Political Despair Contradicts Economic Optimism in the Global Arena

Feb 3 , 2024
By Harold James

---

In an era where political discourse is dominated by pessimism and fear, a contrast emerges against the backdrop of a booming technological economy. This divergence challenges the age-old belief that economic realities invariably mirror political landscapes. Despite the shadow of doubt cast by political narratives, the economic big picture tells a different story.

---

Public opinion about the world today is oddly bifurcated. Big industrial economies, including China, are gripped by a generalised mood of fear and doubt, even though many individuals correctly suspect that they are doing well (it is "everyone else" who is doing terribly). Markets are hitting new highs as political and investor sentiment run opposite directions. Politics is imbued with pessimism, while the economy brims with energy.

For the past 30 years, the American political consultant James Carville's famous mantra, "It's the economy, stupid," has shaped our understanding of politics, especially in an election year. But this bit of wisdom is well past its sell-by date. Politics has long since stopped responding to what is happening in the real world, including the economy.

Start with the United States, which seems destined to rerun the 2020 contest between Joe Biden and Donald Trump. Two old men, four years older than the last time they faced off, will go through the motions again in November. Likewise, France is bracing itself for yet another presidential run by the far-right populist Marine Le Pen.

In Germany, with opinion polls showing a collapse in support for the governing coalition (led by the Social Democrats, in partnership with the Greens and the Free Democrats), the far-right Alternative fur Deutschland has emerged as the country's second-strongest party, suggesting that it will remain a permanent part of the political landscape. Populist parties have recently scored big wins in the Netherlands and Slovakia. In the United Kingdom, everyone now expects the Labour Party (under more moderate leadership) to win the next election. Yet, it is obvious that a new government will inherit a weak economy and a divided polity.

The chief influencer of despair is Trump. He and his European admirers and acolytes weave a mesmerising tale of misery and fear. In Trump's telling, America is "a country in decline; it's a troubled country; it's a failing country frankly." With their deliberately simple and mangled language, such homely utterances create an illusion of authenticity. The same goes for Trump's criticism  of Nikki Haley, with its bizarre capitalisation and solipsistic grammar: "Her False Statements, Derogatory Comments, and Humiliating Public Loss, is demeaning to True American Patriots."

Now consider the economic big picture, which starkly contrasts these bleak political assessments. Technological innovation has driven more rapid and obvious advances than at any other time over the past 50 years.

For a long time, economists puzzled over the paradox, explored by Robert Gordon of Northwestern University, that information communications technology (ICT) looked impressive but had failed to deliver productivity gains on the scale of earlier technologies like electricity. The implication was that digital technology merely offered time-wasting entertainment – millions of office workers were whiling away their hours playing Solitaire and Minesweeper (two games pre-installed on most personal computers in the 1990s).

That is no longer true. ICTs today – artificial intelligence, above all – can increasingly solve fundamental problems, including those that fueled middle-class frustrations over the past four decades.

Is housing too expensive in cities?

Thanks to remote work, residing in a major metropolitan area to hold a job at a major company is no longer needed.

Is education expensive and difficult to access?

Thanks to online courses – like those offered by Khan Academy – anyone can learn many subjects online.

Is health care too costly, inaccessible, and invasive (with unnecessary tests)?

AI will help with all of that.

Many of these technical advances are genuinely shocking. They are sure to displace large numbers of workers who extracted rents from previously scarce goods; but they will also liberate resources, allowing many people to realise a more purposeful existence than what is currently available from what the late anthropologist David Graeber called "bullshit jobs."

In previous moments of uncertainty, such as the inflationary 1970s, savings rates shot up – somewhat paradoxically – as inflation eroded existing savings. But now, saving rates, especially in the US, are falling rapidly from their pandemic highs, below the level of the 2010s.

Does this trend represent a vote of confidence in the future, or does it signal fatalism?

With this new era of technological breakthroughs and novel opportunities comes the need for a new roadmap to guide personal expectations and behaviour. As always, history offers lessons. There have always been transformative individuals who remade public beliefs, working in very different ways than modern influencers like Trump.

Buddha disrupted all the complex priestly hierarchies with a direct challenge. Figures such as Francis of Assisi, Catherine of Siena, and Bernadette Soubirous all exhibited a powerful personal magnetism, intensified by their suffering. They revolted against the establishment and its orthodoxies. They helped people see the possibility of meaningful individual action. They showed rather than told. In the end, but only after they had revolutionised the lives of large numbers of people, did their societies' institutions respond.

This sequence is the inverse of the modern influencer's, who aims merely to marketise imitation and derivative behaviour. Trump is not influential by dint of any value he represents, but because he caught a particular fad. The ephemeral character of such influence is its very essence.

Saints were transformative because they thought and acted in a longer-term – indeed, eternal – context. They salved fear and distrust by dismantling the obsession with the immediate moment. Modern game theoreticians would recognise the effectiveness of this approach in its use of repetition to reframe perspectives. We must recover the ability to see beyond the short term if we will emerge from today's slough of despond.

---

PUBLISHED ON Feb 03,2024 [ VOL 24 , NO 1240]

---