The Brexit vote underscored growing dissatisfaction with the
institutions of Western liberal democracy on the part of a growing number of
citizens in the West. Those institutions are flawed and the capitalist economic
system has provided uneven growth. They need to be reformed. Nevertheless,
there is no denying the fact that liberal democracy has offered the “golden
billion” seven decades of prosperity, stability, peace and freedom – with those
benefits spreading from the north and west of Europe to the south and, more
recently, to the east. Parts of Latin America and Southeast Asia have also
benefited from this process.
If those institutions, sustained up to new by the unswerving
commitment of political elites in North America and Western Europe, are
weakened or destroyed, their own citizens will be poorer and less secure, while
the ideals expressed in the U.S. Constitution and the European Union Convention on Human
Rights (which the new British Prime Minister Theresa May has talked about
leaving) will no longer be a beacon of hope for the rest of the world. The
world will be, in short, a far nastier place.
It’s hard to believe that only a month has passed since the UK
vote. It has been a month rich in unbelievably dreadful events, one following
on the heels of another almost without respite. We’ve seen mass murders on the
two sides of the Atlantic by deranged individuals empowered by the ideology of
jihad, the latest coming on Friday in Munich.
There were a series of terrorist attacks in Istanbul, in Dacca, in Kabul and in Baghdad, where the violence caused a monstrous toll of almost 300 dead and
becoming the worst single outrage in Iraq since the Bush Administration
launched its criminal invasion.
There were murders of unarmed African-American men by unhinged
or racist police officers in America and revenge killings of police officers by
deranged African Americans with military experience.
Pavel Sheremet, a prominent Belarus journalist and voice against post-communist authoritarianism and corruption, was murdered in
Kyiv.
It has been as though the Brexit vote opened a Pandora’s box.
It obviously didn’t cause any of these atrocities, but events of the past month
eerily presage what the world will look like when the institutions of liberal
democracy are junked.
A friend wrote that she now dreads reading the news. But wait.
If you’re a stock market investor, you might have a completely different
perspective on the past month. Wall Street has been in a rally mode, with the
Dow Jones Industrial Average setting a series of new all-time highs. Stocks in
London have also rallied after the Brexit vote. After plunging in its immediate
aftermath, the Footsie 100 index has gained more than 15%.
Bond investors, who are usually highly sensitive to the
prospect of political upheaval, are remarkably relaxed this time. Yields on
benchmark 10-year government bonds in major economies are near record lows and
in some countries are negative – meaning that investors are actually paying
debtor governments to borrow from them.
Are financial markets stupid or are they trying to tell us
something?
The Brexit debacle in the UK was as nothing compared to what
has been happening in the United States. The Republican National Convention in
Cleveland was a poorly organized, low-comedy affair featuring pigs from George
Orwell’s Animal Farm and Hieronymus
Bosch’s nightmarish visions of Hell. It nominated Donald Trump to seek
presidency under the banner of a major US political party.
Trump is, by all appearances, a charlatan and a grifter. But
he’s more than that. There’s more than a touch of method in his madness. He
actually has a political platform and, as it begins to take shape, it looks
suspiciously like the wish list of every authoritarian ruler in the world.
Trump’s strident, ignorant demagoguery at the RNC, preceded by
a programmatic foreign policy interview to the New York Times, lays down his main principles.
At home he wants to junk the Constitution and its protections
for citizens and build a police state on the excuse of providing law and order
and saving Americans from rapists and terrorists supposedly pouring in over the
border.
His rhetoric seems plagiarized directly from Vladimir Putin’s
pledge to “wipe out terrorists in outhouses.” As chess champion and Russian
dissident Gary Kasparov tweeted, “I’ve heard this sort of speech a lot in the
last 15 years and trust me, it doesn’t sound any better in Russian.”
If Trump is elected,
don’t be surprised if he staged a version of the burning of the Reichstag – the
way Putin allegedly did by blowing up apartment buildings in Russia and Recep
Tayyip Erdogan has just demonstrated in Turkey with its very strange military
coup attempt.
Internationally, Trump has presented Putin’s wish list, too: a
sharp turn inward for Washington, the weakening of America’s commitment to
NATO, good relations with dictators around the world, free hand for Russia
everywhere in its backyard – including not just Ukraine but, apparently, NATO
members in Eastern and Central Europe. Trump’s Wall is an apt analogy of how he
wants to set America apart from its closest trading partners and historical
allies, fatally weakening it in the process. His is a typical radical right
program – the wet dream of UK’s Nigel Farage, France’s Marie Le Pen and others
of their ilk.
Last week in Cleveland the sight of high-ranking American
politicians, led by House Speaker Paul Ryan – the number two in the line of
succession to the president of the United States, right after the vice president, endorsing Donald Trump and launching him on the path to the White
House may have been gut-wrenching but it was a natural progression for the
Republicans. After all, Ryan’s political program, developed long before Trump
came onto the political scene, called hollowing out or privatizing Social
Security, Medicare and other programs and abolishing Obama care. On the
Republican watch, the federal government has already been starved of funds for
science, education, arts and culture. America’s infrastructure is falling apart
– largely because of the Republican obstructionism and no-taxes-on-the-rich
ideology. President Trump, as Ryan has asserted, will allow the Republican to finish
gutting out the American government.
Destroying institutions is exactly what Putin, Trump’s obvious
role model, has done in Russia – subverting whatever little he had inherited
from the Soviet era and abnegating all responsibility on the part of the state
for the well-being of its citizens..
But it would be wrong to think that Russia is a failed state.
At least not yet. On the contrary, its actual economic model is working very
well – because the Russian system is designed to benefit, first of all, a very
small number of people in Putin’s inner circle and, secondly, to enrich vast
numbers of bureaucrats and siloviki
at all levels. Seen from this angle, the system is remarkably efficient in
stuffing their pockets with public and private funds and protecting them from
any kind of legal problems they might encounter in the course of their
enrichment and transferring their funds offshore.
The Russian system is based on propaganda, lies and selective
repression. It has proven quite durable. Neither sanctions, nor a drop in oil
prices which reduced the average Russian’s quality of life, have succeeded in
destabilizing it.
Similarly, dismantling the institutions of civil society is
what Erdogan is doing in Turkey after the failed coup. This should make it
easier for him and his entourage to enrich themselves without worrying about
such unpleasant things as being voted out and prosecuted.
Perhaps this is the message Wall Street is sending us when
markets rally in the face of Trump’s political success and a very real
possibility that he will enter the White House come January 2017 – just shy of
the 100th anniversary of the Bolshevik takeover in Russia. What the markets are
telling us is that corporations – and the richest 1% who own them and about
whom so much has been said during the primaries – will continue to get richer,
sending stocks to new record highs. Meanwhile, the rest of Americans will go on
getting poorer as the state leaves them to their own devices in a
winner-take-all economy. Hence, inflation will remain nonexistent and
government expenditures will fall, keeping bond yields low.
Of course eventually the system will crash – just as Putin’s
Russia will, without the support of its dismantled or privatized institutions.
But that “eventually” may be a long time away.
