Democracy is Failing the New Generation
We look back now at the rise of Hitler, Stalin, or any particular tyrant in history, and we wonder: “How did this monster come to power?”. Hitler is a particularly horrific case, because he arose from a democracy. The people voted for him. How did this happen? Why? What does this mean for today?
Whether you are on the left, centre, or the right, there are examples of extremism that have arisen recently that you can see; for the extreme left, we have the newest members of U.S. Congress (Cortez, Ilhan Omar) as well as Presidential Candidate Sanders, Opposition Leader Corbyn, and Antifa, for the extreme right, Marin Le Pen in France nearly won, Vice President of Italy Salvini, Mussolini’s great-grandson Caio Mussolini, and Brazilian President Bolsonar. Those in the centre get to see the horror on both sides of their fence.
Look at any college campus and you will see Communist flags hanging above the windows. The British people are moving towards socialism (Dalgreen, 2016). Jeremy Corbyn is perhaps the latest, most noticeable example of this, but he is certainly not unique in this case. The Russians found that over 70% believed that Stalin was good for Russia (while being the second most prolific murderer in the last century, even beating out Hitler for high scores). As we can see in the below graphs, support is increasing over time:
Meanwhile, people are beginning to don Nazi badges again, with prominent Nazis coming to light, and anti-semitism on the rise again. There is a proven link between austerity and the rise of Nazism in the past (Galofré-Vilà et al., 2017), and all of Europe is under austerity (that said, in a recent article, I found that countries with real GDP growth have more populism and nationalism). The above chart regarding the favourability of Stalin is happening amid austerity measures undertaken by Putin over the past 5 years (Arkhipov, 2019). To see how this later affected the European Election in 2019, read here. Consider the below graph from the BBC (2018):
Almost every country in Europe, a continent that has suffered under both Fascism and Communism are returning to systems similar. Moderation is gone; extremism is rising. Why is this happening?
The reason we allow a government to rule over our lives, to be given power beyond that of any citizen, and to even have the powers of censorship, death, and taxation, is the social contract we have agreed to. While the social contract varies from country to country, and culture to culture, we can generally summarise it as this:
“The GOVERNMENT shall raise the general living standard of the PEOPLE, will not abuse its powers excessively, uphold internal peace, and prevent external invasion.
The PEOPLE will not overthrow or act against the GOVERNMENT when it exercises these powers, refuse to pay their taxes, nor will they break these laws, unless it does not uphold the contract, in which case, the PEOPLE must and will remove it for a new GOVERNMENT.”
We can quibble about voting systems (even if most countries rule without any kind of representation, China being the most famous among them), and what does it mean to raise living standards or removing a government (whether by vote or by gun), but the general idea provides a framework to why people accept a government.
So for a form of government to be attractive, we must be able to see the following four principles:
1) The GOVERNMENT shall raise the general living standard of the people
2) The GOVERNMENT does not abuse its powers excessively
3) The GOVERNMENT shall uphold internal peace
4) The GOVERNMENT shall prevent external invasion
This article shall focus on the first point. I believe that this broken contract is absolutely key to why people are turning away from democracy, and why both the facist and socialist governments are becoming more appealing to people. In a later article, I found that the fourth point had a large link.
Why this point?
There is a joke to be of ‘when you’re a hammer, everything looks like a nail’, but economics is more than pounds and pennies. It is a complex mechanism that sorts out what people want, what is produced, what is bought back from overseas or demanded from overseas, everything from the policies of government that is determined by the underlying culture that informs the government, all the way down to “I don’t like that shop, I refuse to shop there due to non-monetary reasons”. Economics allows us to take many minute factors and put them together. We can also say that, when people are free and healthy, the only thing that governs happiness is their ability to consume and their freedom to consume what, how, and with whom they like. Animal spirits aside, we assume that people are rational.
To give a more humanist and less economist answer, look at Maslow’s hierarchy of needs below:
Notice the bottom two ‘basic needs’. The absolutely basic needs are provided by money, and in most countries, by welfare for free (minus the necessary taxes, of course). Then comes security and safety. There are a thousand and one articles saying that the richer you are, the safer and securer you are, but let’s be specific. The safety needs are defined by the above as:
“Protection from elements, security, order, law, stability, and freedom from fear”
Without these existing provisions, people cannot be happy. We can consider these the minimum a government must allow the chance for, or to directly provide in a welfare state, for a government to have fulfilled the minimum level of “living standard”. Let’s assume people want to have the following things. They want a house. They want a car. They want disposable income. They want retirement savings. They want a job, and not just any job, but a full time job that isn’t underemployed. They want a stable wage, and a stable, secure life. They want to move up the social ladder. These are the reasons that would later lead to the victory of Modi in India.
