ECONOMY

That creeping sense of western dread

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When I was coming of age in the UK in the 1980s, the country was still churning out books and essays about the end of the “age of deference”. Most of them hailed the new era of informality and supposed classlessness. A smaller number of old-fashioned Conservatives bemoaned it. As a leftish-inclined student, I was strongly in favour of anything that would weaken the establishment, especially if it undermined the hereditary principle. I am still very much in favour of the latter. But my youthful small-R republicanism has long since faded.

I am happy for the British royal family to be the exception to the larger goal of un-entrenching privilege, even if it means putting up with what often proves to be an embarrassingly patchy royal household. The thought of embarking on a British constitutional convention is too wrenching to contemplate. Would the UK really be a better place if it was presidential?

At best, the prospect seems irrelevant. In a world in which electorates on both sides of the Atlantic are proving themselves to be dangerously erratic — and frequently ignorant, or at least careless, of the liberal part of liberal democracy — my larger fear today is about the west’s general lack of deference towards the things that matter most, not least the institutions and habits of mind that protect us. These include an independent judiciary, a professional media, the culture of relatively good-faith debate, the lost habit of assuming those with whom you disagree are not evil, and the sense of larger belonging to a community with mutual obligations. I write here not to bury these qualities but to praise them. Sometimes I fear we are too late.

It is almost a year since Donald Trump was defeated by Joe Biden. We ought to be breathing easier. America now has a president who wants to tackle global warming, treat other countries with respect and restore civility to American politics. Yet I think I echo most people who I know — a broader cross-section than many Swampians might imagine — when I say that my sense of dread is greater today than it was a year ago. It was still possible then to see Trump as an aberration, although I always thought he represented a deeper-rooted pathology in modern US society.

Increasingly, however, we fear that it is Biden who is the aberration. Try as he might to do the right thing — and mostly, I believe, that is what he is aiming to do — the forces arraigned against constructive change in America are overwhelmingly strong. This does not just include the Republican party, though any intellectually honest account of its journey would conclude that the GOP has become a vehicle for post-democratic Trumpian nativism. That is frightening enough. But it is the disarray among the rest, including the Democratic party, that most worries me — which brings me back to the quality of today’s upper classes (a term I use deliberately).

America’s establishment is worth storied trillions of dollars yet has collectively earned little right to society’s respect, let alone deference. History teaches us that societies with pragmatic elites understand that you have to bend if you are not to break. As Giuseppe Tomasi di Lampedusa wrote, “For things to stay the same, everything must change” (see Earl Grey’s triumphant showdown with the British aristocracy and his abolition of the slave trade in the early 1830s, or Franklin Delano Roosevelt and his successful war on fellow “economic royalists” a century later).

There is nothing flexible about America’s elite today — and no FDR on the horizon to force them to accommodate. What we are witnessing, instead, is an economic elite that continues to fill its boots. America might still be wracked by Sir Angus Deaton’s “deaths of despair” — the Nobel Prize-winning economist has recently updated his research to show that rising suicide and early death rates are now visible among non-whites, including African Americans and Hispanics.

But its moneyed classes are loath to pay a few extra cents on the dollar to cover America’s health costs, or give parents the right to a few weeks of paid leave. Tesla chief executive Elon Musk spoke up for most of America’s billionaires, I suspect, when he tweeted: “Eventually they run out of other people’s money, then they come for you.” This was on the same day that his net wealth increased by $36bn (on Tesla’s soaring share price), to make him the richest human in history, at least on paper. Musk was reacting to the since torpedoed Democratic plan to impose a tax on the unrealised capital gains of US billionaires (roughly 700 people would have qualified). Musk’s net worth when he tweeted that was $289bn.

Like most of America’s super-rich, Musk thinks he got there without anyone else’s help. He must have forgotten the $465m taxpayer bailout Tesla received in 2010, and the multibillion-dollar public contract for his other company SpaceX, not to mention the huge electric vehicle tax breaks given by state and federal governments. At any rate, Musk could spend $791,780 every day for the next 999 years and he would still have $289m in change for his thousandth year. Let’s hope he’s investing in cryogenic eternity. He needs time to spend what he has earned.

Notwithstanding Musk’s idiosyncrasies, his attitude to money is representative of much of his cohort. It looks like they have again managed to abort modest attempts to improve the progressivity of the US fiscal system, even in a Democratic-controlled Washington.

