Why are people turning to conmen for answers?

 

Simon Wren-Lewis wonders why disenchantment with globalization has caused people to turn to what he calls ‘snake oil salesmen’. That phrase is apt, because snake oil salesmen thrived for decades. And some of the reasons they did so might be relevant today.

My source here is a wonderful paper by Werner Troesken which describes the massive growth in patent medicines in 19^th century America. This suggests to me four points of similarity between snake oil salesmen and populist politicians.

First, patent remedies weren’t entirely ineffective. They often contained alcohol or opium which gave people at least a short-term pep. As Ran Spielger shows, if people mistake this short-term boost for a genuine cure (which is especially likely if their ailment would have cleared up anyway) then demand for quacks will grow.

In this tradition, Trump is mixing harmful anti-globalization policies with a helpful fiscal stimulus.

Second, the very fact that patent medicines failed to eradicate chronic ailments meant that the market for them grew over time as more people got ill. And ill people are desperate, and willing to take risks. Troesken quotes Albert Prescott, a chemistry professor writing in 1881:

“Just as men driven to straights will put their last pittance into the lottery instead of the savings bank… so, with the better excuse of bodily prostration and nervous restlessness, against his own judgement, and suffering with a glimmering apprehension of the wholly unscrupulous character of the human harpies who practice on his credulity, the sick man tries one game of chance among the unknown remedies.”

This, of course, expresses an element of prospect theory – that people facing losses take risks. And this same thing helps explain the rise of populism: people who feel they are losing out from the existing order gamble on change.

Third, patent medicine sellers devoted huge efforts to marketing – an effort which consisted of gross over-hype, claiming their products to be ‘most efficacious in every way’. Troesken says:

“Why promise to cure just one disease, and unnecessarily limit your market?  Promise to cure everything, and more people try the product—the more vile, painful, and incurable the disease, the better. Similarly, do not just claim to make the patient feel better, promise a full blown cure.”

Genuine doctors were powerless against this sales drive, because ill-informed customers could not distinguish between quality and quackery. Troesken says:

“The high-cost provider would have trouble signaling high quality through advertising because all providers, even the low-quality ones, are using their advertising to signal high quality.

Consumers would therefore discount the claims of the high-quality provider just as much as they discount the claims of the low-quality, dishonest provider….

The… physician might have also told the patient: ‘Don’t waste your money on patent medicines; they will not be able to cure you either.’

But absent some independent authority telling patients that the physician knew more than the advertiser of patent medicines, it is not clear why patients would have attached any more meaning to such a statement than they attached to advertisements.”

There’s a direct parallel between this and the inadequacy of the media today. The BBC’s decision to become impartial between truth and lies means that the ‘independent authority’ that might help people distinguish between quacks and experts is indeed absent.

Finally, quacks succeeded by denying that proper doctors had any genuine expertise – a denial aided by the fact that their expertise was indeed limited. (You might see another parallel here with today’s debate between elites and populists.)

Troesken quotes Scribner’s Monthly from 1881, a magazine which advertised patent medicines, despite objections from physicians:

“There is no such thing as medical authority…. The people are, and are obliged to be, the only judges of medicine and of physicians.”

When Jacob Rees-Mogg says that ‘experts, soothsayers, astrologers are all in the same categor’, he is simply echoing a 19^th century shyster – a fact which perhaps won’t surprise you.

My point here is simple. There’s nothing new under the sun. Simon Wren-Lewis is dead right to liken populists to snake oil salesmen because both use similar methods.

And the methods work. Liberals like to think that in the marketplace for ideas, good ideas will beat bad ones, just as in the marketplace for products, good ones will displace bad ones. History, however, warns us that in both cases, it isn’t necessarily so.

Chris Dillow is an economist and author of The End of Politics. He blogs atStumbling and Mumbling, where this article first appeared. Follow him on Twitter @CJFDillow

See: Arron Banks is no ‘revolutionary’. He’s a right-wing millionaire with offshore assets

See: Donald Trump is no working class hero – don’t parrot his propaganda

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