Angrynomics. Eric Lonergan

there if you want to know how the global economy works – all explained in 30 minutes reading! Or you can skip it if you’re not too keen on economics and prefer to stay with the politics. But we hope that you do stick with the economics. Just as war is too important to be left to the generals, so economics is too important to be left to just economists, especially when it has morphed into angrynomics. What we hope to show through these dialogues is that much of what we think about the future, and why we are angry, is misplaced. People have every right to be pissed off – as the British say – but please, be pissed off about the right things. To get us to that point our conversation moves through four themes.

      The first is to understand anger itself. What it is and why it matters. In the first two dialogues we explore two distinct types of anger: tribal energy and moral outrage. We examine what constitutes a legitimate grievance versus an “identity regulator”, and in doing so we uncover the underlying economic causes driving public anger. This provides us with a lens through which to make sense of the rise of populist politics. Populism is incoherent, but the energy of tribes and the moral mob are clearly identifiable. Those most angry are often motivated minorities – those most likely to vote – and street-smart intuitive politicians know how to exploit them. We should know when we’re being duped and manipulated.

      Once we know what we’re dealing with, we want to understand “why?” and “why now?” To get there, in Dialogue 3, we try to give the best political economy story we can about how we got here. Political economy is where politics and economics come together to determine who gets what, where, when and why. To that end, Dialogue 3 gives a crash course in the long-run political and economic history of the world and explains why we periodically fall from economics into angrynomics. The bottom line is that we have been here before – angrynomics is recurrent – and large-scale macroeconomic crashes discrediting conventional models of thinking are its root cause.

      If Dialogue 3 gives the bigger picture, the fourth dialogue discusses a distinct form of private anger – the anxiety and stress that can ruin our private lives. We identify the everyday or micro-level generators of angrynomics. We focus on two in particular: technology and aging. The first is super-hard to think about (because innovation and its effects are inherently unpredictable), and yet there are hundreds of books on how technology, especially artificial intelligence and robotics, is changing everything – even if it hasn’t happened yet.

      We hope to show that technology is changing some things, but not everything. And that a lot of what people say is really techno-babble and a bunch of fantasy-hawkers selling bits of the sky to each other and gullible investors. Entertaining, but not serious. We argue that just because a technology exists, it does not follow that it will be adopted. Technologists, especially those selling blockchain technology and cryptocurrencies, tend to forget that. What economists term the “rate of diffusion” – the length of time it takes us to absorb technology in our work practices and lives – is often far more important than the innovation itself. New technologies are rarely adopted overnight. They are constrained by institutions, social norms and costs, and they are always resisted and modified.

      To investigate the second main source of our everyday anxiety, we focus on demography – the fact that the populations of the world’s developed countries are getting older. Return for a moment to our synthetic economic world of representative agents, devoid of sex, age and ideology. Imagine if we populated that modeled world solely with old people? How would consumption change given that the old save more than the young and have already bought all that they need? What would happen to investment given that the old spend less? What would happen to policy given that old people vote twice as much as young people – almost everywhere? That’s more like the world we live in. Aging has consequences for the economy that we hardly ever examine, but we really should, and those consequences create a lot of our stress.⁷

      Dialogue 5 turns our own moral outrage to posit some creative solutions. A key point we want to make is that individual-level solutions to such problems simply don’t work. Like a libertarian who is rich enough to have his own fire brigade, it’s really not going to help if the whole town is on fire. The solution to an angry world is not to individually insure against it, but to collectively embrace it. And that requires effective forms of collective insurance and distribution that are fundamentally different from the ones that we have in our minds, and in our politics, today. The good news is that the acceptance of a new set of innovative policies that takes politics beyond its traditional left and right boundaries is emerging.

      Our proposals include the creation of national wealth funds to align the interests of business and labour, and to provide assets to those who have none. We propose an overhaul of how central banks work in order to provide new forms of social insurance and to shorten and reduce the likelihood of recessions. Zero or negative interest rates are often viewed as a cause for panic – far from it. Cooperation between fiscal and monetary authorities using a system of dual interest rates can supercharge the finance of alternative energy and regional development. We also propose a new fiscal rule, which is not just prudent, but consigns austerity to history, and provides ample scope to finance various forms of a “Green New Deal”. We want to tackle wealth inequality without stifling genuine innovation. We want to encourage technological change and higher productivity, while securing decent, stable livelihoods for all in society. We demand that the planet thrive for our children.

      Contrary to a great deal of populist pessimism, these objectives are complimentary and require neither new borders nor economic regression. One undeniable fact is that we have greater resources than at any other time in human history. We present radical proposals that disrupt traditional political divisions – they have advocates on both the left and the right – which directly tackle legitimate sources of fear and insecurity, seek to restore the lost credibility of politics and restore the faith of populations in democratic governments. This is what makes us optimists. Our aim is not to make the world quieter or calmer just so that the rich can sleep sounder in their beds. Angrynomics is real and needs to be taken seriously. The point is not to quieten the anger because it’s uncomfortable for those of us with the most comfort, but to listen to its legitimate expression, learn from it, and build a less angry world. This is how anger becomes opportunity.

DIALOGUE 1

       Public anger and the energy of tribes

      “Look at the anger, look at the fear”

      NIGEL FARAGE

       The parable of the angry folk singer

      In the 1970s and 1980s, the British and Irish experienced local terrorism far more intense and frequent than anything the developed world has seen in the past 20 years. The Irish Republican Army (IRA) – a paramilitary organization seeking the unification of Ireland – declared themselves at war with the British state. The IRA killed 125 people in attacks in England, and over 1,500 people in Northern Ireland. Many more were wounded or maimed. Allegiance or opposition to the IRA split many families and neighbourhoods in the Catholic parts of Northern Ireland, and in some parts of the Republic.

      Many years after the peace settlement and the IRA agreeing to disband, a denizen of Dublin went back there with a British colleague who loves Irish traditional music. So they went to a pub near St Stephen’s Green, where traditional bands always played. In the pub there were maybe 30 or 40 people drinking pints of Guinness and listening intently. Ninety per cent were tourists – Germans, Spaniards and Italians. Maybe more. There were also some lost-looking young women over on a bachelorette weekend, unconvinced by the fiddle, banjo and guitar players. Few locals were to be found in the audience. The band was great. They were playing both ballads and traditional dance music. But the lead singer looked pretty glum.

      He had a great voice,