British Prime Minister Theresa May's keynote address to the Conservative Party Conference was overshadowed by coughing fits, a prankster and letters falling off a backdrop behind her. (Reuters)

It’s hard to imagine how British Prime Minister Theresa May’s eagerly anticipated speech to the Conservative Party’s annual convention in Manchester could have gone worse. Not only did she cough her way through it, with a lozenge from her chancellor bringing only temporary relief, but a noted prankster handed her the British equivalent of a “pink slip,” claiming he was ordered to do so by her Cabinet nemesis Boris Johnson. May’s big problem, however, is the fact that she has the impossible task of making Brexit — which economists, political scientists and others nearly all think was a bad idea — a success.

All of which raises an important question. How do bad ideas, like Brexit, gain legitimacy, and why do people stick with them despite buckets of evidence to the contrary?

For us, bad ideas are policy ideas that have been proven wrong empirically and fail to deliver the promised results even when actors have persisted with them. Our research shows that there are two ways in which bad ideas can take hold. Here, we think of ideas as being like financial markets, where the owner of the stock can have a “put” option — an option, but not an obligation, to sell a stock at a certain point in time.

In democracies, citizens, by collectively voting for a given party with given policy ideas, are exercising something like a put option. They are giving the ideas a chance, but retaining the option to ‘sell’ the ideas by voting for someone else if the ideas don’t work out. Voters can always throw the bums out, if the bums’ ideas are rotten.

In a technocracy, citizens don’t really have a put option — they are stuck with bad policy ideas, like it or not, since those in charge are not elected. Technocrats therefore have a strong incentive to keep on implementing policy ideas, even if they are bad policy ideas since their authority and legitimacy depends on them being viewed as the experts, and the rules allow them to ignore popular pressure to deliver better outcomes. In this case, the put option cannot be exercised and the bad ideas persist.


Protester comedian Simon Brodkin gives a thumbs-up after he gave an unemployment notice to British Prime Minister Theresa May as she was delivering her keynote speech at the Conservative Party annual conference. (AFP/Getty Images)

Democracies like the United Kingdom can abandon bad ideas. Eventually.

Many people see the Brexit vote as emblematic of “post truth” politics. The “leave” camp won because it promised that voters could “take back control” and generally “stick it” to the entire British establishment. Now, however, May’s government has to disentangle the United Kingdom from the European Union after 44 years of membership. Even the preliminary talks — over the exit bill, citizens’ rights and the land border with Northern Ireland — have proven to be a lot harder than Brexiteers promised, and worse is yet to come. It is simply impossible for the United Kingdom to get a better deal outside of the European Union than the deal it already had, which was fantastic. It kept its own currency, stayed out of the borderless E.U. Schengen zone, was able to veto anything it didn’t like and could still make big profits by clearing billions of euro transactions through the City of London.

The fights within the Tory Party mean that May — a reluctant “remainer” — is stuck with Brexit. However, others can mobilize opposition to bad ideas like Brexit through the traditional democratic means of organizing opposition to them, and waiting for them to fail. As May’s fall from grace makes clear, once voters figure out that ideas don’t do what they are supposed to, other politicians on the make can capitalize upon this and change the policies. This can be hard — especially when the press demonizes the opposition’s leader, as it does in the United Kingdom. But even so, the public has bought a put option on those policies, and parties have to pay up whenever the public eventually cashes it in.

Technocratic systems tend to keep on making the same mistake.

In contrast, technocratic political systems allow unelected experts and bureaucrats to make the call rather than elected politicians. Such systems pretty much guarantee a continuation of bad policy when it comes to correcting bad ideas. The European Union is a technocracy, run by bureaucrats who see rule-breaking as a challenge to their own authority. In particular, the “euro zone” — the countries of Europe that share a single currency — is subjected to technocratic rule. This is why euro zone technocrats were outraged when France and Germany broke the euro’s rules in 2003, and why they viewed the brief episode of European fiscal activism in 2009 as an error, even though it saved Europe from a massive depression. Indeed, technocrats made a bad idea worse by tightening monetary policy at the same time as fiscal policy between 2009 and 2011, discounting mounting evidence that the policies being followed were part of the problem rather than the solution.

These technocrats had incentives to learn the wrong lesson, because they had enormous political authority without real democratic responsibility to a public. Their response to policy failure was to double down on the policy. The European Union only started growing again in 2014, because member states made them turn a blind eye to the rules on fiscal deficits. After the most recent elections in Germany, the new government in Berlin will likely shift to the right. This may mean that fiscal tightening will return in 2018.

This explains differences in the stickiness of bad ideas

This illustrates the differences between democratic and technocratic politics. In the United Kingdom, “Leave” advocates’ inability to live up to their promises will eventually lead to their ideas being discredited, as May’s approval ratings suggest. But it may well be too late to stop or reverse Britain’s exit from the European Union, which is scheduled for March 2019. However, the bad ideas that prevail in the technocratic euro zone have had more sticking power. Democratic put options should eventually clear the marketplace of bad ideas, even if “eventually” can take a fair amount of time. In contrast, technocratic systems, where puts cannot be written, may never self-correct, and as a result they can experience long periods of policy dysfunction even when the policies obviously are not working.

Matthias Matthijs is assistant professor of international political economy at Johns Hopkins University’s School of Advanced International Studies.

Mark Blyth is the Eastman Professor of Political Economy at Brown University.