The moral bankruptcy of our ruling classes
The world is increasingly dominated by elites. Once they were self-sacrificing, now they are self-serving.
There was, as always, plenty of fascinating discussion about the issues of the day, such as Europe’s debt crisis, America’s fiscal cliff, the Chinese economy and the regulation of banking. And, as usual, everyone takes something different out of the weekend.
But for me, if there was one dominant, overriding theme over the conference it was that most of the world, if not all of it, is now governed by rich elites who are just out to look after themselves - oligarchies.
And the key problem of Planet Earth these days is that this is no longer confined to the non-democracies: the nations that are nominally democratic (United States, Europe, UK, Japan, India) as well as those that are fundamentally undemocratic (Russia, China) are all now ruled by wealthy oligarchies.
Capitalism has failed to deliver for the poor and the middle classes.
Following the triumph of democracy over socialism with the fall of the Soviet Union in 1991, western free market economies have merely seen their elites become very rich, and since in politics "money doesn’t talk, it screams”, these elites have also become very powerful.
By coincidence, while the conference was taking place, a letter to the Sunday Times from British MP Michael Meacher went viral on Facebook and Twitter.
Meacher wrote that the annual Sunday Times Rich List shows that the richest 1000 Britons increased their wealth by 155 billion pounds in the past three years, which is enough for them to pay off the British deficit and leave them with 30 billion. "Despite the biggest slump for more than a century, these 1000 richest are now sitting on wealth greater even than before the slump; their wealth now amounts to 414 billion pounds, more than a third of Britain’s entire GDP.”
"The Left and the Right have both failed to create mass prosperity”, declared one speaker at Hayman on Saturday (it was Chatham House Rule so they can’t be quoted). "State redistribution has not done it, and nor has free market capitalism.”
Another: "In the west we now have an oligarchy that’s fantastically rich that doesn’t carry its share of the freight; they can’t look the rest in the eye and say ‘I pay my share.’ Not only that, they are putting at risk the pension assets of those at the bottom.”
And another: "Most leaders believe in nothing. We used to have self-sacrificing elites, now we have self-serving elites.”
Australia, meanwhile, is only the lucky country because of reforms that came out of an earlier consensus that has now been forgotten and abandoned.
Everywhere, including Australia, politics has trumped economics, and the market has lost faith in political decision-making because it has been captured by vested interests.
The great danger facing the world is that both collectivism and individualism, democracy and one-party rule, have produced the same outcome: oligarchy. "And if you have a society in which only a few win, the rest get together.”
In China, demand for democracy is only going to increase, according to speakers from there. It will have "Chinese characteristics” (not clearly defined) but the Communist Party needs to move towards greater democracy, at the local and province level at least.
Perhaps surprisingly, after all that, the tone of the conference was basically optimistic, not just because of a growing sense that Europe will not collapse or that, eventually, a new polity in America will replace the current dysfunctional one, but more broadly that "human history tells us that in the end the romantics win”.
It’s also because 21st century technology is pro-social. In China there are 100 million micro-bloggers. The era of big data has produced a challenge to privacy, but the information is also shifting economic power to the many.
Moreover, the new economy is one that includes the ability to market reputation as an economic good, for example with eBay.
Banks and markets, meanwhile, are being regulated. Although the attempt via the Volcker Rule to reintroduce a form of the Glass-Steagall Act to separate investment banking from commercial banking has failed, the Dodd Frank Act, with 5320 pages of rules, will make a big difference to the way all firms behave (one person at the conference had read every word).
But pessimists and optimists alike seemed to agree that the big problem is that the world is run by oligarchies that have lost legitimacy. The optimists cling to a belief that it can’t get any worse.
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