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Killer Elephant
Image: Vaughan Leiberum

The elephant that killed Western democracy

Across the Western world, centrist political parties and their supporters are like punch-drunk boxers, reeling from a series of near-knockout blows.  First there was the British (i.e. English and Welsh) decision to leave the European Union.  Then came the ‘impossible’ election of President Donald Trump.  Then there was the less publicised failure of Renzi’s Italian constitutional referendum.  Now all eyes are on the Dutch, French and German elections where the populist right are expected to do well; may end up holding the balance of power; and, in the case of France, may even win the presidency.

How might we explain this radical shift in the way we do politics?  Is it simply that people have become more racist, misogynistic and damned deplorable?  Or could there be something more fundamental that is threatening to tear the fabric of our society apart?

One place to look for answers is the economy.  Since the early 1980s, politicians on both sides of the political centre have pursued a neo-liberal globalist economic policy that resulted in the offshoring of jobs from the developed world (and the consequent rise in incomes in developing economies like China and India).  While the global elite did very well out of this, the global middle class (which includes most UK/US/EU working people) has been systematically crushed.  The result is what has come to be known as the ‘elephant graph’:

Elephant graph

The problem is that the collapse in global middle class income is also a politically explosive collapse in middle class spending power.  For decades, this was papered over by offshoring jobs in order to cheapen consumer goods; and, crucially, by encouraging the middle classes to borrow on a massive scale.  What 2008 really signalled was the point at which the global middle class could no longer repay its debts.

Governments and central banks have only been able to keep the system on life-support by forcing down interest rates (allowing the middle class to continue servicing the debt) and by shifting bad debt from bank balance sheets to government books (and obliging governments to impose austerity in an attempt to offset the bad debt).

The trouble is that these ‘extend and pretend’ policies have further served to crush the incomes of the global middle class, and thereby the consumer spending that would produce a new round of genuine economic growth.  Instead, the period since 2008 has seen a transfer of wealth from the poor to the rich within each of the developed states.  The winners and losers since 2008 have been divided along class, age and geographical lines.  The rich have got richer while everyone else has fallen or flat-lined.  Core metropolitan regions have grown while peripheral areas have stagnated and declined.  The young have been asked to pick up the bill left by the wealthiest of the baby boomers.  As economist Mark Blyth points out, all of this translates into the collapse of the political centre and the rise of right-wing and to a lesser extent left-wing populism.

It should come as no surprise that in the Brexit referendum (in England and Wales) the areas voting to maintain the status quo were those that had enjoyed a degree of growth in the metropolitan areas.  Meanwhile, those areas that – in global terms – would be considered middle (i.e. working) class voted decisively for change.  The same thing happened in the USA last November.  Although the Democrats won the popular vote, they only did so by winning 88 of the 100 most populated counties – those located adjacent to Wall Street, the Washington Beltway and Silicon Valley.  Trump, on the other hand, won 2,600 middle (i.e. working) class counties (to Clinton’s  total of 500).

What both results show are states divided along class lines.  Not only have the centre parties failed to address this growing class divide, they have actively pursued policies that exacerbated it.  So much so, that when the chance of voting for something other than the lesser of two evils was presented to them, the majority of working class people opted for change… any change!

This could be catastrophic for democracy because on the one hand, the losers are embittered.  A sizable minority within the UK and the USA will use any means – including political violence – to overturn the results of the vote.  On the other hand, the necessary economic change is not within the gift of the populist demagogues that have been elected.  Leaving the EU cannot bring back control to an economy that was largely sold to the multinational corporations decades ago.  Nor can Trump hope to lower American wages to the point where corporations will relocate their far-east manufacturing plants to the USA.  That suggests some kind of – again possibly violent – backlash against those who promised to make their countries great again.

American journalist Chris Hedges sums up the problem facing the global elite:

“The final stages of capitalism, Karl Marx predicted, would be marked by global capital being unable to expand and generate profits at former levels. Capitalists would begin to consume the government along with the physical and social structures that sustained them. Democracy, social welfare, electoral participation, the common good and investment in public transportation, roads, bridges, utilities, industry, education, ecosystem protection and health care would be sacrificed to feed the mania for short-term profit. These assaults would destroy the host. This is the stage of late capitalism that Donald Trump represents.”

Sadly, in the absence of a radical shift in economic policy, Donald Trump and Brexit are just the beginning!

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