure people have the right information, but only they can decide what they like. Moreover, there is often a hope the market will take care of the problem of bigotry. People who happen to have petty, narrow-minded preferences should not survive in the marketplace, since being tolerant is good business practice. Take, for example, a baker who does not want to bake cakes for same-sex weddings. He will lose sales from all same-sex weddings, which will go to other bakers. They will make money; he will not.
Except it does not always work that way. Bakers who don’t want to bake for same-sex weddings don’t go bankrupt, in part because they win support from like-minded people. Bigotry can be good business, at least for some, and it seems to be good politics as well. As a result, economics in recent years has had to reckon with preferences, and we have gained some useful insights about how we might be able to get out of this mess.