The
Guardian view on Davos and inequality: a demagogue takes advantage
Editorial
Democracies
will fall under the spell of populists like Donald Trump if they fail to deal
with the fallout of globalisation
Sun 21 Jan
2018 18.05 GMT Last modified on Mon 22 Jan 2018 11.44 GMT
The rich,
as F Scott Fitzgerald noted, “are different from you and me”. Their wealth, he
wrote, makes them “cynical where we are trustful” and their affluence makes
them think they are “better than we are”. These words ring truest among the
billionaires and corporate executives flocking to the Swiss ski resort of Davos
this week. The highs recorded by stockmarkets, the tremendous monopoly power of
tech titans and spikes in commodity prices reassure the rich cosmocratic class
that they have weathered the storm of the financial crisis. The moguls can talk
safely about inequality and poverty. But they will do little about it because
they do not think their best interests are aligned with citizens. This is a
mistake of historic proportions.
Since 2015,
Oxfam calculates, the richest 1% have owned more wealth than the rest of the
planet. The very wealthy think they no longer share a common fate with the
poor. Whatever the warm words at Davos, no company bosses will put their hands
up to the fact they play one country against another in order to avoid taxes;
no firm will be honest about their attempts to stymie trade unions or about how
they lobby against government regulation on labour, environment or privacy that
tilts the balance of power away from them and towards the public. The largest
western corporations and banks now roam the globe freely. As memories of the
financial crisis recede, they are going back to the myth that they are no
longer dependent on national publics or governments. Lobbyists for the
corporate world claim that markets are on autopilot, that government is a
nuisance best avoided.
In fact,
government provides the infrastructure and investment that private enterprise
needs. Government patrols property rights, giving inventors monopoly profits.
When a crisis strikes, it is home governments that come to rescue of big
business. Sir Mervyn King, the former governor of the Bank of England, aptly
remarked that “global banks are international in life but national in death”.
When governments have stepped in, whether through bailouts or quantitative
easing, it has generally further enriched the rich rather than the toiling
classes. These matters are determined by policy choices. From afar it seems
that the rules have been written to redistribute income upward. Those rules can
be re-written, and it’s clear the world needs new progressive ideas. But Donald
Trump is not going to provide them. The US president’s first year has been
unremittingly disgraceful, demeaning him as well as the dignity of his office.
Mr Trump made his fortune as a real estate magnate. He should be at home with
the super-elite of Davos. Yet Mr Trump will turn up this week as a bomb-tossing
outsider.
It is time
to acknowledge that the current mode of trade globalisation opened the door to
demagogues like Mr Trump. Globalisers damaged their own cause by failing to
understand that competition for jobs from countries with lower labour,
environmental and human rights standards was of valid public concern – and
hence put no remedies in place. Businesses wanted, and want, to exploit these
differences for profit. Politicians should not have obliged them without
addressing the distributional consequences of trade with welfare spending,
worker engagement and educational support. In the absence of such measures and
concerted international action on social dumping, populism will spread – aided
by elite selfishness, introspection and its capture of the political process.
As Branko
Milanović, an expert on inequality, wrote of Davos’ attendees, they “are loath
to pay a living wage, but they will fund a philharmonic orchestra. They will
ban unions, but they will organise a workshop on transparency in government.”
The political and economic crisis requires the balance to be restored between
the nation-state and an open global economy. The rich need to drop the idea
that they are a class apart and take a broader interest in society. Otherwise,
growing inequality will see more people living in fear and fewer in hope. That
would be a disaster for democracy and see Trumpism become a permanent feature
of the political landscape.
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