Power and Progress (part 3)

August 28, 2025

Previous | Next

Acemoglu and Johnson argue that the link between technological progress and general prosperity is not automatic. It depends on other variables, especially how well new technologies sustain the demand for labor and how much workers share the benefits of rising productivity. Having supported their argument with historical examples, they now apply it to the more recent economy, especially the period since 1980.

The “graveyard of shared prosperity”

At the height of the postwar prosperity, believers in the “productivity bandwagon” expected further technological breakthroughs to raise productivity and wages, continuing and even surpassing the postwar prosperity. Digital technologies, like the mainframe computers already in use in the 1960s, looked very promising. As the digital revolution took off, the rate of innovation soared.

“Digital technologies, even more so than electricity…are general purpose, enabling a wide range of applications.” They have the potential not only to replace human labor with smart machines, but also to complement and enhance human labor. During my university career, I used computers to enhance my teaching, research and administrative work in numerous ways, but they never replaced me in any of those roles. Many manufacturing workers weren’t so lucky, as new technologies were used more to replace labor than to augment it. As the authors put it, “Digital technologies became the graveyard of shared prosperity.” I would emphasize the word “shared” in that claim, since no one disputes that digital technologies have created great riches for some and modest gains for others.

The authors attribute much of the decline of shared prosperity to a more conservative vision of progress that developed in the 1960s and 70s and became dominant after the “Reagan revolution” of 1980. In this vision, the path to prosperity started at the top, with wealthy investors, high-profit corporations, and well-rewarded shareholders. If left alone by government, they would create more wealth and income for all. But to maximize investment, the rich needed low taxes; and to maximize profits, corporations needed low taxes, minimal regulation, and low labor costs. “Many American managers came to see labor as a cost, not as a resource…This meant reducing the amount of labor used in production through automation.”

Americans may place most of the blame for lost manufacturing jobs on foreign competitors like China, but automation is responsible for more job losses and downward mobility. While foreign workers and immigrants did take many of the of the low-wage manufacturing jobs, automation destroyed more of the jobs that had been paying good wages.

The workers who remained in manufacturing were more productive, but the demand for additional workers fell. In addition, total factor productivity grew at a much slower rate after 1980 than in the previous four decades. Median wages grew even more slowly, less than 0.45% per year.

Inequality increased in a number of ways:

[T]he share of the richest 1 percent of US households in national income rose from around 10 percent in 1980 to 19 percent in 2019…Throughout most of the twentieth century, about 67-70 percent of national income went to workers, and the rest went to capital (in the form of payments for machinery and profits). From the 1980s onward, things started getting much better for capital and much worse for workers . By 2019, labor’s share of national income had dropped to under 60 percent…

What income did go to labor was divided more unevenly across educational levels, with college-educated workers gaining some ground, while less educated workers saw actual declines in real earnings. Rather than train less educated workers, employers more often replaced them with fewer but more educated workers. Along with the destruction of manufacturing jobs came the decline of unions and the reduced power of workers to fight for good wages and job training.

The value of the five biggest corporations—Google, Facebook, Apple, Amazon and Microsoft—grew to about 20 percent of GDP, twice as much as the value of the five biggest corporations at the height of the Gilded Age in 1900.

Artificial intelligence

Acemoglu and Johnson see artificial intelligence making matters worse, since so many employers are using it to replace human labor rather than augment it. Rather than ask how machines can be useful to workers, proponents of new technologies ask how machines can equal or surpass human workers. Taken to an extreme, the goal of AI enthusiasts is to achieve a general machine intelligence that can make any decision as well as a human. From a business standpoint, it is the ultimate way of cutting labor costs, by replacing educated as well as less-educated labor.

So far, the results have been a lot of what the authors call “so-so automation,” with only modest gains in productivity. The reason, they think: “Humans are good at most of what they do, and AI-based automation is not likely to have impressive results when it simply replaces humans in tasks for which we accumulated relevant skills over centuries.”

What makes us think that the way to prosperity is to devalue the human capacities of the workers who are trying to prosper? That may generate short-term profits for the owners of the machines, but not shared and sustained prosperity. The authors warn that “infatuation with machine intelligence encourages mass-scale data collection, the disempowerment of workers and citizens, and a scramble to automate work, even when this is no more than so-so automation—meaning that it has only small productivity benefits.”