Contracting Disposable Income
Ultimately, on the day when the bills come whether it is the water bill or a restaurant bill, all that matter is how much money is in your pocket. There is an arrogance among economists and politicians that all problems ultimately return to money, and that more money can solve them, but here we are. Let’s ignore all of the cultural and social issues; people today have less real money in their pocket than the people before them. Money is food. Money is water. Money is warmth and shelter to rest in. Creative activities certainly require it, as does travel, going out with friends, even drinking at the pub with mates. Every level of Maslow is affected by the cash in your hands.
The most famous recent example of being unable to afford living is the Yellow Vest riot. While it has many reasons for its existence, and that seems to change depending on who you ask, one consistent measure is that of impossibly low or even negative disposable income (Euronews, 2019). Rising fuel costs, rising bills, rising taxes, these eat into the wallets of the poor. The Yellow Vests came to be because, with the new fuel taxes, those in the countryside would be literally unable to live. It has become do or die.
Now, I am not unsympathetic to the viewpoint of the French government. The rich were fleeing France (who is known to have perhaps the highest tax rates in the world) and Macron was trying to encourage them to stay. But in the game of democracy, you must have the mandate of the people, and you must ensure the living conditions of the poor to keep that mandate.
In Canada, 48% of Canadians live with effectively no money (with only $200 from disaster). The ever increasing interest rates seem to have no effect on stopping families taking on further debt (Fong, 2019). This can mean one of two things: either Canadians simply don’t care about debt. More likely, that even with the threat of greater debt, Canadians have been driven into debt to pay for their autonomous consumption (which is consumption that isn’t affected by interest rates or preferences) and are forced to take debt to pay for the absolute necessities.
A recent report by Bankrate (Smith, 2019) shows that young people do not even have the money to live on their own terms, and have to borrow from their parents. More interestingly is the language used to discuss this phenomenon: “how old is too old to borrow from Mum and Dad?”. See within the withering disrespect from society to people who have to live like this, and the imagined self-esteem damage caused by such disrespect. Disrespect from a generation and a society that has taken from them opportunity, hope, and a chance to improve themselves. Through taxes and debt (that the generation before did not have to pay, mind), they even take what little money they do manage to scrape together, and mock those who ask for help from family. Amusingly, one response to the report (Cerullo, 2019) is that children will do better if left to develop their own ability to survive, mind, in an economy set up to pay for the social programs that the children will not benefit from for a long time. Do you want not-communist Bernie Sanders elected? Do you see why Ocassio-Cortez is so believed by some? Because this is why they is so popular among the young today, as is upcoming UBI advocate Andrew Yang. At least they treats the problems of the youth with respect.
What if you’re responsible? What if you save your money? Then you may have your money inflated away, becoming even less useful than saving it. The substitution effect is when it becomes better to use your money differently, when one thing becomes more expensive, you’ll buy the opposite. Why mention this? In the United Kingdom, in the below statistics released by the Department of Environment, Food and Rural Affairs (2018) released this diagram:
The above diagram shows that the weekly income after housing housing has been decreasing and hasn’t recovered to pre-recession levels, despite the fact that we have a recession every 8-10 years, meaning that another recession is likely to hit us soon (probably from a slowing Chinese economy and the post-Brexit trade with Europe). Meanwhile, this is what inflation looks like (Office of National Statistics, 2019):
So you will notice that as household spending decreases, goods are becoming more, not less expensive. So the British people have less money, and goods are becoming more expensive (sitting comfortably above 1% inflation) over the same period of time. The average Briton cannot even match inflation; in short, their savings and their income is shrinking in terms of real money. Not only that, but increasing downward pressures on their income and employment from immigration will invite hostility as well.
According to the Institute of Fiscal Studies (Cribb et al, 2018), home ownership has fallen among the young. A home acts as shelter, appreciating asset, and a literal home to live in. In certain countries such as China, a home is a prerequisite to marriage, and a symbol of both the ability to provide and protect ones family. In the West, it is expected that people should be able to purchase a house around the time they marry and begin a family. It is the very definition of a “safety need”.
63% of the people born in the early 1970’s owned a home by the time they were 32. Five years later in the late 1970’s, it had dropped to 54%. Only 25% of people born in the late 1980’s owned their own home. Cribb at al (2018) provide a helpful graph:
People are brought up expecting to be as well off as their parents; in this regard, we can roundly agree that society has failed to allow them the same opportunity in terms of home ownership. In recent years, there has been a steady decline in all age brackets regarding home ownership (Cribb et al, 2018):
This is no paper declaring all young people alone are somehow more inept than their previous forebears; this is an issue across all of the United Kingdom. A lot of people may say, “well, London has become more expensive. If people were willing to live in Ipswich or Newcastle or something”, but the research shows that this is common everywhere in the United Kingdom:
The final retort may be: “well, some people are rich, and some people are poor, and of course poor people cannot afford a home”. This is an issue affecting every class in society. Even the middle class, and even the rich are struggling.
