CAPITALISM THEN AND NOW

The politics of despair

For 30 years, the famous mantra "It's about the economy, dumbass" has shaped our understanding of politics, especially in election years. But politics has long since stopped responding to what is happening in the real world, including the economy

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Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate
Photo: Reuters
Photo: Reuters

Public opinion about today's world is unusually divided. The major industrial economies, including China, are gripped by a general mood of fear and suspicion, so many individuals rightly doubt that they themselves are doing the right thing ("everyone else" is the one doing terribly). Markets are reaching new highs, but political and investor sentiments are moving in opposite directions. Politics is permeated with pessimism, while the economy is full of energy.

For 30 years, the famous mantra of the American political consultant James Carville - "It's about the economy, stupid" has shaped our understanding of politics, especially in election years. But this wisdom is now outdated. Politics has long since stopped responding to what is happening in the real world, including the economy.

Let's start with the United States, which seems destined to watch the 2020 race again, between Joe Biden and Donald Trump. Two old men, four years older than the last time they met, will live it all over again in November. Likewise, France is preparing for another entry into the presidential race of far-right populist Marine Le Pen.

In Germany, where opinion polls show a collapse in support for the ruling coalition (led by the Social Democrats in partnership with the Greens and Free Democrats), the far-right Alternative for Germany has become the second-strongest party in the country, suggesting it will remain a permanent fixture on the political landscape. Populist parties have recently won big victories in the Netherlands and Slovakia. In Great Britain everyone now expects the Labor Party (under more moderate leadership) to win the next election; it is also clear, however, that the new government will inherit a weak economy and a divided state.

The main source of despair is Trump. He and his European admirers and supporters peddle a fascinating story of suffering and fear. According to Trump, America is "a country in decline, it's a troubled country, frankly, it's a failing country." Such domestic conversations, in deliberately simple and distorted language, create the illusion of authenticity. The same goes for Trump's criticism of Nikki Haley, with its bizarre capitalization and solipsistic grammar: "Her False Statements, Derogatory Comments and Humiliating Public Defeats are Offensive to True American Patriots."

Now let's consider the overall economic picture, which stands in stark contrast to these gloomy political assessments. Technological innovation is driving faster and more visible progress than at any time in the last 50 years.

Economists have long been puzzled by the following paradox, explored by Robert Gordon of Northwestern University: Information and communication technologies (ICTs) looked impressive but did not generate productivity gains compared to earlier technologies, as did, say, electricity . The implication was that digital technology only offered entertainment, wasted time, and that millions of office workers were stealing working hours playing Solitaire and Minesweeper (two games that, in the 1990s, came pre-installed on most personal computers).

This is no longer the case. Today, ICT - especially artificial intelligence - can, increasingly, solve basic problems, including those that have frustrated the middle class for the past four decades. Is housing in cities too expensive? Thanks to remote work, you no longer have to live in a big metropolis to be in a position in a big company. Is education expensive and unaffordable? With online courses like those offered by Khan Academy, you can study many subjects online. Is health care too expensive, unavailable and invasive (with unnecessary tests)? AI will help you deal with all these problems.

Many of these technological advances are truly shocking. It will certainly displace large numbers of workers who were extracting rents from previously scarce assets; but it will also free up resources, allowing many people to pursue a more purposeful existence than is currently available and from what the late anthropologist David Graeber called "dumb jobs."

In previous periods of uncertainty, such as the inflationary 1970s, the savings rate rose - somewhat paradoxically - as inflation ate away at existing savings. However, savings rates, especially in the US, are now falling rapidly from their pandemic highs, below 2010 levels. Does this trend reflect faith in the future or does it signal fatalism?

In this new era of technological breakthroughs and new possibilities, there is a need for a new road map to define personal expectations and behavior. As always, history offers its lessons. There have always been people with the power to change public opinion who behaved very differently from modern day influencers like Trump.

The Buddha openly questioned and massively disrupted all complex priestly hierarchies. People like Francis of Assisi, Catherine of Siena and Bernadette Subira possessed a powerful personal magnetism, strengthened by suffering. They rebelled against the establishment and its orthodoxy. They helped people see the possibility of meaningful individual action. They showed, not told. In the end, their social institutions reacted only after they had revolutionized the lives of large numbers of people.

This is the reverse image of the modern influencer, whose goal is only to market an imitation and the behavior derived from it. Trump is influential not because of the values ​​he espouses, but because he has embraced a certain fashion trend. The short-lived nature of such influence is its essence.

Saints transformed because they thought and acted in a long-term - indeed, eternal - context. They got rid of fear and mistrust by eliminating the obsession with a given moment. Modern game theorists will recognize the effectiveness of this approach in reconstructing ideas through repetition. If we are to emerge from today's despair, we must regain the ability to see beyond the short term.

The author is a professor of history and international affairs at Princeton University

Copyright: Project Syndicate, 2024. (translation: NR)

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