The threat to democracy

The part of the book I found most disturbing was the chapter, “Democracy Breaks.” It describes what some have called a new “digital dictatorship,” most evident in China. With the help of some of the world’s largest AI companies, the Chinese government has turned the data-crunching capacities of new technologies into tools of mass surveillance and control. The aim is to monitor, rate, and sanction the behavior of any citizen. Forty years after Orwell’s imaginary 1984, Big Brother is watching more efficiently than ever. Other authoritarian governments—Russia, Iran, Saudi Arabia, Hungary, and even India—are developing similar capabilities.

In the United States, “The NSA cooperated with Google, Microsoft, Facebook, Yahoo!, various other internet service providers, and telephone companies such as AT & T and Verizon to scoop up huge amounts of data about American citizens’ internet searches, online communications and phone calls.”

Digital media have also played a role in polarizing Americans and debasing civil discourse. Media companies whose business model was based on selling ads, such as Facebook, wanted to keep their users as engaged as possible. “Any messages that garnered strong emotions, including of course hate speech and provocative misinformation, were favored by the platform’s algorithms because they triggered intense engagement from thousands, sometimes hundreds of thousands, of users.”

The hope that digital media would—like the printing press of an earlier era—empower citizens and strengthen democracy has not been fulfilled. The underlying problem, according to Acemoglu and Johnson, is that technology companies prefer a more “technocratic approach, which maintains that many important decisions are too complex for regular people.” In the economy, that encourages the devaluation and replacement of human  laborers and a flow of economic rewards to the rich. In government, it enables the surveillance and control of citizens and a flow of political power to authoritarian leaders.

Redirecting technology

In their final chapter, Acemoglu and Johnson describe a three-pronged formula for redirecting technology: “altering the narrative and changing norms…cultivating countervailing powers…[and] policy solutions.”

The new narrative would reject “trickle-down economics” and shift the emphasis back to shared prosperity. It would encourage decision-makers to address the wellbeing of ordinary people, instead of assuming that what’s good for corporate profits or large fortunes is good for everybody. Hopefully it would influence how business managers think and what they learn in business school.

Countervailing power against self-serving technocrats and corporations can come from many directions—government, civic organization and online communities. Now that blue-collar manufacturing workers are a smaller part of the labor force, organized labor should grow to embrace many occupations. Workers should organize on a broader level than the plant or the firm and play a major role in national politics.

Here are some of the policy changes they recommend:

  • Subsidize socially beneficial technologies, especially those that augment human labor rather than replace it
  • Support research on such technologies, especially in education and health care
  • Break up technology companies that have become too monopolistic
  • Reform tax policies that favor investments in equipment over hiring of workers
  • Increase tax incentives for worker training
  • Repeal the law that exempts internet platforms from any accountability for what they post
  • Tax platforms that rely on advertising in favor of those with alternative revenue streams, such as subscriptions or nonprofit contributions
  • Raise the minimum wage, but do not provide a Universal Basic Income

The authors regard a Universal Basic Income as “defeatist,” since it “fully buys into the vision of the business and tech elite that they are the enlightened, talented people who should generously finance the rest.” What they support instead is a new vision committed to seeing the value and productive potential in all of us and investing accordingly.

Leave a Comment » | Uncategorized | Tagged: , , , , , , , | Permalink
Posted by Ed Steffes

Why Trump Would Like to Be King

June 13, 2025

Previous | Next

Organizers of the “No Kings” protests are planning hundreds of rallies this weekend to remind the country that the President is not a monarch. Why does Donald Trump give so many people the impression that he is trying to be one? Why would he want to be one?

The short answer is that Trump wants to accomplish through undemocratic means what he cannot accomplish through democratic means. One of his favorite gambits is to declare a national emergency about something, and then claim dubious emergency powers to impose his policies. In the first six months of his second term, he has already done this several times.

The power to tariff

Consider his trade policy. Although the United States has been running a trade deficit with the rest of the world for the past fifty years, President Trump has now declared this a national emergency. He claims that his emergency economic powers allow him to impose tariffs on foreign goods unilaterally, although the Constitution clearly assigns that power to Congress.

He has tried to sell his tariffs to the public by claiming that foreigners will pay them. As more people come to realize that American importers and consumers will pay them, support for tariffs has declined sharply. Some supporters remain, such as domestic steel companies hoping to benefit by higher prices on foreign steel, but they are outnumbered by the companies and consumers relying on foreign goods. If a democratic vote were held today, Trump’s sweeping tariff proposal would lose.

