Dear elites, here’s why the peasants don’t trust you

Elites are baffled by the suspicious hostility exhibited by the lower orders. Let me clear up the confusion…

Photo by Liam Edwards on Unsplash

“My administration is the only thing between you and the pitchforks.”
Obama to a bevy of bank CEOs (2009)
(The remark was made while Mr Hope and Change was ensuring finance-sector types wouldn’t have to so much as take a haircut, let alone face any serious consequences for driving the US economy into the ditch to line their own pockets.)

Selina Kyle (Catwoman): You think all this can last? There's a storm coming, Mr Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us.
Christopher Nolan’s The Dark Knight Rises (2012)

“I’m an economic nationalist. The globalists gutted the American working class and created a middle class in Asia.”
Steve Bannon, (2016)

Trust is crucial in a functioning market economy. An article in The Atlantic a little while ago likened trust to the social lubricant of capitalism. Every economic transaction involves trust. The banking system and fiat currencies are ultimately built upon it. There’s a well-established link between trust in a country and prosperity… According to a Roy Morgan survey of 2,000 Australians released today, trust in corporate Australia has never been lower… It’s never wise to put too much faith in a single survey, but there seems to be a growing consensus and body of evidence that trust towards institutions – business, government, media – in developed economies is in significant decline. How do we restore it? That is a harder issue to solve.
John McDuling, editor-in-chief of Capital Brief (Last week)

In the US, they have something called ‘Diner Journalism’. Whenever the common people in the flyover states do something even more incomprehensible than usual – such as vote for a vulpine, thrice-married, philandering, reality TV star with a history of shady business dealings instead of “the most qualified presidential candidate in history”, top US journalists heroically venture forth from their offices in New York and Washington to schlep to midwestern diners to try to shake some sense out of the truck drivers, factory workers and beauticians that patronise low-cost eateries.

Australian journalists are big on the ‘pub test’, but that’s not the same. Pub testing revolves around whether the salt-of-the-earth denizens of a pub agree or disagree with a specific proposal or policy. In contrast, diner journalism attempts to elicit detailed explanations of a (representative) individual’s behaviour. “In between wolfing down five serves of lemon meringue pie, Billy-Bob McCoy, a morbidly obese, thrice-divorced, Evangelical 45-year-old roofer from Mobile, Alabama with a predilection for NASCAR,  methamphetamine and stepmom porn, explained that he voted for the first time in his life because he believes Trump is the Risen Christ, come to guarantee the right of the people to keep and bear arms during the Rapture…”

Never one to shy away from a challenge, I shall now attempt what might just be the first piece of diner journalism ever composed by an Australian (sometime) journalist.

I’ll focus on the US because even non-Americans are usually familiar with American history. And also because, as I observed last week, all Anglosphere politics is downstream from American politics. That means much the same political dynamics that played out in the US also played out in nations such as Australia, Canada, New Zealand and the UK over the last century.

The New Deal era
Contrary to the popular narrative, Herbert Hoover was neither stupid nor particularly right-wing (at least in his younger years). But he was a Republican who was not entirely comfortable with state intervention in the economy. So, when the Great Depression hit, he failed to meet the moment. (His main economy-restarting initiative was forcibly repatriating around a million Mexican labourers.)    

Famously, his successor had no such Big Government hang-ups. So, the New Deal era of US politics can be seen as starting with the election of FDR in 1932 and stretching almost half a century to 1980.

That time frame covers two substantial Republican presidents – Eisenhower and Nixon – who seemed to believe ordinary Americans deserved a reasonable slice of the national income pie and that unions played an essential role in advocating for the interests of working-class and even middle-class Americans. An argument can be made Jimmy Carter was neoliberalish and that the New Deal era effectively ended with Nixon, the “last liberal president” in Chomsky’s famous evaluation. But Carter still had one foot in the New Deal camp, so let’s stick with the election of Reagan in 1980 as the dawn of the Neoliberal era.

Here's how things worked during the New Deal era:

*There were strong unions. A critical mass of both private and public sector workers joined them. Indeed, it was impossible to get a job at a ‘closed shop’ if you weren’t a union member. The union movement was often guilty of everything union haters accused it of. Nonetheless, it ensured average workers (rather than just shareholders and C-suite executives) got a piece of the action. Among other things, this meant it was possible to leave school at 15-16 and immediately find a blue-collar job paying a salary sufficient to fund a middle-class, home-owning lifestyle.  

