CHAPTER 6
Frustration and Political Unrest
Unprecedented Social Frustration
In this complicated and unstable world in which threats are materializing at regular intervals, people feel that the current system is unsustainable. To countries like the United States or France that engineered or shaped previous global financial systems, the current path of globalization seems to be uncertain, and their populations now shudder at the prospect of the decline of their countries.
However, in the midst of this uncertainty, the global community has never been so rich, it has never produced so much, it has never consumed so much, and it has never invested so much.1 But this global community of extraordinary abundance is not one of shared abundance: inequality has been reduced between countries, even while within some countries, it has clearly widened. This is particularly true for developed countries and certain emerging countries with strong rates of growth. Lifespan and standard of living of the middle class are no longer going up, and the wealth of the elites has increased while real salaries have decreased. Yet income inequality, combined with inequalities of wealth and opportunity (those that hinder people from expressing and revealing all of their potential through lack of access to education or care—as Saint-Exupéry says, “What torments me is not the humps nor the hollows nor the ugliness. It is the sight, a little bit in all these men, of Mozart murdered”2) has made growth unstable and generated immense frustration in societies.
An Unprecedented Level of Wealth Creation
Popular protest movements, such as Occupy Wall Street in the United States and the Indignés/Indignados antiausterity demonstrations in Europe, are proliferating. They demonstrate how some people have lost confidence in capitalism or in their institutions (government, media, and companies) to serve them and help them build a future. Electoral successes or progress for populists such as Donald Trump, Nigel Farage, or Marine Le Pen will show that the concerns go further than the visible manifestations of a few and have become more mainstream. That is the high price of the global financial crisis that is still being paid. Ordinary citizens feel they have been “had.” They harbor a deep resentment at finding out that the market economy, the financial system, and the system in general, do not work for them but function solely for the benefit of a few—starting with bankers and the elites.
Prosperity Not a Benefit to All: Seemingly Something Hidden
This crisis of confidence is further aggravated by the release of secret information by whistleblowers. WikiLeaks, founded by Julian Assange, has leaked sensitive documents; Edward Snowden, former consultant for the National Security Agency, has released classified information; and the Panama Papers, made public by an anonymous source, detail the tax evasion practices of many world figures. The increasing transparency of our modern world allows us to learn about thorny issues, but it also fuels the everything-is-rotten camp and their conspiracy theories. These revelations reinforce the public’s feeling that things are being hidden from them, that the deck is stacked, and that the elites of this world keep the largest slice of the pie for themselves. (It is embarrassing that it is not only the “usual suspects” from countries known for corruption but also the leaders of supposedly clean countries, such as the prime ministers of Iceland and the United Kingdom, who were named during the Panama Papers financial scandal.) We cannot pretend to ignore, while at the same time deploring, the anger, disenchantment, and even disgust of citizens in the face of such events.
The Temptation to Simplify and Withdraw
In the face of this generalized suspicion, exacerbated by the empowerment of individuals and the increasing belief in the equal value of all opinions, the legitimacy of traditional authority and forms of government is being questioned and challenged.
In France, Europe, and elsewhere, defiance of authority and fear of the unknown are prevalent, in part because leadership has never been so weak, or even entirely absent. The United States can no longer be the sheriff of the world as in the past, nor can any other nations, at a time when no one can act in isolation anymore. The success of positions against free trade in the US election campaign opened up a cycle of withdrawal from trade agreements, which was confirmed after President Trump took office. Europe no longer works collectively to respond to the world’s emergencies, cooperation that was sidelined by a visionary and unified Franco– German partnership before possibly being revived by the election of Emmanuel Macron. The British government failed to avoid the referendum on Brexit demanded by the nationalists and risked a crisis—and it lost. Spain remained without a government for months. Belgium revealed the fragility of its sovereign functions through its uncertain management of recent attacks. Turkey saw its internal divisions grow after the failed coup against President Erdogan, and executive powers were increased by referendum. The Russo– Ukrainian conflict is still going on. Somalia is still a failed state. Iraq, Syria, and now Libya are facing Islamic State (IS) challenges. China hesitates to assume its role in world leadership. I could continue this list: the planet has never been faced with so many crises of authority.