The power to defund

Another part of Trump’s undemocratic agenda is his war on the administrative state, the federal government agencies that carry out mandates given them by Congress. Here he has used the “emergency” of the longstanding budget deficit as an excuse for drastic cuts to the federal workforce, especially in agencies he dislikes, like the Agency for International Development, the Environmental Protection Agency, and the Consumer Financial Protection Bureau.

The Constitution gives Congress the power to spend, and the Congressional Budget and Impoundment Control Act bars the executive from refusing to spend what Congress has allocated without its permission. Russell Vought, Trump’s budget director and major contributor to the Project 2025 blueprint for radically conservative government, has encouraged Trump to violate this law in the hope that the Supreme Court would then declare it unconstitutional.

Americans are always interested in reducing “waste, fraud, and abuse,” but they are not very keen on closing Social Security offices, reducing veterans’ services, defunding cancer research, firing weather forecasters, or weakening consumer protections. Ironically, now that Trump must work with Congress to pass a budget, he supports the “One Big Beautiful Bill” that the Congressional Budget Office and most economists expect to increase the deficit. That raises suspicion that the assault on the federal bureaucracy was never about deficit reduction in the first place, even if Elon Musk wanted it to be.

The power to deport

President Trump’s favorite “emergency” justifying extraordinary powers is immigration. Here he has had more popular support, especially for preventing illegal border crossings and deporting immigrants who have committed other crimes.

He could have pursued these goals legally, in cooperation with Congress. Instead, he told lawmakers during the campaign to kill the bipartisan bill that would have tightened border security and provided some path to citizenship for migrants who have been here many years. Meanwhile he riled up his base with a disinformation campaign associating immigrants in general with violent crime, a correlation that the evidence does not support. Having promised to prioritize criminal deportations, his administration then proceeded to order Immigration and Customs Enforcement (ICE) to deport large numbers of immigrants with no criminal records as quickly as possible. Finding and prosecuting criminals just doesn’t meet the quotas, and giving people their day in court takes too long to please Trump.

Many Americans who support normal criminal law enforcement are distressed to see armed and masked ICE agents rounding up people they consider harmless, like restaurant workers, strawberry pickers, students on the way to school, or job seekers in Home Depot parking lots, let alone mothers dropping off their children at day care centers. Most Americans do not support forcing the immigrant parents of U.S.-born children to choose between leaving their children behind or depriving their children of their rights as citizens. Trump’s solution was to try to end birthright citizenship by executive order, in blatant defiance of the Constitution.

The power to intimidate

When people protested these policies, Trump declared the protests themselves an emergency justifying the militarization of law enforcement. He deployed the National Guard and other military forces without the consent of local authorities, telling a federal court that he was putting down a rebellion against the United States. (Homeland Security Secretary Kristi Noem suggested a more sinister motive—“liberating” the people of California from their “Marxist” leadership, as if the administration had a right to overturn California elections too.) Trump promised that further protests would be met by overwhelming force, a stunningly hypocritical position for a president who failed to mobilize the military to defend the Capitol on January 6, and then pardoned the rioters convicted of assaulting and injuring police officers.

If Trump is going to mobilize the military for every small and mostly peaceful demonstration—misleading portrayals by right-wing media to the contrary notwithstanding—his kingdom will soon look a lot like a police state. We don’t need too much imagination to see him responding to the social unrest he helps create by declaring martial law and arresting opposition leaders, Putin style. He has already said that arresting Governor Gavin Newsom is “a great idea.”

Federal courts have ruled that many of Trump’s actions—imposing tariffs unilaterally, impounding federal funds, deporting migrants without hearings, and deploying the National Guard to put down an imaginary rebellion—exceed his authority. That covers a lot of his agenda, making Richard Nixon’s domestic lawlessness pale by comparison. Many of these rulings are on hold as the administration pursues its appeals. Nevertheless, the protestors—by which I mean the peaceful majority—are often the ones with the law on their side, while the administration is the larger threat to law and order. President Trump said the other day that he is certainly not a king, since he is having so much trouble getting what he wants. Let’s hope we keep it that way.

Leave a Comment » | Uncategorized | Tagged: , , , , | Permalink
Posted by Ed Steffes

Autocracy, Inc.

