The dangers of elitism in politics and economics

What America's economy needs

Joseph E. Stiglitz

Mr Donald Trump's astonishing victory in the United States presidential election has made one thing abundantly clear: too many Americans - particularly white male Americans - feel left behind. It is not just a feeling; many Americans really have been left behind. It can be seen in the data no less clearly than in their anger. And, as I have argued repeatedly, an economic system that doesn't "deliver" for large parts of the population is a failed economic system. So what should President-elect Trump do about it?

Over the last third of a century, the rules of America's economic system have been rewritten in ways that serve a few at the top, while harming the economy as a whole, and especially the bottom 80 per cent. The irony of Mr Trump's victory is that it was the Republican Party he now leads that pushed for extreme globalisation and against the policy frameworks that would have mitigated the trauma associated with it. But history matters: China and India are now integrated into the global economy. Besides, technology has been advancing so fast that the number of jobs in manufacturing is declining globally.

The implication is that there is no way Mr Trump can bring a significant number of well-paying manufacturing jobs back to the US. He can bring manufacturing back, through advanced manufacturing, but there will be few jobs. And he can bring jobs back, but they will be low-wage jobs, not the high-paying jobs of the 1950s.

If Mr Trump is serious about tackling inequality, he must rewrite the rules yet again, in a way that serves all of society, not just people like him.

The first order of business is to boost investment, thereby restoring robust long-term growth. Specifically, Mr Trump should emphasise spending on infrastructure and research. Shockingly, for a country whose economic success is based on technological innovation, the gross domestic product share of investment in basic research is lower today than it was a half-century ago.

A comprehensive approach is also needed to improve America's income distribution, which is one of the worst among advanced economies. While Mr Trump has promised to raise the minimum wage, he is unlikely to undertake other critical changes, like strengthening workers' collective-bargaining rights and negotiating power, and restraining executive compensation and financialisation.

A protest, one of many, against President-elect Donald Trump since his election win. However, to dismiss or disparage his supporters risks fuelling populists’ belief that the elites are truly against them. PHOTO: AGENCE FRANCE-PRESSE

Regulatory reform must move beyond limiting the damage that the financial sector can do and ensure that the sector genuinely serves society.

In April, President Barack Obama's Council of Economic Advisers released a brief that showed increasing market concentration in many sectors. That means less competition and higher prices - as sure a way to lower real incomes as lowering wages directly. The US needs to tackle these concentrations of market power, including the newest manifestations in the so-called sharing economy.

America's regressive tax system - which fuels inequality by helping the rich (but no one else) get richer - must also be reformed. An obvious target should be to eliminate the special treatment of capital gains and dividends.

Another is to ensure that companies pay taxes - perhaps by lowering the corporate tax rate for companies that invest and create jobs in America, and raising it for those that do not. As a major beneficiary of this system, however, Mr Trump's pledges to pursue reforms that benefit ordinary Americans are not credible; as usual with Republicans, tax changes will largely benefit the rich.

  • The writer, a Nobel laureate in economics, is a professor at Columbia University.

A majority of 'deplorables'?

Jan-Werner Mueller

Had Mrs Hillary Clinton won, Mr Trump would most likely have denied the new President's legitimacy. Mrs Clinton's supporters should not play that game. They might point out that Mr Trump lost the popular vote and hence can hardly claim an overwhelming democratic mandate, but the result is what it is. Above all, they should not respond to Mr Trump's populist identity politics with a different form of identity politics.

Instead, Clinton supporters ought to focus on new ways to appeal to the interests of Trump supporters, while resolutely defending the rights of minorities who feel threatened by Mr Trump's agenda. And they must do everything they can to defend liberal-democratic institutions, if Mr Trump tries to weaken checks and balances.

To move beyond the usual cliches about healing a country's political divisions after a bitterly fought election, we need to understand precisely how Mr Trump, as an arch-populist, appealed to voters and changed their political self-conception in the process. With the right rhetoric, and, above all, plausible policy alternatives, this self-conception can be changed again.

At a rally in May, Mr Trump declared: "The only important thing is the unification of the people, because the other people don't mean anything." This is telltale populist rhetoric: there is a "real people", as defined by the populist; only he faithfully represents it; and everyone else can - indeed should - be excluded.

A single, homogeneous people who can do no wrong and need only a genuine representative to implement their will properly is a fantasy - but it is a fantasy that can respond to real problems. There is substantial evidence that low-income groups in the US have little to no influence on policy and go effectively unrepresented in Washington.

