Burgess COMMENTARY
This is a very thought provoking piece. Certainly there is a large amount of discontent that leadership elites seem to have sought to exploit more than they have sought to fix. In part this may be because they know how to do the politics, but they actually don't know how the discontent can be fixed. When you look at the world as a complex system comprising three segments ... a socio-enviro-economic system ... rather than a simple money based economic system ... then potential solutions start to emerge.

For much of the past 200 years there was a massive increase in the power of technology that was used to improve the standard of living through more production and using more labor ... good for people, but bad for the environment. Then there was a change and more technical progress enabled more productivity and more production with less labor ... good for profits and owners, but bad for workers and society and bad for the environment. Now we need to use technology and productivity to address the needs of the multi-billion population around the world that are still short of all sorts of things (product / services / infrastructure / etc.) and improve the performance of all our production systems so that they do no damage to the environment, and indeed remediate the degraded environment. In technical engineering terms we can do this. The problem is that the money metric and store of value used by bankers, economists and all of us cannot handle what is technically possible. There needs to be a better understanding of how this socio-enviro-economic system works and how it can be optimized ... and a start in this direction is going to be better metrics, and an ecosystem for good that is as strong as the ecosystem we have for money.

Investors finance all sorts of things that have the potential to make profit ... whether or not they are good things or bad in other ways. Impact investors are looking to invest both to earn money returns but also to do some good ... but the measures for good are still primitive and costly compared to what is needed.

There are all sorts of bad things happening in the modern world, and in large part this is caused by people not having the opportunities that they would like to have and this is caused by the amount of valuable economic activity being constrained by the availability of money. From the dawn of economic history to the 1970s good economic activity was constrained by nature (represented by land) and by the availability and capabilities of workers (labor). Since the 1970s productivity has reduced the need for labor ... and this is the root cause of most of the discontent that is fueling much of the angst that we are facing today ... an angst that is driving society and politics in all sorts of different ways, mostly unproductive and dangerous.

Peter Burgess http://truevaluemetrics.org
Peter Burgess

From Trump to Erdogan: The Rise of the “Identitarians” Supporters of identity politics feel safer by shutting doors to the rest of the world. Who pays the price? How did elites contribute to it all?

Credit: Michael Fleshman www.flickr.com

Takeaways

• Today’s nationalists & Islamists are motivated by same desire for “purity” of society or faith.

• In contrast to nationalists, Islamists want to extend their “pure faith” to the entire world.

• Supporters of identity politics feel safer by shutting doors to the rest of the world.

• Whether majority rule or dictatorship, identitarian politics illiberally targets minorities.

• It is tempting to blame “neoliberalism” and “globalization” for the rise of identitarian politics.

• It was the misguided constructivist zeal of the elites that fueled the rise of the identitarians.

• Liberal society is endangered by uncontrolled migration from regions with different social orders.

We live in a world of ever more uncertainty. And yet, as more and more trend lines are pointing downward and national agendas are becoming brittle, there is a common force operating across a wide range of societies.

Rejecting openness

To understand what is going on, you have to answer a truly globe-spanning question: What unites Donald Trump in the U.S., Marine Le Pen in France, the AfD and Pegida in Germany, the Brexiteers around Boris Johnson in the UK, the Kaczynski supporters in Poland, Chinese nationalists around Xi Jinping, the Islamists around Recep Tayyip Erdogan in Turkey, the so-called Islamic State and many others?

They all cater to the rising demand for “identitarian” politics. The identitarian movement emerged in the early 2000s in France and moved from there to neighboring European countries.

The new identitarian movement emphasizes ethnic and cultural homogeneity of societies in their respective settlement areas. They abhor western, liberal universalism that has led to globalization.

Anti-Westernism: Nationalists and Islamists stand united

Although they do not subscribe explicitly to the identitarian ideology, today’s nationalists and Islamists are motivated by the same desire of “purity” of society or faith.

The various identitarian movements of differ widely in the means they employ to fight “impurity.”

Moreover, in contrast to the identitarians or nationalists, the Islamists want to extend their “pure faith”— and their rule — to the entire world. But they are all driven by the same desire for homogeneity and “purity.”

Botched response to modernity

How did all of this come about? To a considerable extent, it’s a botched response to modernity itself. Voters susceptible to, or strongly supportive of, identitarian politics see a world that, in their minds, has lost all boundaries.

For them, the only way to cope is to go forward on the basis of the principle of exclusion, expulsion, even destruction.

Their goal is to root out all that is foreign – so that they can cling to a heavily romanticized and simplified version of a “pure society” that presumably existed in the past and has been diluted by western liberalism.

In short, by shutting the doors to the rest of the world—or shaping it after their own imagination — they retrieve their sense of personal safety from the dilution of their identity — whether in the nation, the ethnic or cultural community, or the only true faith.

Majoritarianism and identity building

To legitimize themselves, politicians promoting an identitarian agenda can often claim the support of the majority. That may well be so. But it is also true that democratically legitimized majority rule does not necessarily lead to the rule of law, which is at the core of the liberal social order.