August 12, 2024

Previous | Next

Anne Applebaum. Autocracy, Inc.: The Dictators Who Want to Run the World. New York: Doubleday, 2024.

Pulitzer Prize-winning journalist and historian Anne Applebaum has written a short but insightful book about the form that many undemocratic regimes are taking in the world today.

After the Soviet Union collapsed and the Cold War ended, many Western politicians and commentators became optimistic about the spread of democracy from West to East. Global communication and trade would lead more countries to adopt the political and economic institutions of the “free world.”

Everyone assumed that in a more open, interconnected world, democracy and liberal ideas would spread to the autocratic states. Nobody imagined that autocracy and illiberalism would spread to the democratic world instead.

Many countries have seen the rise of new autocrats who use international connections to strengthen their own positions. Unlike the autocrats of an earlier era, they are less ideologs than deal-makers, less interested in joining a bloc of nations than making self-serving connections wherever they can, even within more democratic countries. They seek wealth and power for themselves and their friends as much or more than for their own nations. “Autocracy, Inc.” refers to the networks of connections that support such leaders both within and among countries.

Often the cooperation among autocratic forces is economic, as when countries like the United Arab Emirates are available to launder or invest stolen wealth. Sometimes it is military, as when Russia and Iran helped Syrian dictator Bashar al-Assad put down a popular uprising.

Applebaum encourages us to stop thinking of autocrats as local leaders, too isolated to pose much threat to the democratic West.

A world in which autocracies work together to stay in power, work together to promote their system, and work together to damage democracies is not some distant dystopia. That world is the one we are living in right now.

Kleptocracy

After the breakup of the Soviet Union, Vladimir Putin led Russia to create a new kind of government, which Applebaum calls an “autocratic kleptocracy.” It exists not just to govern but to siphon off national wealth for personal gain. Even when he was mayor of St. Petersburg, Putin was profiting from his authority to issue export licenses, diverting income from the sale of commodities “into the bank accounts of an obscure group of companies owned by Putin’s friends and colleagues.” After becoming president, Putin created an autocratic form of capitalism:

Russian “capitalism” was, from the very beginning, designed to favor insiders who knew how to extract and hide money abroad. No “level playing field” was ever created in Russia, and the power of competitive markets was never unleashed. Nobody became rich by building a better mousetrap. Those who succeeded did so thanks to favors granted by—or stolen from—the state. These were the true beneficiaries of this system: the oligarchs whose fortunes depended on their political connections.

Putin benefited from his background in intelligence, since the KGB was experienced in money laundering to cover up its funding of terrorists and agents in other countries. He also took advantage of the “amoral world of international finance,” in which Western banks and other institutions were happy to see money flowing in their direction, whatever the source. The interconnected world of the global economy provides many places to hide money. Some US states—Delaware, Nevada, South Dakota, and Wyoming—have made it especially easy for crooked autocrats and their cronies to invest anonymously.

In her chapter, “Kleptocracy Metastasizes,” Applebaum focuses on Venezuela and Zimbabwe as other examples of corrupt autocracies. She emphasizes how much their leaders—Chavez and Maduro in Venezuela, Mugabe and Mnangagwa in Zimbabwe—benefited from the assistance of other autocracies to remain in power, such as Russia, China, Iran, Cuba and Turkey. She says little about financial dealings elsewhere, so I was not entirely clear on whether she considers a leader like Xi Jinping of China a kleptocrat as well as an autocrat.

Anti-democracy

Today’s autocrats are less likely than Adolph Hitler or Joseph Stalin to embrace a particular ideology, whether right or left. They do, however, have an interest in undermining democratic thinking, both at home and abroad. They may offer no utopian vision, no promise of a better world just over the horizon. They are more likely to tear down the promise of democracy, depriving their people of any alternative to autocratic rule, with all its flaws. Applebaum gives the example of China after the Tiananmen Square protests of 1989:

To prevent the democratic wave then sweeping across Western Europe from spreading to the East, China’s leaders set out to eliminate not just the people but the ideas that had motivated the protests: the rule of law, the separation of powers, the right to freedom of speech and assembly, and all the principles that they described as “spiritual pollution” coming from the democratic world.

