Back-walking

“If democracy and open societies depend on constantly providing their citizens with more wealth tomorrow than today, then the Western world — and soon enough the whole world — is in for tough times.” (Zachary Karabell, Forget Dow 20,000 — the Boom Times Are Over. Is Democracy Next?, Foreign Policy, 2017/01/26)

Shouldn’t we ‘back track’ and try to identify what and when, if any, we’ve done wrong before attempting to go any further?

The author identifies, with surgical precision, the stepping stones that have led us to where we are now.

We, in the West, have grown to associate material affluence with capitalism, democracy and liberalism.
In the process, we got “addicted” to a special kind of ‘economic growth’,  the one measured in monetary terms.Lately, after people no longer had as many children as they used to – which, supposedly, is going to hinder and eventually halt ‘economic’ growth, things are no longer seen in the same light.
The economic boom in China and recent developments in Philippines, Turkey and a few other places which “have seen a surge in nationalism of late, a questioning of democracy and skepticism about liberalism even as economic growth has been strong and deep”  are adding to the confusion.
Even “more surprising is the erosion of support for democracy and the norms of liberalism — even of capitalism — in the United States, France, Spain, Greece, and elsewhere”.

He also identifies, with equal precision, some of the barriers that prevent us from seeing the wider picture.

That we haven’t yet developed a clearer understanding of what liberalism and democracy might be. In his own words they still are “adolescent concepts relative to the tenure of recorded history”.
Then there is the matter of how we understand ‘economic’ growth.
“Politicians and governments rise and fall based on how successfully they have been seen to address the problem of wealth and jobs — not the problem of food, shelter, health, and quality of life.”
“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.”
And it’s not only a matter of understanding but also one of perception. “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.”
Which perception leads to a certain way of seeing things. “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.”
On top of this, there is “anger”. Produced by the “evidence that we have the ability to meet our collective needs and wants” corroborated with the “ample evidence that many countries lack the political will or social consensus to make that happen”.

So, what next?

In Mr. Karrabell’s terms, we need to brush off skepticism, fear and anger – since they “are not themselves barometers of the future” – and …

“The greatest questions for the coming years is whether material stability is enough to mitigate against political chaos and societal decay.”

I’m sorry but I really don’t like this kind of ‘wait and see’ attitude.
It doesn’t make much sense to bother about something that will happen outside your sphere of influence, does it?
Place a bet, if you are a betting guy, and go back to whatever you might be able to actually do!

How about rephrasing that question?

What is it that might bring about the “political chaos and societal decay” we are so afraid of?

Now is the moment for me to make a confession.
I’ve altered, just a little bit, the narrative.
While Mr. Karrabell did mention “anger”, he only said about it that it was “evident” – without providing any cause for it. It was I who associated that anger with the “ample evidence that many countries lack the political will or social consensus” to “meet our collective needs and wants”.
The way I see it there is no way that any country might ‘meet our collective needs and wants’, no matter what amount of ‘political will or social consensus’ might be involved in the process. Not in the longer run, anyway.
All communist regimes – which were, declaratively, trying to accomplish exactly that – have failed. Abysmally.  Not because, in reality, all of them did nothing but cater for their ruling elite but because all of them used to be run according to a ‘central plan’.

And stop calling China a ‘communist’ regime. Or Vietnam, for that manner. As long as the ‘means of production’ are more or less private, and their owners free(ish) to use them as they see fit, those countries are not ‘communist’. They might not be entirely free but they are not at all ‘communist’. Venezuela, for instance, is a lot more ‘communist’ than China.

But let’s return to the countries that might attempt to make it so that ‘our collective needs are met’.
How are they going to do that?
First of all, those in charge – the government, right? – would have to determine what those ‘needs and wants’ are and only then make the necessary arrangements for them to be met. But not more than that, because that would be wasteful.

Do I hear any chuckles? You figured out that those ‘willing’ countries would have to use the same ‘central planning’ system that has already led to the failure of the communist regimes?

How about re-framing the whole situation?
How about the “ample evidence” mentioned by Mr. Karrabell suggesting that too many countries – including the one that has recently inaugurated Mr. Trump as President – no longer have “the political will or social consensus” to allow their citizens enough real freedom and enough real opportunities to pursue their own “needs and wants”? As they see fit?

Then shouldn’t we next try to understand the process through which the erstwhile ample opportunities have been curtailed?

As I mentioned before, I’m going to use the ‘back-walking’ method.

First step, anger. We really need to loose that. Nothing good ever came out of it.

Specially when considering the next steps, perception and understanding. If we allow anger to cloud our thinking both perception and understanding will yield errors instead of knowledge.

Which brings us to our obsession with (monetary measured) growth. Could this obsession be explained by the fact that money is the easiest thing to distribute but also the easiest thing to hoard? Panem and circenses eventually failed… Why do we still see hoarding money as a legitimate goal (after amassing more than one could ever spend, with the entire family, in a hundred years)… beats me.
But explains what’s going on.
As long as enough of us see hoarding money as a legitimate past-time, more and more people will engage in it. More exactly ‘try to engage’ in it. And this is the very behavior which produces ‘bubbles’. As in ‘market bubbles’. And, eventually, crashes.

But not only crashes. Misconceptions also.

“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.”
My point being that none of those, in any form, are ‘conduits’ for anybody to provide, through them, anything for anybody else.
Democracy, liberalism and capitalism, together, determine the three dimensional ‘space of opportunity’ where we, human individuals, try to provide for our own needs. If allowed to, of course.
It fact it is not the “politicians and governments” mission to “address the problem of wealth and jobs”. In a full-fledged liberal democracy the government does nothing but guards the freedom of the economic market  and the safety of the citizens – including their ‘human’ rights and private property.

As for capitalism… it doesn’t provide anything. Lest of all “incentives”. People provide incentives. Capitalists provide their employees with incentives to work and politicians provide the capitalists with incentives to engage in such or such enterprises or to refrain form others. And while the first kind of incentives, those provided by the capitalists themselves, work as intended – increase productivity, that is, if employed wisely, the latter end up curtailing the freedom of the market. Which can no longer work smoothly enough. This being the moment when opportunities disappear for the ‘man in the street’ and when those ‘connected’ to the government start to ‘flourish’.

You see, real capitalism is not as much about money as it is about trust.
Trust that your business partner – well, most of them – is going to fulfill his end of the bargain, not try to rip you off. Trust that if things go wrong – in the rare event that he does try to rip you off – the government will move swiftly on your behalf.

That’s all.
That’s what Deng Xiaoping meant by ‘I don’t care about the color of the cat, all I care is for it to catch the mouse’. That’s why the Chinese imported capitalism works. Because the Chinese government has learned that the market cannot do its job, in the longer time frame, without a certain dose of ‘liberty’.
The problem being that China is but an exception. Along with a few other examples, mostly in South Asia, they are the very few countries whose authoritarian governments have learned to refrain from interfering too much in their economies.

Looking back in time, ‘back-tracking’ that is, we’ll notice that capitalism has emerged in places where the entrepreneurs had both considerable individual liberty and enough wisdom to refrain themselves from trying to con their business partners. Otherwise the whole (budding) economic effervescence of the time would have very quickly been smothered by greed.
Think of the Medieval Venetians trading with the Arab merchants of the time. This being the reason for why the oldest surviving bank in the world, Monte dei Paschi di Siena, is based in Italy – the least centralized country in the Medieval Europe.
Or think about how a hand shake used to be enough to seal a deal between two Americans. Some time ago… nowadays you need an army of lawyers to buy a car… not to mention the flurry of official permits needed in most cases…

So, what we need to do, if we want to continue to be a source of inspiration for the rest of the world, is to restore democracy, liberalism and capitalism to what they used to be. Dimensions which described the space of opportunity that used to be open for all of us.

OK, hindsight is always 20-20… or so they say…
I’m afraid that what I just described was an idealized mental construction but I’m sure that you got my drift.
After-all, if the Chinese were able to learn it from us … we’ll surely be able to restore it to its old glory.
Or else…

http://foreignpolicy.com/2017/01/26/forget-dow-20k-the-boom-times-are-over-is-democracy-next/