Whether based on majority rule or dictatorship, identitarian politics is deeply illiberal, because it is directed against minorities in society.

Globalizers, not globalists, bear fault

It is tempting to blame “globalization” for the rise of identitarian politics and to demand that it be contained or that its perceived “victims” be compensated by income and wealth redistribution.

Globalization is a feature of liberal societies in a technically interconnected world. Should therefore liberalism or, as its enemies like to say, “neoliberalism” be contained?

This would be a grave mistake. It was not liberal policies that shaped global interconnectedness in a way that has fueled the rise of the Identitarians.

To the contrary, it was the misguided constructivist zeal of the elites, inconsistent with a liberal order, that created the conditions for the rise of identitarian movements.

Recall that, in the United States, it was the neoconservatives who wanted to impose Western values on the peoples of Middle East by force. The result was the destruction of tribal societies, civil wars and mass migrations.

Too many people thought top-down

In Europe, it was the EU federalists keen on creating an ever closer union by introducing a single European currency who ignored political, social and economic reality. The expectable result was economic stagnation and political tensions among the nations in the European Union.

At the global level, it was the financial elites in their self-serving desire to maximize profits and minimize risks through worldwide diversification who violated liberal principles of freedom and responsibility.

With the unfortunate compliance of politicians, the result was the decoupling of making profits and bearing losses, which benefited the elites and left the less privileged holding the can in the financial crisis.

Protecting liberal order

If we want to avoid that the discontent of the Identitarians leads us into a dictatorship of the majority, as it can be seen in Turkey right now, we need to protect the liberal order of our society.

There, the rule of law contains executive power and protects minorities, which have often been the source of economic and social progress. The liberal order is a prerequisite for all members of society to be able to realize their potential.

At present, the liberal society is endangered by uncontrolled migration from regions with different social orders. Make no mistake about it: Help for the needy is a key component of our liberal order.

But that help must be tied to the condition that the needy – newly arrived refugees — respect the order they owe the help to. If they are allowed to violate liberal values they will destroy the liberal society they have sought as safe haven from persecution or economic deprivation.

Freedom and responsibility

Our order is also endangered by the decoupling of freedom and responsibility. In the European Union, member states seem to have made it an all-too-convenient organizing principle to shuffle off the costs of their actions to the community level.

The massive rescue operations to support the euro embody the break of the liberal rule of accountability and responsibility. This goes against the grain of a liberal social order.

In the financial sector, all the mellifluous talk in the name of modern finance about profit maximization and risk management have led to the socially and economically gruesome and, for the elites, very self-serving privatization of profits and socialization of losses.

Politicians and central bankers — presumed to be arbiters acting on behalf of all of society, not just elites — have actively contributed to the decoupling of profits and losses.

The exchange of goods and ideas as well as financial relations across borders — in short, “globalization” — have long been a component of our liberal order.

At the same time, in democratic societies, the support for global trade and finance evaporates when they militate against the desire for fairness and the connection between freedom and responsibility, and are instead an instrument for the enrichment of the elites.

Identitarian politics is like cancer

That is why multilateral or bilateral trade agreements need to be checked, as to whether they satisfy the principles of fairness and responsibility.

However, this examination, democratically necessary as it is, is often abused to sabotage global trade and finance with a view to promoting identitarian politics.

For the liberal society, identitarian politics is like cancer. It leads us into the dictatorship of the majority, where minorities are suppressed. Even if it is democratically legitimated, the dictatorship of the majority can in no way be justified.

Never mind that the solutions identitarians from Erdogan to Johnson and LePen offer will all fail. They sound great rhetorically, but are practical dead ends.

More on this topic

What Asia Should Learn From Trump’s Rise
U.S. Republicans and Erdogan: The Dangerous Lure of Take-No-Prisoners Politics
Recep Tayyip Erdogan Speaks

About Thomas Mayer Thomas Mayer is Founding Director of the Flossbach von Storch Research Institute in Cologne, Germany, and the former Chief Economist of Deutsche Bank Group.

Founding Director of the Flossbach von Storch Research Institute

Thomas Mayer is the founding Director of the Flossbach von Storch Research Institute in Cologne, Germany.

From 2010 to 2012, he was chief economist of Deutsche Bank Group and head of Deutsche Bank Research. In that capacity, he advised Deutsche Bank’s management and key clients.

Previously, from 2002 to 2009, he was chief European economist at Deutsche Bank in London and co-head of the Deutsche Bank’s Global Economics Group. Before joining Deutsche Bank, Thomas worked for Goldman Sachs in Frankfurt and London, and for Salomon Brothers in London.

Before moving to the private sector, he held positions at the International Monetary Fund and the Kiel Institute for the World Economy. He holds a Ph.D. in economics from the University of Kiel and is a CFA Charterholder since 2003.

His book “Europe’s Unfinished Currency: The Political Economics of the Euro” was published in October 2012 by Anthem Press. He writes a regular economics column in the Frankfurter Allgemeine Zeitung.

Since 2015, he is an honorary professor at the University of Witten-Herdecke.