Autocrats have learned how to use new information media to wage disinformation campaigns, exaggerating the problems of democratic countries and denying their accomplishments. A “fire hose of falsehoods” leaves people not knowing who to trust or what to believe. These campaigns are international as well as national. If autocrats can get media in other countries, especially more democratic countries, to spread their propaganda, so much the better. “Information laundering” is the analog of money laundering. Since the invasion of Ukraine, Russian agents posing as Americans have spread the idea that the war is none of America’s business, and some American right-wing media have reinforced the message.

When Putin helped Assad remain in power in Syria, he got the added benefit of creating a problem for European democracies. Syrian refugees flooded into Europe, aggravating domestic conflicts and encouraging isolationist sentiment. Russia then reinforced those trends by spreading anti-immigrant propaganda in European media.

Autocratic governments have also campaigned to change the language of international diplomacy, removing references to human rights. They accuse Western governments of an imperialist effort to impose their own values on the world. Instead they offer the ideal of “multipolarity.” Countries ought to respect one another’s sovereignty, even when a sovereign government is practicing autocratic kleptocracy at home and exporting it abroad.

Nonviolent warfare

In his 1993 book, Dictatorship to Democracy, Gene Sharp recommended a wide range of nonviolent tactics that people could use to fight authoritarian regimes. Unfortunately, autocratic governments also became more skilled in the use of nonviolent methods, especially propaganda campaigns to discredit opposition leaders. Governments accused of corruption confuse the public by leveling similar charges against their accusers. They use violence too, but not the mass violence associated with Nazis or communists. They find that “targeted violence is often enough to keep ordinary people away from politics altogether, convincing them that it’s a contest they can never win.” Sophisticated surveillance systems, often purchased from Western technology companies, help identify and target dissenters.

Smear campaigns cross borders more easily than armies. After Secretary of State Hillary Clinton spoke out against Russian human rights violations, Putin retaliated with an online smear campaign to help defeat her 2016 bid for the presidency. A casual reader of Facebook or Twitter would have little idea of where the attacks were coming from.

Countermeasures

In her Epilogue, Applebaum suggests a few ways that citizens of democracies can fight back. Again, she encourages us to bear in mind that this is not mainly a war between countries or blocs of countries. Autocratic movements cross national lines, and so must the countermeasures. We should “think about the struggle for freedom not as a competition with specific autocratic states, and certainly not as a “war with China,” but as a war against autocratic behaviors, wherever they are found.”

One goal is to fight international kleptocracy and money laundering by making property ownership more transparent. Foreign oligarchs should not be able to hide their ill-gotten gains by buying property in Wyoming.

To counter authoritarian ideas, advocates for democracy must do more than just compete with autocrats in the “marketplace of ideas.” That marketplace is too easily dominated by big spenders who finance massive disinformation campaigns, and by “social media companies whose algorithms promote emotional and divisive content.” Express an interest in one conspiracy theory about the “Biden crime family,” and you will be treated to a dozen more. Democratic governments and their supporters are starting to expose disinformation campaigns and call for more regulation of social media platforms.

Political leaders were naive to think that free trade with undemocratic countries would make those countries more democratic. For one thing, free trade carried the risk of becoming too dependent on autocrats for strategically important goods, such as European dependence on Russian oil before the invasion of Ukraine. Applebaum wants trade relationships to be more selective, avoiding dependence on “anything that could be weaponized in case of a crisis.”

Autocracy here?

The ultimate danger is that Autocracy, Inc. will extend its tentacles so far into democratic countries that they will become autocracies themselves. Writers like Levitsky and Ziblatt have observed that most breakdowns of democracy have occurred not through military coups, but through the democratic election of leaders who used the powers of their office to promote authoritarian rule. Applebaum’s book adds another dimension to this warning. The threat to democracy from would-be autocrats is only heightened when existing networks of accomplished autocrats and their enablers are available to assist them. I will relate that point to Donald Trump’s bid for another presidential term in my next post.

Leave a Comment » | Uncategorized | Tagged: , | Permalink
Posted by Ed Steffes

The Fourth Turning Is Here (part 3)

February 1, 2024

Previous | Next

Neil Howe believes that today’s social turmoil is shaping up to be another once-in-a-lifetime Crisis, similar to the most dramatic turning points in American history. Although the current cultural and political divisions are part of his story, he is cautious about trying to say which side should or will win. He does not expect a total victory of either one. “In a democratic society, one tribe never fully dominates the other without incorporating key elements of the other’s program within its own.”

