Trumpian populism has not yet taken hold here. Why? Perhaps because this country’s not quite as unequal as others.
One good thing about taking a break from work is that it gives you time to let your mind wander from all the pressing concerns of our fast-moving world – the preoccupation with this ‘‘crisis’’ and that ‘‘crisis’’ – to less immediate but more important problems. And it helps if you’ve used the time to read a good book or two.
On my recent long break – soon to be followed, I fear, by my summer holiday – I read The Crisis of Democratic Capitalism, by Martin Wolf. Wolf is the chief economics commentator of the Financial Times in London and the global doyen of my tiny profession of economics editors.
Wolf has two worries. Democracy isn’t working well and neither is capitalism.
He sees many signs that faith in democracy is declining and voters are turning to authoritarian demagogues peddling populist solutions to difficult problems.
You can see that in the election of Donald Trump and the even more remarkable possibility that this self-serving con man could be given another turn at the wheel. You see it in Britain’s self-harming decision to leave the European Union.
And you see the rise of rightwing populism in an ever-growing number of European countries – from Hungary to Holland, not to mention in South America – much of it involving resentment of immigrants, particularly Muslims, and the search for scapegoats.
Turning to capitalism, there is much dissatisfaction with the evident failure of ‘‘neoliberalism’’ – the doctrine that less government and more freedom for business is the path to prosperity.
The privatisation of governmentowned businesses has often made things worse rather than better. The contracting of private businesses to provide government services hasn’t helped. Nor has the use of private consultants rather than the public service.
Wolf argues that the poor performance of the economy is the main explanation for the rise of populism in the rich democracies.
The global financial crisis of 2008 led to much disillusionment. Particularly in America, deregulation of the banks left them free to make many bad loans, but when the house of cards collapsed and plunged the advanced economies into the Great Recession, billions of taxpayers’ dollars had to be used to bail out the banks, but the bankers escaped unpunished.
Leaving aside the temporary disruption of the pandemic, the advanced economies have never since returned to healthy growth and rising living standards.
Then there’s globalisation. It has moved much manufacturing activity from America and Europe to China and other Asian countries to the great benefit of consumers of manufactured goods throughout the rich world.
It lifted millions of workers out of poverty in Asia, while robbing many American workers of their well-paid jobs in manufacturing.
Governments could easily have used their budgets to require those of us who benefited from cheaper cars, clothing and all the rest to compensate and help those who lost their jobs but, in the era of neoliberalism, they didn’t bother.
It was the decisions of the former blue-collar workers of the rust belt states to move their votes from Democrat to Trump that pushed him across the line in 2016.
Wolf says, ‘‘people expect the economy to deliver reasonable levels of prosperity and opportunity to themselves and their children’’. When it doesn’t fulfil those expectations ‘‘they become frustrated and resentful’’.
‘‘Instead … it has generated soaring inequality, dead-end jobs and [economic] instability.’’
Whether you look at politics or the economy, you see we’re moving to a plutocracy – government by the rich and powerful. You see powerful – but often harmful – industries buying favourable treatment with generous donations to political parties.
And you see the way our chief executive class has increased its remuneration out of all comparison, while holding down the wages of their fellow employees.
But Wolf’s story applies more fully to America, Britain and Europe than it does to us. While it’s true living standards in Australia have hardly risen for the past decade, things here haven’t been as bad.
Our one great would-be populist saviour, Pauline Hanson, hasn’t got far. Our two big parties’ problems have been with the Greens and teals.
And while our incomes have become more unequal over the decades, they haven’t worsened much in the past two decades – except at the very top.
Part of that lack of deterioration is owed to our system of regularly – and fairly generously – increasing minimum award wages.
Another saviour has been the Labor governments’ umbilical cord to the union movement, something not matched by America’s Democrats.
Anthony Albanese hasn’t seemed terribly brave on many issues, but last week he pressed on with closing the legal loopholes employers have long been using to chisel their workers, against ferocious opposition from the (big) Business Council, the Mining Council and the employer groups.
According to them, Labor’s changes will destroy many jobs and kill the economy. Don’t stay up waiting for it to happen.
Republished from The Sydney Morning Herald on December 13, 2023.
Readers might also be interesting in:
Political polarisation in the US – Part 1: How real is the problem?
Economics Editor, Sydney Morning Herald.
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