With Brexit and Trump testing the resilience of democracy on both sides of the Atlantic, will it cope with a possible fiscal fallout should either fail to address imbalance in wealth?
Much to the annoyance of Young Turks with no memory of the 20th © or of TV before The Simpsons and reality shows, older people are still prone to musing wistfully about the “good old days” when life was better. It is true that such ‘buftis’ often lack any social media skills or even the smartphones on which to display them, and so miss out on gifts of modern life . But sometimes they are right. The benefits to civilisation of gunpowder, machine gums and ICBMs are, to say the least, a matter for debate. On a similar vein, have resent frenetic social and financial developments made the world a better place?
Social and financial developments are more subtle in their impact, but just as pervasive in their effect, Among these, political systems have evolved to govern such advances. Though they still have adherents, neither Dictatorship (of which Monarchy is a hereditary variant) nor Communism offers a viable form of government, acceptable to its people. So, with exceptions of the strange hybrid of China and some grubbier corners of the globe, Democracy has become dominant, even though it may be, in Churchill’s prophetic words “the worst form of government—apart from all other forms of government”.
Given rising standards of living over the last couple of centuries of those living under Democratic rule, it deserves some praise. But, because of its present role as “the only game in town”, scant attention is paid to its drawbacks, let alone its vulnerability. In one respect, it is no different from Monarchy, Dictatorship or Communism, in that it relies on a belief in its rewards and authority. If it fails in either, the result is revolution.
Revolution may not come as pitchforks and torches descending on the palace. In Portugal, the Soviet Union and Zimbabwe, scarcely a shot was fired. Only belief in “the system” running the country by the bulk of its people will resist and see off attempts at radical change. The foundation stone of such resistance is a constitution—or, in the case of fuddy-duddy states without one like Britain, long tradition having a similar effect. This provides both authority and common cause as long as citizens believe in it. But when constitution is seem as constipation, history shows instability, then misfortune for all follow: Weimar Germany; pre-civil-war Spain; Allende’s Chile. Currently Venezuela—an ostensibly rich democracy—is sliding down this slope.
Pillars of Western democracy, such as Britain and the USA, are considered immune to any such disruption. With centuries of political stability and increasing affluence behind them, why would any significant part of their population feel disaffected enough to cause unrest? The British union of 1707 led to 250 years of profit and prestige, right up to 1945. America fashioned a rich superpower out of boundless space and eager immigrants, using civics and wealth as common cause: widespread belief in the Constitution and the American Dream. This found its peak in the period after WW2. There was reverence, not ridicule for Kennedy when he said “ask not what your country can do for you but what you can do for your country”.
Shocks from oil prices and the Vietnam War dented nut did not damage America’s belief in itself. Britain, on the other hand, underwent a traumatic transformation under Callaghan and Thatcher. The miners’ strike and Toxteth tore British social fabric deeper than Watts did in the States. The Reagan boom years and military prowess displayed in the Gulf Wars restored Americans’ belief in “the system”. British faith was restored later with the salary and property boom around the millennium..
Boom times both sides of the Atlantic ended in the financial crash of 2008 when a witches’ brew of opaque financial derivatives, irresponsible lending, “Master of the Universe’ hubris and sloppy oversight laid several major financial institutions low. The British public was landed with eye-watering bills to clean up the mess. It was in the resulting austerity that cohesive belief in the system—in equality of opportunity and fairness on both sides of the Atlantic started to erode. In America, Joe Sixpack had pulled down $30 an hour building autos in Detroit, bulldozers in Ohio or airliners in Seattle found Toyota, Komatsu and Airbus had eaten their lunch. In Britain, from Cleveland to Coventry, British ex-miners, ex-steelworkers, ex-factory hands, etc found themselves on the economic scrapheap. On Canary Wharf or Wall Street, P45s fell on a few minions while board member and CEO carried on, remuneration unscathed. Fred Goodwin might have said ‘sorry’; Philip Green sweated a Parliamentary Committee easily. Both laughed all the way to the bank.