While I agree with that, I will strike a somewhat more partisan note. One thing that stood out for me as I read the historical parts of the book is that the three last “saecula”—Howe’s term for the long cycles of American history—have all culminated in victories for democracy. The Revolutionary Saeculum ended with the victory of democracy over monarchy and British colonialism. The Civil War Saeculum ended with the victory of democracy over slavery. The Great Power Saeculum ended with the victory of democracy over fascism. Democracy is always a work in progress, and none of these turning points perfected it. But I think we should at least hope that our current Millennial Saeculum leaves democracy stronger than ever before.

Today’s battle for democracy

If that is our hope, then the next question is which side in today’s political struggle better represents our democratic values and institutions. Once we pose the question that way, the answer seems obvious: Surely it is not the party dominated by Donald Trump and the MAGA movement.

Trump’s own autocratic tendencies are obvious to many observers. He places himself above the law, claiming immunity from prosecution for any acts committed as president. He expresses his admiration for dictators like Vladimir Putin and Viktor Orban. He wants to replace thousands of Civil Service employees with people selected less for their expertise than for their personal loyalty to him. Having failed to change the results of the 2020 election by legal means, he led an effort to resort to illegal means, with substantial support from both Republican leaders and the party base. The Mueller Report had already accused him of obstructing its investigation into Russian interference in the 2016 election. Now he continues to obstruct, delay and attack any court that tries to hold him accountable.

In addition to using undemocratic means to gain or maintain domestic power, MAGA Republicans have been impeding US support for democracy in the world. They are currently obstructing military aid to Ukraine as it defends itself against Russian invasion. They are less committed to international cooperation among democratic nations through NATO, the United Nations, and international agreements like the Paris Climate Accord. Their global stance is reminiscent of the isolationism that prevailed before the United States joined the war effort against Nazi Germany. As columnist Max Boot wrote this week:

Every president but one since Franklin D. Roosevelt has believed that the United States should exercise preeminent international influence for its own good and that of the world. Trump is the lone exception. He is committed to an “America First” agenda — the same label embraced by the Nazi sympathizers and isolationists of the pre-Pearl Harbor period. He has nothing but scorn for the twin pillars of postwar U.S. foreign policy: free-trade pacts and security alliances.

MAGA economic policies also seem more appropriate for an earlier, pre-Crisis time. They include propping up the private sector with additional tax cuts, while depriving the public sector of needed tax revenue and opposing public sector investments for the common good. In some cases, these policies are throwbacks to the previous Unraveling era, especially the 1920s. Then too, tariffs and trade wars hampered the global economy, and restrictive immigration laws tried to hold back the ethnic diversification of the population. Howe points out that since the American-born population is reproducing too slowly to replace itself, we depend on immigration to grow the population and boost the economy. Immigration is one area where compromise is needed, with some balance between facilitating legal immigration and blocking illegal immigration. Currently, Trump and his followers prefer chaos to compromise, in the hope that it will benefit them politically. In general, MAGA policies are less likely to leave the nation greater and stronger than poorer and weaker.

Framing the current Crisis as a crisis of democracy highlights the absurdity—but also the critical importance—of this year’s presidential campaign. One of our major parties is preparing to nominate the man who is least likely to uphold democratic institutions at home and abroad.

Where the generations will stand

Donald Trump is a member of the Boom generation, the generation of the Prophet type which is supposed to provide the moral leadership in a time of Crisis. But he is noted for neither his personal morality nor his civic virtue. Writers like Tim Alberta (The Kingdom, the Power and the Glory) have marveled that so many evangelical Christians have hitched their wagon to a leader who flouts so many moral norms. If Trump is a prophet at all, he is a false prophet or Prophet of Doom. His message is that the country is going rapidly to hell, and he alone can save us. Contrast that with FDR’s positive, hopeful message that we have nothing to fear if we all pull together.

Where are the progressive leaders of the Boom generation? Here’s an interesting fact: Both Republican Boomer presidents, George W. Bush and Donald Trump, lost the popular vote to their Democratic Boomer opponents—Al Gore in 2000 and Hillary Clinton in 2016. Both elections were controversial, since five Republican-appointed Supreme Court justices intervened in the 2000 election, and the Russians interfered with the 2016 election. While the presidency has been narrowly out of reach for them lately, Boomer Democrats do hold the position of Senate Majority Leader (Chuck Schumer) and governorships in fifteen states.