This is an issue that affects every class. Every age. Every area of the United Kingdom. There is no escape. There is a sickness in our economy leading to the alienation of the young, who see the ability to buy a home slip further and further out of their grasp. When faced with a future like this, no wonder so many young people are turning to the arms of populists who promise to fix the problem.
This is the final point of Maslow; self-actualisation and pride in one’s own achievements. In a healthy society, a person who achieves goals and their dreams should be able to move up the social ladder. In more basic terms, social mobility is hope. If this dies, then we can assume that there is no longer any hope for the poor, and even the middle class. To quote OECD (2018, pp.13):
“prospects of upward mobility also have a positive influence on life satisfaction…inversely, high risks of downward mobility…[undermine] social cohesion and people’s feeling that their voice counts…This reduces trust in the socio-political system with potential consequences on democratic participation. This also strengthens political extremisms or populism.”
A recent social mobility report by the OECD (2018) has shown some worrying trends. The income gap between the richest 10% is seven times higher than that of the poorest 10%. The top 10% of society holds 50% of the wealth, but the bottom 40% of the population holds 3%. There has been a 5% fall, from 21% to 16%, in people who believe they have a better job than their parents over the last 20 years. Over all OECD countries, people believe it more likely they will not have a better life. Here is figure one from that report:
People today believe more and more that the system is not set up for individual merit, but familial connections. There is no hope of rising by yourself; instead, the game is rigged from the start. Considering the following figure from OECD (2018):
We can see that the countries with higher perceived persistence and higher earnings persistence are under (but not limited to) the following problems:
South Africa (ZAF) has growing populist and left-wing factions even within the ANC (Buccus, 2019).
Germany (DEU) has had the rise of the AFD, now polling in second place in elections.
France (FRA) is still under the Yellow Vests movement.
Hungary (HUN) is under a right-wing anti-semitic government already (BBC, 2019)
The United States of America (USA) has the potential of having an election between two populists; Donald Trump and Bernie Sanders (at time of writing, Sanders has the largest consistent base in the Democratic party).
Italy (ITA) has elected the grandson of Mussolini to the European Parliament, and elected fascist vice-President Silvani to Vice-President. Later, Salvini’s The League won massively.
The United Kingdom (UK) is Brexiting (at time of writing). This led to a massive swell of support for the Brexit Party in European Elections 2019.
Spain (ESP) have elected a left-wing government, which relies in turn on the support of the populist left-wing party Podemos, and potentially the Basque nationalist party PNV. Meanwhile, there is an increase in the populist right-wing parties voting base and representation (Gutiérrez and Clarke, 2019).
I believe that this is perhaps one of the most crippling problems in modern democracies, one that will lead people back into the arms of extremists. Hitler rose among the Weimar Republics depression. Mao arose during the famines and repression of Chi’ang’s leadership during World War ΙI.
There is a lot of economic sense to austerity. Lower taxes, greater incentives, etc. The fact is, however, that in a contracting market where people are pushed into unemployment, and those who work are pushed into lower and lower levels of consumption and economic security, austerity will lead to greater extremism. People will look for a way to fix the problem, and if the democratic free market doesn’t work, where else to go? People will hear about Hitler’s economic miracle, where everyone had a job and a wife (while looking aside from the genocide). People will misremember Stalin’s brutality to notice instead the pride, work, and dignity of his people at the time (whether they had it or not).
The Strangling of Democracy
If democracies cannot provide work, opportunity, and is seen to only benefit the rich and wealthy, then we face a threat of democracy and the legitimacy of democracy across the free world. Worse; it can be well argued with facts, not even rhetoric, that it does benefit the rich and wealthy. With the above worsening conditions for those who are not in the top 10% of the world, we can see the increasing disenfranchisement of the people; reduced voting rates, greater protest votes, as well as greater support for people who promise people what they want for the sake of power. If these problems are not addressed, and the mandate of the people not polished and cleaned up publicly and transparently, then we face a real threat of revolt, revolution, and the death of the democracy. If people feel they cannot change things peacefully, then they will turn to violence. We would also be fools to not consider that countries without democracy would not support these movements to turn free countries into client states of the dictators and the autocrats.
In all articles, I provide as much information for sources as possible, including links. I encourage everyone reading this article to read deeper, and make their own conclusions. For students, links are here so they can read the original source themselves.
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