*Related to the above point, Western business and political elites hadn’t yet shipped their nations’ industrial bases to developing countries with cheap and reliably compliant labour, as well as lax environmental protections

*Related to both of the above points, Western business and political elites still viewed communism as a serious threat. I’m guessing business owners and CEOs didn’t like paying lots of tax, having to play nice with bolshie union leaders, and only earning 20-30X times the average wage (rather than 200-300X) back in the New Deal era. Still, they begrudgingly learned to live with these impositions. (And they undoubtedly felt New Dealism was a far better option than having the proletariat seize the means of production, as had occurred recently throughout Eastern Europe.)  

*Necessities – housing, education and healthcare – were relatively cheap. Luxuries, such as plane trips, were much more expensive  

*Incomes were much more bunched together. Yes, there were still rich and poor people, but most people lived in the fat part of the income-distribution bell curve. John Howard often talks about how proud he was when a US dignitary visiting during the 1970s praised Australia for having, per capita, the biggest middle class in the world. (Howard still believes that Australia is the most middle-class nation on earth.) Plus, social media and reality TV didn’t exist, so even if you weren’t rich, you weren’t consumed with status anxiety

*Those at the top of societies felt they had an investment in their society. If anything, they believed they had a greater than average investment in their society given their privileged position. For instance, they didn’t attempt to evade military service themselves, or pull strings to get family members out of serving.

JFK sustained serious injuries serving in WWII. His brother, Joseph Jnr – the one Joseph Snr had earmarked for the presidency – was killed in Europe when his plane blew up. No doubt a politically well-connected plutocrat like Joseph Kennedy Snr could have kept both his sons out of harm’s way. But both he and his sons would have found that deeply shameful. (The Kennedys were fond of quoting Luke 12:48 to each other – “To whom much is given, much will be required”.)   

*Societies were broadly meritocratic. But they weren’t yet quite so hyper-meritocratic that the winners were absolutely convinced that they had earned their fortunate position – and that the ‘losers’ deserved theirs     

The neoliberal era
New Deal policies were fantastically successful at generating widespread prosperity. Until they weren’t. For reasons there isn’t space to explore here, Western economies began turning to custard around the mid-1970s. All kinds of weird phenomena, such as stagflation (high unemployment and high inflation), started freaking out policymakers.

I fear critics of neoliberalism, especially those too young to have any memory of the late 1970s, downplay just how traumatic the final years of the New Deal era were for people at all levels of society.

It was around this time that Lee Kuan Yew warned Australia, which like many Western nations at that time had seemingly intractable double-digit unemployment, was destined to become the “poor white trash” of Asia. Many Brits who endured the ‘Winter of Discontent’ would have assumed that post-Imperial Britain was already the poor white trash of Europe. Even the constitutionally optimistic Americans came to fear their country had taken a terrible wrong turn somewhere. (Carter never actually mentioned malaise in his infamous 1979 “Malaise speech”. But he observed that America was in a profound crisis that “strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation. The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America.”)

By the late 1970s, voters in Western nations were so desperate to return to the kind of post-war prosperity they had grown accustomed to that they were ready to vote for anyone who claimed they could get things back on track.

The likes of Thatcher and Reagan promised voters something much more enticing than the status quo of managed decline and ever less genteel poverty. They promised economic revitalisation, national restoration and the chance to get ahead, albeit as an individual rather than a member of a class.

Of course, some rough medicine would need to be swallowed down, but once it was the terrible fever would break.

The rough medicine consisted of the following:

*Neutering organised labour

*The societal veneration of “wealth creators” rather than workers

*Minimal, and minimally enforced, taxes on “job creating” entrepreneurs and companies  

*An ongoing redistribution of wealth and political power from Labour to Capital. (It was rarely put so baldly, but that’s what the eminently foreseeable impact of neoliberal policies, such as union busting and free trade, was always going to be)  

*Greater income and wealth inequality

*The privatisation of anything not nailed down (with the accompanying loss of secure, public-service jobs)

*The deregulation of the labour market in general (with the accompanying loss of secure, private-sector jobs)