I do not know whether any particular Boomer will emerge as a “Gray Champion” like Franklin Roosevelt. I do expect aging Boomers to keep raising questions of values and ideals, trying to formulate broad goals for the nation. They will probably move from asserting individual values like self-expression, personal growth and sexual freedom; to placing more emphasis on civic virtues like voting rights, honest debate and the rule of law. Expect to hear a lot about democratic values being on the ballot in the upcoming election.

As members of Generation X assume their midlife leadership roles, they will bring a lot of practical skills to the collective tasks at hand. As an especially right-leaning generation thus far, they will need to ask serious questions about what values and goals they serve. Hopefully, Trump’s fall from power will soon be complete, either by electoral defeat, criminal conviction, removal from office, or ineligibility to run again. Having been slavishly devoted to its one strongman, the MAGA movement may then disintegrate. Many Generation Xers may then rethink their loyalties, turning from the politics of grievance and resentment to something more constructive. Alienated and lonely young men may then reconnect with their communities and learn how to fight for society instead of against it.

As members of the Millennial Generation complete their transition to adulthood, their first civic obligation will be to vote in large numbers. In later life, they will assume leadership during the High era that hopefully follows the current Crisis, as the G.I. Generation did after World War II. But for now, they will provide masses of followers for whatever leader can set the national agenda. The leader to inspire them will almost certainly be someone less selfish, narcissistic, and belligerent than Donald Trump. This generation craves teamwork, order, security, competence and civility. They are ready and willing to make sacrifices for causes they believe in. Although they are not currently wild about our aging Silent-Generation president, they are ready to join some team, and I don’t think the MAGA team will suit them.

When the national mood changes, it often changes with dizzying speed. Who predicted the emergence of a “counterculture” in the 1960s, the Reagan Revolution of the 1980s, the Global Financial Crisis of 2008, or the MAGA movement of 2016? We live in “interesting times,” in the words of the Chinese curse. Fasten your seatbelts, and prepare to be astonished at how fast the country can turn

Leave a Comment » | Uncategorized | Tagged: , , , , | Permalink
Posted by Ed Steffes

Democracy and Prosperity (part 3)

July 19, 2019

Previous | Next

I have been discussing the symbiotic relationship between capitalism and democracy as described by Torben Iversen and David Soskice. So far I’ve ignored variations among advanced capitalist democracies. But the authors warn against using any one country–such as the United States in discussions of the “Washington Consensus”–as a model for how ACDs have developed or should develop.  The American version of the emerging knowledge economy is only one version, and one that has its origins in a certain kind of history.

Two paths to capitalist democracy

The symbiotic relationship between democracy and capitalism developed along with the industrial economy. One link between the two was human capital development. Industrialization required a labor force with at least some basic skills, such as reading and writing, and that required some commitment to democratic institutions such as the public school.

How was the political order to be broadened to include the opinions and interests of workers? In some countries, such as Denmark, Sweden, Netherlands, Belgium and Germany, pressure from the working class itself played a major role. In others, such as Britain, U.S., France, Australia, Canada and New Zealand, the initiative came more from modernizing elites who were challenging the power of agrarian interests unsympathetic to industrialization and democracy.

Those differences had their origins in preindustrial patterns of organization:

[T]he countries in which democratization was eventually the result of working-class pressure were organized locally on a quasi corporatist basis both in towns, with effective guild systems, and in the countryside with a widespread socially rooted semiautonomous peasantry, rural cooperatives, and/or dense rural-urban linkages…. [A]ll of these states were Ständestaaten in the nineteenth century—a system in which the different estates (including organized professions) played a direct role in governing. We therefore refer to the preindustrial political economy of these societies as protocorporatist.

The authors do not give any simple definition of corporatism, but I think of it as the opposite of rugged individualism. While classical British and American liberalism celebrates the self-interested individual, corporatism sees people more as representatives of strong group interests, such as guilds or churches. To make a long story short, the protocorporatist countries provided more fertile ground for the emergence of strong worker organizations.

Things were different in Britain and America:

The elite-project societies, in essence Anglo-Saxon (apart from France, which we discuss separately), functioned quite differently: well-developed property markets with substantial freedom of labor mobility, towns with limited local autonomy, and guild systems which had either collapsed (Britain) or had hardly existed (the settler colonies and the United States, minus the South). We refer to the preindustrial political economy of these societies as protoliberal.

