This is an Age of Anxiety. Larry Elliott writes that it's not hard to understand why:
The past decade has seen the biggest financial crisis in a century, the biggest slump since the Great Depression and the slowest recovery since the second world war. Living standards have flatlined and public spending has been cut.
People are anxious, frustrated and angry. The only real surprise is that they are not angrier. That, though, may only be a matter of time, because rapid technological change is happening at a time when the global economy seems fragile and many people feel they are getting a raw deal. These are perfect conditions for an age of insecurity.
In anxious times, populism and demagogues arise, hand in hand. The OECD has just released a study which explains the present populist wave:
A quick glance at the report on social mobility published by the Organisation for Economic Cooperation and Development last week helps explain why populists are gaining ground. The OECD found that 25 years ago, the disposable income of the richest 10% of the population across its 34 member countries was seven times that of the poorest 10%. It is now nine times as high. Wealth inequality is even more pronounced, with the top 10% owning half the wealth and the bottom 40% just 3%.
What’s more, there is less chance of a child born into a poor family making good than there once was. The OECD found that upward mobility for people with lower educated parents tended to increase for children born between 1955 and 1975 but stagnated for those born thereafter. “Families and communities in many countries seem to be trapped on the bottom rungs of the ladder.”
It is possible for children with a disadvantaged background to get up the ladder but it is a long and painful process. In the average OECD country it would take five generations for somebody born into the poorest 10% of the population to achieve average (mean) earnings.
In the past, institutions arose to counter balance the changes which swept through society:
The three previous industrial revolutions all caused technological disruption and led to significant job replacement. They also led to income inequality, because those with the greatest skills were able to stay one step ahead of the machine. Workers did not always benefit fully or immediately from the pick-up in productivity associated with periods of technological change, which were often long as well as difficult for those affected.
But institutions developed to ensure that the fruits of growth were shared. These took many forms: compulsory schooling, the spread of higher education, the development of central banks, the emergence of credit unions and friendly societies, the arrival of trade unions to represent workers, and the creation and expansion of the welfare state during the 20th century.
At the moment, spearheaded by the blind and the furious -- people like Mr. Trump -- those institutions are being torn apart. Without them, life will become, in Hobbes' phrase, nasty, brutish and short.
Clearly, the crunch is upon us.
Image: Huffington Post
