Political Turning Point?
You would have to be living under a rock to not realise that something very different is unfolding in this election season. Soaring global inequality, a drought of stable full-time well paying jobs, wage stagnation, falling standards of living and housing unaffordability have all manifested themselves into an unequivocal rejection of globalisation and establishment politics. The politics of old, Republican vs Democrat, is outdated. The new paradigm of Globalist vs Nationalist is the new status quo. Many in the mainstream media find themselves awkwardly unable to explain how this has come about. Not only is the answer to this question simple, but the situation we find ourselves in is entirely predictable.
“Wherever there is power or oppression, there is resistance. Ironically, the more the few use their power to oppress the masses, the more resistance increases” Karl Marx
First then, let’s look at what ‘power’ has done over the past 30–40 years. Since the pro-market reforms set in place by Reagan and Thatcher in the 70’s and 80’s inequality has been on a steady increase. A 2016 Oxfam report concludes that the richest 1% now owns more wealth than the rest of the world combined and that, that capital is being used to widen the gap even further. In 2015, just 62 individuals had the same wealth as 3.6 billion. This figure is down from 388 individuals as recently as 2010.
So called ‘free trade’ deals have seen tens of thousands of jobs move to the third world where wages are low, benefiting largely a minority of multi-national corporations at the expense of the worker yet we’re still told by leading publications like the Economist (The politics of anger, p9) that globalisation is a source of prosperity. The obvious question would be; prosperity for whom? Clearly NOT the bottom 99%. As time goes on and the public wake up we are beginning to understand that the message is not just contradictory, but it is potentially, purposefully fraudulent. Essentially, the rhetoric doesn’t match reality. For example, in the very same article in the Economist they go on to mention that while American GDP per person grew by 14% between 2001–2015, median wages grew by only 2%. Prosperity, it would seem is going straight to the top and it is remaining there.
The other big elephant in the room is the complete failure of trickle down economics, where it was ‘assumed’ that the rich would invest in companies, capital works, etc which would result in jobs for the lower/middle classes. Well, given that the 1% now own more wealth than ever before why hasn’t this resulted in better than ever investment? The answer is twofold. 1) They are investing in jobs, just not in western countries. 2) It’s more lucrative to invest in financial products than it is to invest the old fashioned way. The financialisation of the economy has been devastating for jobs and growth.
Let’s take the demise of GM as a case study. Most people are probably aware of the collapse of GM during the 2008 Global Financial Crisis (GFC), but similarly most people probably aren’t aware of why they were in so much trouble. In 1995 GM had around 700,000 employees globally and was the largest and most profitable car company in the world (Alam, 2009, p234). However, all that success would come to a dramatic end with GM filing for bankruptcy in 2009. The reasons for GM’s collapse involve a range of factors however, the most interesting and rarely discussed is how GM’s management attempted to make up for high costs of production and declining sales by selling risky financial products that eventually lead to its downfall. As Schwartz (1991, p 262) notes, the financial side of the company came to dominate the corporation. GM’s financial arm, General Motors Acceptance Corporation (GMAC), began to expand its financial services, i.e. providing car loans, to less than reputable buyers. In other words, sub prime buyers. Starting to sound familiar? But, GMAC didn’t stop there. They eventually moved well beyond simply financing loans for new vehicles and began dipping into financing customer leases, purchases of used vehicles, new vehicles of other manufacturers, it loaned money to other dealers and involved itself in a range of insurance products (Senter & McManus, 2013, p9). Further, and critically for GM, GMAC became involved in sub prime mortgage lending! And herein lies the problem. Whilst there is short-term gain to be made from predatory lending, corporations will do it. Particularly, when business isn’t doing so well. The financial sector is where the 1% are investing and the money is not trickling down. If anything it is perpetuating the problem as the 99% have to keep borrowing just to keep up. This is why the money will never trickle down, because it keeps the 99% in debt and the 1% with a safe constant return on investment.
This would seem to be wonderful for the 1%, however, as their power continues to squeeze the rest of us, this will ultimately lead to greater and greater resistance, as is now playing out in modern politics.
The question is; how will the 1% react to this resistance? So far what we’ve seen is that they continue to ignore it. For example, Bernie Sanders rallies drew tens of thousands of supporters, he drew vast contributions almost rivalling that of Hillary Clinton with an average donation of around $27, yet he was completely ignored by the mass media. Still Marx’s maxim of power and resistance is ignored and no doubt resistance increases.
In this sense, it can be said that the current crisis facing us now has been, ironically, completely manufactured by those in power. If trickle down economics worked, there wouldn’t be such widespread dissatisfaction with the major parties. The unelected markets have been given their chance (via trickle down economics) to rule and surprise surprise they have not acted with the public interest in mind. Instead, they’ve acted in their self-interest whilst the public is ignored and treated as another externality, not to be taken seriously but to be controlled and marginalised via the mass media.
The ordinary person doesn’t want for much, but to be treated fairly, given ample opportunity to educate themselves, to work and succeed, be free and provide a decent life for their family. The growing desire of establishment power to deteriorate this basic need has, of their own greed and volition, brought us to this political turning point.