In both kinds of countries, some democratization accompanied industrialization, but it took different directions. In the protocorporatist countries like Denmark and Germany, “effective training systems were built on guild and Ständestaat traditions and provided a large pool of skilled workers, which in turn led to unified labor movements with the capacity to extract democratic concessions from elites.” In the protoliberal countries like Britain and America, “the absence of either guild or Ständestaat traditions led to fragmented labor movements with privileged craft-based unions but no effective training system. Here democracy emerged as the result of industrial elites compelling a reluctant landed aristocracy to accept expansion of education and other public goods required for industrialization.”

Political representation

These two paths to democracy had consequences for electoral systems. Where the working class was highly unified and organized, the more socialist left came to be better represented in politics. The elites and other prosperous members of society might resist democratization until the demands of the working class became too strong to ignore. Then they supported a system of proportional representation rather than winner-take-all elections, to protect themselves against the possibility of a working-class majority. Some of these democratic countries (Germany, Austria, Italy) reverted to authoritarian rule for a time in order to counter a perceived threat from the left, but democracy eventually prevailed.

In countries like the United States and Britain, where organized labor was weaker and more politically divided, majority rule worked better for the modernizing elites and other beneficiaries of industrial capitalism.

In these cases industrial elites had little fear of the working class, but they had a strong incentive to expand public goods, especially education and sanitation, required for the development of an effective labor force (in part to circumvent union control over the crafts). The key obstacles to this project were landowners and more generally conservatives who had no interest in an expansion of public goods and who held strong positions politically, especially at the local level. Majoritarian democracy in these cases essentially emerged as a means to force the landed elites to accept major public investments in education and infrastructure needed for modernization. At the same time, a majoritarian system with a strong bias toward the middle classes effectively excluded the radical left from influence over policies.

Iversen and Soskice see a perfect correlation between the alternative paths to democracy and the electoral systems. The “protocorporatist” countries adopted proportional representation systems that gave worker parties more voice, while the “protoliberal” countries adopted majority-rule systems where major parties had to be more-or-less centrist to win a majority.

Inequality and educational opportunity

Democratic governments of different kinds have adopted many of the same policies to support the growing knowledge sectors of their economies, for example by liberalizing trade and investing more in education. All of them have experienced some increase in inequality as technological innovation has rewarded workers with the right skills and penalized those without them. However, they differ markedly in the extent of the inequality and the associated decline of economic opportunity. The U.S. Council of Economic Advisers introduced the term “Great Gatsby curve” to describe the inverse relationship between economic inequality and intergenerational mobility among countries.

In general, the countries with weak worker organization and majoritarian electoral systems now have relatively high economic inequality and relatively low social mobility. This is true of the United States, United Kingdom and France. Canada and Australia are more average in inequality and social mobility.

In contrast, the countries with strong worker organization and proportional representation systems now have relatively low economic inequality and relatively high social mobility. This is especially true of the Nordic countries: Finland, Norway, Sweden and Denmark. Germany is more average in inequality and social mobility.

I think this is an important finding, because it means that even in a world of global, hi-tech competition, countries have choices. Economic growth and global competitiveness do not necessarily require the extravagant executive salaries and tax cuts enjoyed by the American 1%! Nor do they require tossing aside former manufacturing workers without making provision for their economic security or retraining.

One of the biggest factors in economic opportunity is education, and here the international findings reflect badly on the United States. Here the authors use an index of educational opportunity based on such variables as the availability of vocational training, the public spending on preprimary education, the public/private division of higher educational spending, and the age at which students are tracked (since early tracking can restrict opportunity). Among advanced democracies, only Japan and South Korea scored lower than the U.S. on this index. The Nordic countries scored the best.

Many readers may find this puzzling because the U.S. has so many fine schools, especially major research universities. But the quality of individual schools is not the same thing as educational opportunity. A good prep school that serves only the affluent does little to provide upward mobility.

In our majority-rule system, the interests of the downwardly mobile minority are not being well served. Their interests have diverged more sharply from those of more successful workers, making it harder for the traditional party of labor to represent them. This relates very much to the next topic, the threat that populism poses to democracies with high inequality.

Continued

Leave a Comment » | Uncategorized | Tagged: , , , | Permalink
Posted by Ed Steffes

« Previous Entries