© James Ferguson
For every complex problem, there is an answer that is
clear, simple and wrong." HL Mencken could have been thinking of today's politics. The western world undoubtedly confronts complex problems, notably, the dissatisfaction of so many citizens. Equally, aspirants to power, such as Donald Trump in the US and Marine Le Pen in France, offer clear, simple and wrong solutions — notably, nationalism, nativism and protectionism.
The remedies they offer are bogus. But the illnesses are real. If governing elites continue to fail to offer convincing cures, they might soon be swept away and, with them, the effort to marry democratic self-government with an open and co-operative world order.What is the explanation for this backlash? A large part of the answer must be economic. Rising prosperity is a good in itself.
But it also creates the possibility of positive-sum politics. This underpins democracy because it is then feasible for everybody to become better off at the same time. Rising prosperity reconciles people to economic and social disruption. Its absence foments rage.
The
McKinsey Global Institute sheds powerful light on what has been happening in a report entitled, tellingly,
Poorer than their Parents?, which demonstrates how many households have been suffering from stagnant or falling real incomes. On average between 65 and 70 per cent of households in 25 high-income economies experienced this between 2005 and 2014. In the period between 1993 and 2005, however, only 2 per cent of households suffered stagnant or declining real incomes. This applies to market income. Because of fiscal redistribution, the proportion suffering from stagnant real disposable incomes was between 20 and 25 per cent. (See charts.)
Comment: More signs of economic trouble ahead: