“It’s the economy, stupid” is a famous quote from Democratic strategist James Carville. And he was right. At its core, politics is driven by the economy. If the economy is good for almost everyone, politics is relatively benign and we all have the luxury of arguing passionately about inconsequential issues. If the economy is in trouble, politics become vicious and dangerous and we get populism or fascism or other nasty things, as we have currently. And the US economy (and the world economy as well, for that matter) is in deep trouble right now. I don’t mean just the short-term pandemic-driven problems with inflation, unemployment, and supply chain problems. I mean the long-term problem embodied in the chart below, which I have posted before:
Fundamentally, since about 1970 wages for the bottom four-fifths of the nation have been stagnant, while the top 1% has gotten fabulously, even obscenely, wealthy off the labor of that bottom four-fifths. This level of inequality is simply unsustainable, and is at the root of the present disorder – including the Trump phenomena in the US. In Europe it is having much the same effect, driving things like Brexit and the French riots.
National economies are massively complex and hence very hard to understand. Economists, for the most part, don’t really understand national economies very well either. Despite the complex formulas they have developed (many based on highly dubious assumptions about human behavior), most seem to reason more from ideology than from data, which may be why their policies so often fail. (Think about the EU “austerity” plan which bankrupted so many southern European nations.) I’m sure that assessment would seem overly harsh to a professional economist, but I think history supports my case.
Politicians seem to be largely clueless about economics, but then most of them are lawyers by training, so perhaps that is not surprising. Judging by the current bills before Congress, the Democratic (bare) majority doesn’t yet understand the real issue, and is focused on rearranging the deck chairs while the ship sinks. The Republicans haven’t shown any better understanding, or even much interest in trying to gain a better understanding. To be fair, all US national politicians are severely constrained in what they could do, even if they wanted to, by their indebtedness to the wealthy donors, corporations and special interest groups that put them in office and keep them there.
The best and most persuasive (and understandable) overview analysis I have seen of what has happened in the US national economy over the past half century, and how we got to our present unsustainable state, comes from Mark Blyth, Professor of International Economics and Director of the Rhodes Center for International Economics and Finance at Brown University. Perhaps because he isn’t really an economist, but instead straddles the fields of economics, finance, political science and behavioral science, he seems to have better grasp of what is happening, or at least he is better at explaining it in understandable, even entertaining, terms to a lay person, so long as you can understand his delightful Scottish accent and brutal sense of humor. For a relatively quick summary of his explanation, watch his 2019 lecture on YouTube entitled “Global Trumpism and the Future of the Global Economy”. It runs about an hour and a half, but would be a well-spent hour and a half for anyone who really cared about what is happening.
But really this posting is a recommendation for his 2020 book Angrynomics, written with Eric Lonergan, an economist, author and philosopher. Written as a series of dialogues between Mark and Eric, it goes into the issue in much greater depth., exploring not only the economics, but also the whole psychological and philosophical issue of public anger. But be warned, reading this book will take some work, some concentration. It’s not that it is incomprehensible, it is in fact quite readable, and jargon and formula-free. It is that there are lots of interconnected ideas to follow, which in fact is what I find so interesting about it.
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