Again, notice how a populist responds to a situation like this: Instead of demanding a fairer system, he tells the downtrodden that only they are the "real people". A claim about identity is supposed to solve the problem that many people's interests are neglected. The particular tragedy of Mr Trump's rhetoric - and, arguably, its most pernicious effect - is that he has convinced many Americans to view themselves as part of a white nationalist movement.

It did not have to be this way. Mr Trump has obviously made a successful claim to represent people. But representation is never simply a mechanical response to pre-existing demands. Rather, claims to represent citizens also shape their self-conception. It is crucial to move that self-conception away from white identity politics and back to the realm of interests.

This is why it is crucial not to confirm Mr Trump's rhetoric by dismissing or even morally disqualifying his supporters. This only allows populists to score more political points by saying, in effect: "See, elites really do hate you, just as we said, and now they are bad losers."

  • The writer is a professor of politics at Princeton University and author of the book What Is Populism?

A world of distrust

Janine R. Wedel

A crisis of public confidence in civic institutions - including governments, legislatures, courts, and the media - is a central factor in the rise of Mr Trump and figures like him around the world. And so long as the crisis persists, such leaders will continue to resonate with voters, regardless of electoral outcomes.

The crisis is not new. A 2007 study, commissioned for a United Nations forum, showed a "pervasive" pattern: Over the last four decades, nearly all of the so-called developed, industrialised democracies have been experiencing a decrease in public trust in government. In the 1990s, even countries long known for strong civic trust, such as Sweden and Norway, recorded a decline.

In the US, Gallup's latest survey of "confidence in institutions" shows double-digit percentage declines in trust since the 1970s (or the earliest available measurement) for 12 of 17 institutions, including banks, Congress, the presidency, schools, the press and churches. Of the remaining institutions, confidence increased modestly for four, and significantly for just one: the military.

According to a major study by the economists Anne Case and Angus Deaton last year, the mortality rate for middle-aged, less-educated white men in the US has been surging, in what some observers have called a wave of "despair deaths".

At the same time, American millennials (those born between 1982 and 2004) are postponing marriage and home or car purchases, with many telling pollsters that the postponement will be permanent. They are residing with their parents at rates not seen since 1940, and many are eking out a living through a patchwork of "gigs" that provide neither benefits nor job security.

As a result, a growing cohort of people are identifying as outsiders. Many look to anti-establishment movements and figures, such as Mr Trump, for salvation.

This same tendency is apparent in the anti-elite, anti-system rage that has erupted across Europe, reflected in the United Kingdom's Brexit referendum, the right-wing Alternative for Germany party's continued rise, far-right National Front leader Marine Le Pen's strong showing in the French presidential campaign, and the Austrian elections this year, where for the first time since World War II, no "establishment" candidates made it to the final ballot.

In the US, as the 2016 presidential campaign got under way, many voters clearly believed - not without reason - that the system was "rigged". But democracy and distrust can be a dangerous compound, because people confronting complex political and economic issues do not always direct their anger at the proper target.

Profound economic and technological changes in recent decades - together with privatisation, deregulation, digitisation and financialisation - have further empowered elites and enabled them to hone their use of political influencing via think-tanks and philanthropies; shadow lobbying, workarounds that subvert standard processes; the media; campaign finance; and stints in "public service" to advance their interests. This "new corruption", though usually technically legal, is virtually non-transparent - and thus, highly corrodes public trust.

This, along with widening income inequality, helps explain how voters can be swayed by a candidate like Mr Trump, especially when they live, as many increasingly do, in their own information universes. Facebook and Twitter algorithms confirm a group's biases and screen out contrary viewpoints - and even facts. The digital age has created an insularity that, ironically, is not unlike that fostered under communism.

The result is frighteningly familiar to anyone who has studied Eastern European history. Like Russian President Vladimir Putin, Mr Trump harnesses futility and anger, exploits nostalgic yearning and nationalism, and finds convenient scapegoats in vulnerable people such as immigrants. Trust is the lifeblood of a thriving society, and much of the West needs an emergency transfusion. But its political systems will remain on life support until their entrenched elites feel sufficiently vulnerable to stop ignoring the needs of those who have been left behind.

  • The writer is an anthropologist and professor at the Schar School of Policy and Government at George Mason University.
A version of this article appeared in the print edition of The Straits Times on November 17, 2016, with the headline 'The dangers of elitism in politics and economics'. Subscribe