Traders work on the floor of the New York Stock Exchange on Dec. 18, 2014. (Photo credit: ANDREW BURTON/Getty Images)
The growth addiction
That leaves the acute question of whether in a lower growth, demographically stagnant world, democracy and liberalism can survive in those societies that reaped its greatest benefits. If you judged purely from the politics of today, you’d have to be skeptical. But it’s too easy to get lost in the noise of the present. Yes, economic growth is slowing in the developed world, and, yes, that has led to a wide gap between those profiting from technology and changing patterns of work and trade and those bearing the brunt of its dislocation. But growth is only one side of the ledger. The other is cost and living standards that may not be well-captured by the gross domestic product.
Economic growth was and is simply one way to meet societal needs. After all, if everything were free, you wouldn’t need capitalism or growth. Capitalism was and is just an effective means of providing incentives. As many have noted, the net effect of today’s technologies is to drive the costs of almost every basic need lower: food, shelter, clothing, medicine, transportation, entertainment, and so on. In such a world, theoretically, growth can be completely absent; in fact, economic output could shrink — and the preponderance of people would still be able to access ever more of what they need.
But the optics would be terrible. That’s because we know no other way to assess economic strength and societal success except by the metric of growth. Three hundred ago, the metric was armies and territory. Today, it is GDP, jobs, and wages. You could craft a lovely society with zero growth, but nobody would believe it if GDP, jobs, and wages were shrinking and the rewards remained unevenly dispersed. Sure, a few ethnically homogenous societies such as Finland have modest growth and high levels of freedom and social comity, but it is hard to argue that a small country with a population less than a few boroughs of New York City constitutes a model for significantly larger, more complex societies.
In a time of leveling economic growth, inequality has become a first-order issue. Even as the basics of life become cheaper and more prevalent (after all, almost no one starves in the developed world; whereas famines were one of the great threats to humanity from time immemorial), the distribution of income and economic security create wide gaps among citizens within societies. Global wealth gaps have shrunk, with less divided between France and Gabon or between the United States and Brazil, but domestic gaps have increased between rural Alabama and Silicon Valley or between central London and Yorkshire. How people react to inequality is hardly straightforward; the populist wave that elected Trump doesn’t yet mind a billionaire cabinet. But the perception that some are reaping rewards at the expense of the many is deep and strong; that, too, was a line almost verbatim in Trump’s inaugural address.
The fact is that while basic needs might be cheaper, far too many legitimately fear for their ability to meet those needs. We may be doing brilliantly providing more at less and less cost, but in the United States and in parts of Europe, we are failing spectacularly in providing everyone with the basic security and knowledge that come what may, they will not starve; they will not lack for education and health care; they will not be without a decent home; and they will be able to see their children secure in the future.
The issue is not whether can we feed, clothe, educate, house, heal, and entertain a global populace; the issue is whether we can structure society so that everyone can access that securely and consistently. We clearly are able to provide basic material needs to everyone. But in the developed world, we are failing to provide a sense of security even while most people’s lives are de facto more secure. An analogy is food production and supply in the 20th century. Starting in the second half of the 20th century, various agricultural innovations from seed genetics to Norman Borlaug’s work in India, produced more than enough food to feed the world. That did not prevent repeated episodes of famine in Asia and Africa. In Ethiopia in the 1980s, one of the worst cases, mass starvation was a political crisis, not an agricultural one; it wasn’t that nature had created a crisis of too little water and food, or even that people weren’t able to harvest enough. It was simply a political crisis. Today, that is exactly the case with the basics of a prosperous society.
Visitors use HTC mobile phones on the second day of of the Mobile World Congress on Feb. 23, 2016 in Barcelona.(Photo credit: DAVID RAMOS/Getty Images)
Technology is not a bubble
There is little evidence that democracy and liberalism (and capitalism) in their current form are the best or only conduit for providing for economic needs and wants for all. If they were, there would be less roiling discontent. There is, on the flip side, no evidence that something else would be better. There are, however, more and more deviations from the mold of the last half of the 20th century, as governments and people around the world turn to hybrids and variants (the Dutertes, Erdogans, Putins, Trumps) that they hope will lead to more consistent, reliable economic outcomes.
Even though the challenges facing the Philippines or India are different than those facing the United States or France, the main concern almost everywhere is how to structure society and government to continue the massive expansion of living standards that have occurred in the past few decades. The more affluent and developed societies such as the United States, Europe, and Japan — having reached a level of collective wealth unparalleled in human history — are faced with the added challenge: What now? Trump and many other voices argue that we are simply a series of reforms and new policies away from picking up the thread of the 20th century. We will see if they are right, but given that nowhere in the world has satisfactory answers, it is more likely that after a short period of growth stimulated by lower taxes and more spending, we will find ourselves with the same question: What now?
The arc of technology almost certainly means we can provide for all basic material needs for everyone. The arc of politics and ideology, however, challenges whether we will. The nationalism and populism on the rise promise more for those who feel that they have less than they should (and may in fact have less than they should). As Trump said at his inaugural: “Washington flourished, but the people did not share in its wealth. Politicians prospered, but the jobs left and the factories closed.”
There’s lots of evidence that we have the ability to meet our collective needs and wants; there is also ample evidence that many countries lack the political will or social consensus to make that happen. Affluent countries such as the United States and much of Europe face an uncertain future of declining populations and lower growth combined with the increasing ability of technology to mitigate the worst effects. Developing countries face still-rising populations that expect their needs to be met. The net result is that our systems are fraying even as the basic necessities of life have never been more easily available.
What is most evident is anger. But anger needs fuel, and absent systemic economic collapse and violent decay of social order, it is unlikely that anger alone will destroy the open societies of the West that have deep roots. Slow growth combined with declining costs is a vastly better formula than no growth or negative growth with increasing costs. The 20th century saw societies collapse in the face of inflation and economic contraction; that challenge is almost completely absent today.
Odd though it is for a relatively young country, the United States has the oldest democratic government in the world and one of the longest uninterrupted legacies of an open society. While there is little evidence the Americans are prepared to sit down and think about what is needed to maintain collective affluence in the future, that history and those institutions matter greatly, as does the continued viability of an economic system that — however frayed — continues to provide material goods to most. The situation elsewhere, where those institutions have existed for far less time or where collective needs are still impartially met, is less positive, but we shouldn’t underestimate just how much of the world is succeeding in meeting material needs even as headline economic growth waivers. That may matter more than we think.
The greatest questions for the coming years is whether material stability is enough to mitigate against political chaos and societal decay. Just from the tenor of the times, more people are skeptical than not. But fear and skepticism, just like anger, are not themselves barometers of the future. We live in roiling times of angry passion and confusion, but that should not obscure the fact that most people living today are freer and more affluent than was true even a few decades ago. That is easy to forget, and vital to remember.
Top photo credit: Getty Images/Foreign Policy illustration