*Companies focusing (near) exclusively on maximising shareholder value, regardless of the impact on other stakeholders, such as employees or customers

*The elimination of tariffs, allowing Western businesses to engage in widespread labour arbitrage (i.e. shipping any location-insensitive work to a developing nation, usually China)

*Turbocharged immigration to “grow the economy” (and, purely coincidentally, reduce the bargaining power of native-born workers)   

*An acceptance that what Tom Wolfe memorably christened the “Masters of the Universe” shouldn’t be expected to play by the same rules as the rest of us. Perhaps the most piquant contemporary example of this is everybody’s shoulder-shrugging acceptance that Silicon Valley billionaires have openly made detailed plans to loot their society then catch a private jet to their luxurious New Zealand bolthole when the policies they’ve promoted cause America to implode.  

The post-neoliberal era
Just as neoliberalism’s critics typically ignore the reasons why neoliberalism emerged, they tend to downplay its initial successes. And it was initially successful, with Western economies roaring back to life in the mid-Eighties. The neoliberals weren’t wrong about everything. Taxes were too high on individuals and businesses. Union leaders did often behave irresponsibly during the 1970s. It turned out there was no compelling reason for governments to own airlines, car makers or telecoms.

But like members of all political movements, the neoliberals never knew when to stop. While telecoms and airlines can be left to the private sector, the results aren’t so good when you start privatising, for example, public transport or water companies.

Reining in the power of the union movement at the height of its hubris was probably good for almost everyone, including unionised workers (many of whom voted repeatedly for Reagan, Thatcher and their Anglosphere imitators). But having a situation where organised labour is emasculated and employers almost always have the whip hand has eminently foreseeable consequences when it comes to the wages and conditions most workers can expect

I won’t even get into neoliberalism’s role in putting a rocket under the cost of housing, education and, in the US, healthcare. Instead, I’ll conclude by belatedly attempting to answer my initial question: Why are non-elites now so sceptical of contemporary elites?

The reasons any Average Joe or Joanne (i.e. those in the bottom four quintiles of the income distribution) will have for being disgruntled with the powers that be will vary. But here are some common ones:

*You can’t afford to buy a home

*If you are male, not being able to afford a home makes it challenging to attract a female partner

*If you are female, not being able to find a male partner who can afford a home means it is more difficult to get married and have children  

*If men and women aren’t forming committed relationships, fewer children are born. (Tragic for those who end up involuntarily childless and disastrous for any society that wishes to continue to exist)

*You have little job security

*You don’t even have a job, only a “gig”

*You have little reason to believe your economic situation will improve over time. In fact, you fear it could get much, much worse

*You believe elites – be it bank CEOs, economy-shuttering, prevaricating health bureaucrats, or Jeffrey Epstein’s many powerful friends – are entirely devoid of a sense of noblesse oblige and, even worse, never have to bear the consequences of their actions

*You believe that, at best, elites are oblivious to people like you and, at worst, actively hostile to people like you   

*Your wishes on issues ranging from immigration to military adventurism are routinely ignored by elites. (You can add things such as paid maternity leave, a higher minimum wage, socialised healthcare, government-funded childcare and cheaper college tuition to that list in the US)  

*You believe that local elites have gone all in on feathering their nests in recent decades and have much more in common with similarly venal elites in other nations than they do with their compatriots

You bought the neoliberalism ticket, now take the low-trust ride
If media power players such as John McDuling want to repair relations between elites and non-elites and return to a society where ordinary people instinctively trust the “business, government, media”, I would humbly suggest they are going to have to return to the kind of New Deal policies that foster social capital. My read is that the bottom 80 per cent of the population in the Anglosphere would be delighted to experiment with New Deal 2.0.

The question, as ever, is whether elites want to.  

I don’t ask much…  
I’ve never charged for these Musings and have no plans to do so. But if you feel you’ve got some value from them and you’re one of those book-readin’ effete intellectual types, you might want to repay me by buying the books of two high-profile Substackers who were kind enough to expose their readerships to Precariat Musings:

Rob ‘Luxury Beliefs’ Henderson’s memoir, Troubled: A memoir of foster care, family, and social class is coming out soon. You can pre-order it here.

Freddie deBoer’s How Elites Ate the Social Justice Movement is coming out very soon. You can pre-order it here.