Rising polarisation causes major shifts on US environmental policy between administrations — this worries CEOs: Vincent Pons

Vincent Pons is Michael B. Kim Associate Professor at Harvard Business School. Speaking to Srijana Mitra Das, he discusses the role of democracy and stability in bolstering economies:

Q. What is the core of your research?
A. I work on the weakening of democracy, the manifestations of this worldwide and possible remedies towards it. By this, I refer to multiple phenomena including the decline of voter participation, the multiplication of protests and increased polarisation. These are seen globally now, including in some of the oldest democracies like France and the United States.

^{This problem is very deep because democracy itself relies on the delegation of decision-making to millions of citizens — hence, remedying this situation requires studying the dynamics of electoral politics with an aim to bringing citizens back to the polls. We need a fundamental understanding of the different steps of the electoral cycle through which preferences are aggregated into an electoral outcome and then policies — if we can see at which steps there might be a failure, we can learn how to address that.}
Q. Your writing mentions how global CEOs are worried about a democratic waning worldwide — can you elaborate?
A. Political stability and democracy are key conditions for economic growth — CEOs recognise this. When they see a democratic weakening, they consider this an important concern for their company.

This has been noted in recent surveys of CEOs in the US, for instance, where, increasingly, the first concern voiced is governmental and political instability. The connection between democracy and economic outcomes has also been established empirically — many economists have found democracy typically leads to more prosperity.


Q. In the US, what economic outcomes do you connect to recent electoral dynamics?
A. There is a worrying rise in polarisation in the US along with a deep lack of belief in the other side’s intentions. This leads to constant changes in policies implemented by successive Presidents. Consider the environment — Barack Obama backed the Paris Agreement in 2015, among the first global treaties seeking ambitious environmental action. Donald Trump withdrew the US from this. Joe Biden returned to it and has also been implementing very ambitious green programs, like the Inflation Reduction Act, support for renewable energy, electric vehicles, etc.

Now, as both parties prepare for the 2024 election, Republican voices have a ‘Project 2025’ mentioning what a Republican President would implement in terms of policies — this goes back on all the things the Biden administration has been doing.

So, there is this back and forth between Obama, Trump, Biden and perhaps a future Republican President. This is problematic for any company which needs to know how long policies will even last. This generates uncertainty which is a major issue for economic activity. We need a proper debate on tackling climate change — but this cannot occur with such strong polarisation levels.

Q. What explains the enduring popularity of Donald Trump?
A. There is increasing distrust in the US against the elite. Among reasons is the 2008 crisis where the economic elite, big banks particularly, was seen as being responsible, technocrats as not preventing this and the political elite as bailing out large banks.

Secondly, the economic elite has long advocated more globalisation and less trade barriers. But globalisation creates both winners and losers and the latter are disenchanted. So, a candidate can say these elites negatively impact ordinary people and they’ll fix that — Donald Trump has convinced many voters he is such a figure.

Q. How does he do this despite having a globalised real estate business himself?
A. That’s the paradox. You could say he himself is part of an elite — but he’s an outsider to the political elite because he isn’t a career politician. Trump joined politics late which lets him say, ‘I’m not one of them and I can actually help you’.

Q. What drives US voter preferences now?
A. Some of the factors I’ve studied show voter preferences and levels of engagement are heavily determined by the context where we live. I’ve studied voters who move across states or counties to see how they adjust their behaviour — they become much closer to the average behaviour of the place they move to.

Someone who moves from a place with low to high participation becomes more likely to participate in elections. Someone who moves from a Republican-dominated area to a Democrat-led location is more likely to become a Democrat. Our behaviour is heavily determined by our context, peers and the institutions, economic environment and media landscape we find. Electoral turnouts are also determined by the ease of voter registration — in France and the US, eligible citizens have to go do this themselves. This often builds a barrier because it takes time and effort.

In an experiment in France, we sent volunteers to residences, giving citizens information or helping them register — these visits increased people’s interest and participation in the election. We tend to assume people who don’t vote aren’t interested but oftentimes, this is not the case.

Views expressed are personal