Comparison of UK Incomes, by Decile
With incomes now differing by a factor of nine, even after tax, the stage is set for the two horsemen (we can’t afford four)of the economic apocalypse: Brexit and Trump. The former being driven by a privileged Home Counties few using disaffected ex-workers in the North as democratic pawns. It is an unholy alliance that may drive Britain into an economic river-of-no-return and polarise the population in a rift that tears acoss party lines. Both repentant Remainers and hard-line Bexiteers are disowning a government that appears to speak for fewer and fewer people. Brexit is now inevitable. But the ‘Brexit Dividend’ appears to be, id anything, economic damage to a wide swathe of people, most of whom were not rich to start with, This bode ill for peace and stability.
But potential civil unrest here will be dwarfed by what is going on in the States, two years into Trumpdom out American cousins are digging themselves into a political feud worthy of the Hatfields and McCoys. America has long lived with an institutionalised two-party system and massive wealth disparity. As long as a generous amount of bi-partisan agreement mitigated the former and everyone believed they had a shot at rectifying the latter, things happened that benegited all. It wasn’t Trump who invented blinkered partisanship. But he has developed it into public entertainment in the style of a wrestling match or reality TV show. The recent political circus made of the (supposedly apolitical) appointment of a Supreme Court judge was largely of Trump’s doing. But, since the Democrats chose to engage in the debate with the same mid-wrestling absence of restraint and dignity means their chances of sweeping next month’s mid-terms are doubtful, even with outraged women incentivised to vote.
But, whatever the outcome, constipation in politics will we dwarfed by the effect of constipation in social mobility. Even before Trump came to power, weallth disparity in the States made Britain’s factor of ten inequalities seem positively minicule. The chart below shows wealth distribution by single percentile in 2016—before Trumpr’s tax breaks boosted the wealthy even further.
Wealth Distribution in the USA by Percentile
Were this $94.2 trillion distributed evenly over America’s 124 million households, each would have a tidy $760 million to bequeath the kids. But the lower 50% average $11,000 or under 1% of the wealth. In gact, the tip 1% owns more than the bottom 90%combined: a worker must toil for a month to earn what a CEO is paid in an hour,
What the media both sides of the Atlantic fails to realise (and therefore to cover) is the great mass of ordinary people, possibly even a majority, who are appalled by what has happened to those who represent them. They see them turning into self-absorbed, dogmatic pit bulls; many are repelled by the whole shooting match. In prosperous times, this might not have mattered. But people harmed by Trump’s tax break for the rich or by Brexit fallout will start looking for scapegoats.
This is dangerous.
Whereas monarchs could lop off dissenting heads, fascists could wheechle them into forced labout and communists could cattle truck them off to some KGB gulag east of Tomsk, dissent in democracy is a ticklish thing. It is never hard for politicians to pull the wool over the public’s eyes. Indeed it is a brave politician who risks his/her career by being honest. Present politicians on both sides of the Atlantic mostly lack such moral candour. So, when frustration with ineffectiveness of a vote between party rent-a-quotes makes more people angry and frustrated, them—Constitution or no— watch out.
Without a Constitution to check its government, the British have, until now, relied on good sense and fair play among MPs to find tolerable solutions. Thatcher broke the mould on this but May is exploiting what has never been exploited outside of times of war; the almost untramelled power available to her. It will need no more than a botched Brexit with no deal for the degree of disgust outside of political and media circles to boil over into something very un-British and very ugly.
To some extent, the Americans have it easier. There is still faith in the Constitution and its ability to handle aberrations as crassly insensitive and partisan as Trump. The fist line of defence is the Legislature—but it is being as tribal as the President. And, now that the Judiciary, in the from of the Supreme Court, has been stuffed with two Trump appointees. as check on White House demagoguery must be in question.
Americans are even more pecuniary than the British. As long as Trump’s claim to have boosting jobs and manufacturing holds, then the broad population can keep believing the American Dream is theirs,. But, should the ‘trickle-down’ effects of last year’s tax cuts for the rich not compensate for the massive budget deficit they imply by growing the economy and spreading the wealth, then a narrow rich elite will get even richer and the vast majority get poorer. Should that majority ever conclude the much-vaunted Constitution does not protect them and has become the tool of wealthy lawyers protecting their super-wealthy clients, this could get ugly. If Trump’s luck does not hold then the Constitution will mean no more than it did to those fomenting the LA riots of the 1990s. And once faith in any democratic system collapsess, it is a long, hard, impoverished road back. Ask any Venezuelan, or Zimbabwean.