Tuesday 15 October 2019

Dan O'Brien: 'As the American dream dies for many, the wave against capitalism could yet wash up on our shores'

Bernie Sanders, one of the more left-wing Democrat presidential candidates. Photo: REUTERS/Carlos Barria/File Photo
Bernie Sanders, one of the more left-wing Democrat presidential candidates. Photo: REUTERS/Carlos Barria/File Photo
Dan O'Brien

Dan O'Brien

Times are changing. They always do. But some periods bring more change than others. There are weeks when decades happen, Vladimir Lenin once wrote.

As it happens, this year marks the 30th anniversary of the fall of the totalitarian system Lenin played such a roll in unleashing on the world. After decades of grinding repression, dictatorship, human rights abuses of all kinds and economic failure, the edifice of communism collapsed within weeks in 1989.

Could 2019 be the year that its rival over the decades - capitalism - suffers a similar sort of crisis?

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That the question would even be posed may seem strange to Irish readers. Ireland's anti-capitalists who long for revolution are a small and motley crew with little electoral support. Moreover, of the big political issues of the day, Ireland's problems are more likely to be caused by the failings of government and the State than by private enterprise and the free market.

While the housing shortage is a mixture of both, endless health failings and scandals lie at the door of the State. The unwillingness of successive governments to stand up to powerful vested interests in order to bring about reform is at the root of the problem.

The (well-funded) public health system in Ireland is a good example of how State bureaucracies can become laws unto themselves, prioritising insiders' interests over those of the people the system is designed to serve - in this case patients.

If there is little discussion of the 'crisis of capitalism' in Ireland, there is much more in the country that is most identified with free enterprise, entrepreneurship, social mobility and small government.

In recent times, a potentially huge change has taken place in the US. More and more of the biggest names in American business and finance are talking about an urgent need to reform capitalism.

Wall Street financiers are speaking of the "fraying of the American dream" and others warn of "some sort of revolution" if the benefits of boom - the current expansion will become the longest in American history in June - do not start delivering for more Americans.

This debate has emerged in response to the leftward shift of the Democratic Party. That, in turn, has been driven in large part by changing political values of younger generations. A Pew opinion poll last year showed that Americans aged 18 to 29 viewed socialism more favourably than capitalism.

This is quite a change. In the past the labelling of a politician or a policy as 'socialist' in the US would often end any debate.

Unlike in Europe, where people are quick to ask what the government will do about social and economic ills, Americans have traditionally been much more sceptical of the role of the state. Low taxes and small government were widely supported because they kept politicians and bureaucrats out of the way as Americans sought to fulfil the American dream.

But the path from rags to riches by dint of hard work in the US is harder to navigate today than in the past. There is much talk of those who are at the top pulling up the ladder to prevent those at the bottom from moving up.

There is good evidence to show this is happening, but a recent case of influence peddling might end up being more influential than reams of hard data on social mobility.

Felicity Huffman, a star of the widely watched TV series 'Desperate Housewives' was recently charged with bribery and other forms of fraud in an effort to ensure her daughter had a better chance of being accepted by one of America's elite universities. A host of other well-heeled parents have also been charged in what has become known as the college admissions scandal. It could be a watershed moment.

In Europe - Ireland included - society has evolved differently from that of the US. By many measures equality of opportunity is greater in Europe than in the US. Nor does the great social escalator - education - require huge borrowings, unlike the US where getting a degree can involve taking on mortgage-sized debts.

Europe and the US have diverged not only on equality of opportunities, but also on equality of outcomes.

While America has always been less equal than Europe when it comes to incomes and wealth, the gap has widened in recent decades. That is both because the US has become more unequal, while in Europe income equality across the continent has either been stable, as in Ireland, or has increased by a lot less than in the US.

Despite conditions being different in Europe, and a political shift towards the hard right more than the hard left, the debate in the US is always worth paying attention to.

American ideas, fashions and fads invariably make their way across the Atlantic to influence how we Europeans think about issues and how we discuss them. This was brought home a few years ago on, as it happens, equality.

A French economist, Thomas Piketty, published a scholarly tome on that subject in his native country. It made little impact. When it was published in English in the US it became a bestseller and triggered a huge debate, fuelling the "crisis of capitalism" narrative that is so spooking capitalists. It was only when Americans started talking about Piketty's book that it got picked up in France, and across the rest of Europe.

It is perfectly possible that one of the more left-wing candidates seeking the Democratic Party's nomination to challenge Donald Trump in next year's presidential election will win out, and that he or she will become the next president. That could change America more than the election of the current president. Despite some cutting of regulations and taxes, Trump has not pushed through legislative reform that will transform how the US functions.

Some of the proposals coming from Democrats, including much higher taxes for the rich, European-style healthcare and radical environmental measures, could have a much more lasting impact if implemented.

America often leads the way in the world. Its debate about reforming capitalism could well wash across the Atlantic, bringing change here as well as the US.

Irish Independent

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