The world is more complicated to govern than it was 15 years ago. The time of the G7, when Western powers influenced or even dictated the international agenda, has passed; now the G20, which extended membership to emerging countries, gathers members who share neither the same values nor the same priorities. The world is not far from being that of “G-Zero,” as Ian Bremmer wrote in December 2015.3 However, these international summits, as imperfect as they are, are indispensable. We cannot take the risk of letting the engine run untended and get the upper hand over the people who are in charge. We must make leaders summits into actual leadership summits: find ways to let this leadership express itself! We must prefer decision and action to carefully crafted but empty communiqués.
The current situation represents a real danger for democracies and the world. The failure of world leadership, while authority is being challenged, combined with social unrest and fear of the unknown in this topsy-turvy world, creates an explosive cocktail that feeds the success of demagogues over pragmatic problem solvers. Throughout the world, we are witnessing a breakthrough, if not a slow but sure climb, of populism and extremism that gives voters simple “common sense answers,” that tell them what they want to hear. Whether it is Donald Trump in the United States, Marine Le Pen in France, Rodrigo Duterte in the Philippines, Viktor Orbán in Hungary, Boris Johnson (the former mayor of London who campaigned for Brexit) in the United Kingdom, the Law and Justice (PiS) party in Poland, the FPÖ in Austria, the Alternative für Deutschland in Germany, or even the Golden Dawn in Greece, the radical and xenophobic followers concerned with “de-demonizing” their autocratic style are mounting serious electoral challenges around the world. When times are hard, when confidence is low, it is so much easier to lay the blame on some group (the elites, the refugees, Muslims) and suggest leaving Europe, closing borders, building a wall, and withdrawing, than it is to explain the tough truth that we need to roll up our sleeves and try to work together because we simply can’t do anything on our own.
We need to find answers to the central question of borders so we can rein in finance to serve a common good and put globalization on the right path. We need to demonstrate that if we all work together, we can solve the world’s problems—the economy, finance, education, health, climate, migration—and to do that, we need to go beyond borders while respecting these same comforting boundaries. Everyone needs to feel at home somewhere. Yet the world has a need to work together like never before. The Old World in particular, the same one that is trying to retreat within itself today, has never been in such need of people from elsewhere to renew itself. How do we cope at a time when Europe, which offers humanity a transnational model of cooperation, is threatening to implode? And when the United States, which shaped the present global order, questions it so deeply?
Another, equally fundamental question is the state of the middle class in Western democracies, which shaped the current international financial system. In France the Trente Glorieuses (“thirty glorious years” from 1945 to 1975) led to the emergence of a middle class, which became the backbone of democracy. When the middle class is weakened, when it can no longer keep pace to represent its members’ social progress, when it no longer seems to be represented, the heart of democracy itself is under attack. Faced with the continued slowdown of global economic growth and growing inequality, faced with risks that threaten the universal dream of peace and prosperity, should we conclude that the emergence of this middle class was nothing but an accident of history? Is this population segment doomed to shrink? Has the weakening of the middle class endangered democratic systems?
We cannot ignore these crucial questions if we want to restore meaning to our models, and not just our economic models but our political, social, and cultural models as well. In the absence of quick answers, the centrifugal forces unleashed around the world today could overwhelm the system that we have built.
Above all, we must not surrender to siren call of pessimism. I have not made my suggestions to add to Cassandra’s lamentations of the world but to emphasize how the current environment, with the many threats it is facing, including its ultra-low or negative interest rates, maintains this cognitive bias that leads us to concentrate on what can go wrong rather than what can go right. This irresistible temptation thrills us to the point of letting fear lead us—even though we will see that we have the means to overcome it. As General Douglas MacArthur said on the purpose of youth, “When your heart is covered with the snows of pessimism and the ice of cynicism, then, and then only, are you grown old. And then, indeed, as the ballad says, you just fade away.”
Finance, unbridled, led us to where we are: in a state of questioning and disarray. We are on the verge of pessimism and cynicism. There is not much each of us can do, right? However, this is precisely the moment when we must engage and discuss what comes next. What if finance could change the course of the endeavor? What if finance could save the world?