Rana, how do you teach an elite to understand that social peace comes with a price — and that a healthy and stable society is ultimately good for their bottom line? What is the killer argument that we have yet to deploy?

Recommended reading

  • For another angle on Musk, my colleague, John Thornhill, has a characteristically astute column on why Tesla has redefined what carmaking means. “For the electric vehicle company to justify the stratospheric $1tn stock market valuation it hit this week (while remarkably still bearing a subinvestment credit rating of double B plus), Tesla has to be different in an epoch-redefining way,” John says. “Arguably, it is.”

  • My column this week argues that Biden’s strongest weapon is still Donald Trump — the entirely legitimate fear of the president’s predecessor coming back, rather than Biden’s questionable list of accomplishments, is still his greatest political asset. Though Biden’s two large bills are still a work in progress, they have been sufficiently stripped for me to ask: “If this is building back better, what does dismantling look like?”

  • Finally, do watch this panel with Fiona Hill (of Trump’s first impeachment fame) on her new book, There Is Nothing For You Here. The conversation begins at about minute 34. In spite of the fact that I moderated the discussion, the panel is well worth watching for everyone’s comments, including those of Deaton (whom I mentioned higher up in this week’s note), Hill and the University of Maryland’s Rashawn Ray and Carol Graham. I learned as much from these brains as from any event I have moderated in years. Here is my colleague Gideon Rachman’s review of Hill’s unusual — and compelling — memoir.

Rana Foroohar responds

Ed, I share your sense of dread, and of course noted the same Musk tweet that you did. Terrifying, especially since the basic research that fuels much of what made Musk so rich was funded by taxpayers. There is no sense of history. There is no shared sense of duty or collective.

Which brings me to what I think the only solution to this problem might be: a national year of service. We desperately need something that brings us together as a society, and the only thing that I can think of right now is to force everyone — of whatever gender, race, creed or socio-economic status — to do a year of national service without exception.

This should be done the way Israel does it — you can’t buy your way out of it, you can’t defer, you can’t pull rank of any kind. The sons and daughters of the elite are forced to rub shoulders with those of no means. Everyone has to do their bit for the national good. This might include national guard-type activities, or a stint in defence, but also many other things, like a “Teach for America”, domestic Peace Corps or Habitat for Humanity sort of activity run at a national level.

I don’t know what it would take to propose or even pass such a programme. But I honestly can’t think of anything else right now — perhaps short of banning surveillance capitalism — that could really bring us together at the moment.

Your feedback

And now a word from our Swampians . . .

In response to ‘The Squid and the Whale’:
“While I agree the crystal ball is cloudy on how the Chinese government is going to treat major international financial institutions going forward, with the Chinese consistently owning over $1tn of US debt and the country running a massive trade surplus with our country, the economies are inextricably linked into the foreseeable future. The UK-based HSBC has a major footprint in China and just announced a massive increase in profits, though the UK and China are also having their substantial geopolitical conflicts. President Xi Jinping is making large gambles in some of China’s recent economic and military activities, but for all the kerfuffle, he is no Mao Zedong willing to destroy the Chinese economy to save it. So he continues to hedge his bets wherever and whenever he can. Giving US financial institutions more running room (though I agree they will always have to look over their shoulders) is part of that hedge. Heck. He even allowed Jack Ma out of the country.” — Harris Miller, McLean, Virginia

“This mounting tension between the US and China can only end in one of three ways. The first is that both sides decide to back off, but that seems very unlikely given the scale of China’s ambitions and the US’s concerns about them. The second is a shooting war, most probably arising from Taiwan or navigation rights in the South China Sea, not through deliberate provocation but because of inadvertent escalation. The third is the US deciding that it must impose the ultimate economic sanction on China, which is depriving it of access to foreign capital as you suggest, not just via US institutions but others as well. This third option obviously does not preclude the second, but if it is done discreetly (?) has the greatest chance of reining China in, as the US would perceive it.” — Robert Upton, Fleet, Hampshire

We’d love to hear from you. You can email the team on [email protected], contact Ed on [email protected] and Rana on [email protected], and follow them on Twitter at @RanaForoohar and @EdwardGLuce. We may feature an excerpt of your response in the next newsletter

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