Investing in Equality

13.05.18 Publication:

What do Donald Trump, Five Star, the Lega, Vladimir Putin and Hungary’s prime minister Viktor Orban have in common? The answer is that they all favour closed societies over open ones. They may not think that they do, but that is the impact of what they stand for. And if they get their way, it will be a tragedy for all of us, and for our children and grandchildren.

Let’s leave Putin and Orban to one side, for a moment: those two really want, and think they can achieve, a personal dictatorship disguised as a democracy. Five Star, the Lega and President Trump are different, or at least they say they are: they want to shake things up, throw out the old caste, drain the swamp, clean up corruption, make Italy and America great again. They think they are on the side of us, “the people”.

So there, straight away, is the primary paradox of our populist, insurgent times. It is that for these wannabe change-makers, openness should be their friend. Yet they are making it their enemy, and choosing to close our societies’ doors instead. By doing that, they will block change, not promote it.

Corruption, the number one target of Five Star, thrives in a closed economy and society. It always has and always will. When power is privileged and protected, the price of getting anything done rises. It is the insider, close to power, beneficiary of recommendations and connections, member of cabals and cartels, who wins. Italy has suffered from too much corruption precisely because it is too closed as a society, with too much power in the hands of too few people. Open the windows and doors, letting in sunlight and bracing winds, and corruption will be the loser.

The same is true of corporate power and the selfish interests of oligarchs and plutocrats. If ordinary citizens are to have a chance, those power centres need to be challenged, by being exposed to competition, to technological and social change, to new and disruptive ideas. Close the doors and the oligarchs thrive while old, stuffy establishments easily resist the newcomers and continue to favour their nephews, cousins, friends and business partners.

You can see it happening every day in Trump’s America. The candidate who swore he would “drain the swamp” of lobbyists and cronies has provided a bonanza for that very same species. He has concentrated power in his family and friends, encouraged lobbyists and given all sorts of billionaires the chance to make more money. He has opted for closure rather than openness.

Meanwhile he, like Five Star and Lega, wants to protect American firms against foreign competition. He is doing it by blocking some chosen foreign takeovers of US firms and by raising tariffs on steel and aluminium imports. Five Star and Lega are talking about preferring “Italian solutions” to industrial problems, and by talking negatively about the results of a deal by the Indian-French steel firm Arcelor-Mittal to take over the Ilva steel plant in Taranto.

OK, Ilva is a very specific and painful case, one that traps any bystander between the desire for jobs and that for a clean environment. But much in this whole issue depends on that word “protect”. It is a fashionable word these days, and with some reason. Many people feel they had a right to have governments protect them from the consequences of the appalling financial boom and bust that was the 2008 global financial crisis, led by Wall Street but with plenty of sinners to blame in London, Paris and Frankfurt too. Governments failed the citizens, generally for somewhat corrupt reasons. People are right to be angry.

The question, however, is what conclusions to draw from that dreadful and painfully long period. Does “protection” mean closing off our societies to foreign investment, to some trade, to flows of capital, to immigration? That is the conclusion drawn explicitly by Donald Trump and by Marine le Pen of France’s Front National party, and implicitly by at least some of the policy positions laid out by Five Star and Lega.

In my view, that is the wrong way to think about protection. The reason is that protection of that sort will also “protect” us from so much of the technological, business and social progress which has enhanced our quality of life over the past several decades: the new ideas, often from new people, making new things, allowing us to travel to new places, to get unlimited information on our smartphones and to benefit swiftly from new developments in medicine.

All societies, at all times, need a certain dynamism, a positive metabolism that creates new things like abandoning old ones. We must not be “protected” from that process. Openness is the servant of that positive metabolism, it is what gives new chances and new tools to our children and grandchildren, making them feel smarter and often freer than their stuffy old parents and grandparents.

Let’s not be naïve: this doesn’t mean we have to be completely open to every storm and tempest that passes through, nor indeed to rapid, unlimited immigration. Everything needs some form of control. But that doesn’t mean nailing the doors firmly closed. Openness is too valuable for that.

What our societies also need, however, is to invest in all the things that help make us feel equal as citizens, more or less equally able to adapt to the changes that openness brings and to enjoy these new opportunities. What Italy, Britain, America and others have failed to do over the past couple of decades is to keep investing in education, in help for people to change jobs, in help for people to move house to where the jobs are. We stopped investing in equality.

That is the sort of protection our citizens need: investment in all the ingredients of equality as citizens. They won’t get that if doors are closed, because we won’t be able to afford it. And as doors are closed, and power gets more concentrated and protected against challenge and competition, so our societies risk becoming more like Russia and Hungary: genuinely illiberal and repressive. When that happens, the powerful always prosper, but the rest of us – and our children and grandchildren – are the ones that suffer.