The civil service may save us all

I am not a fan of civil servants, but in the current political climate, they may end up as our saving grace.

Anyone who has ever watched ‘Yes, Minister’ or ‘Yes, Prime Minister’ knows that (at least in the UK) politicians aren’t really in charge of government. It is career civil servants who really run the show. This is why populist politicians on the right (and on the left) field calls to ‘drain the swamp’ and eliminate the ‘deep state’.

Unfortunately, we know that populist leaders on the left and right are terrible for the economy and a country. A study in 2023 that I discussed here showed that populist leaders typically cost the economy 10% of its GDP over 15 years. That is a massive cost to the economy, particularly in countries like those in Western Europe that already suffer from low growth due to demographic headwinds.

Now, Massimo Morelli and his colleagues investigated whether populists have a different impact on the economy in more bureaucratic states. The chart below shows an international sample of countries where populists were elected to run the government.

The sample was split between countries with a high bureaucracy score and countries with a low bureaucracy score. The bureaucracy score was constructed based on three V-Dem measures: rigorous and impartial administration, merit-based recruitment, and remuneration of civil servants. In other words, it measures less the size of the bureaucracy and more how independent and professional it is.

The chart below shows how economic performance changes in the years after a populist leader is elected. Countries with a professional and independent bureaucracy can delay the economic decline by about four years, but eventually even in these countries economic decline sets in. But if a country is lucky, the populist leader will be ousted after a term in office, and the worst can be avoided thanks to a strong civil service. But if a populist wins a second term in office, things become dangerous for the economy.

Economic performance after a country elects a populist leader