Angrynomics. Eric Lonergan

in the economic ideologies of left and right, and these were in turn deeply embedded in social and political institutions, such as political parties, trade unions, working men’s clubs, churches, and small business associations.

      People in this period did not identify politically primarily based on tribal, ethnic and nationalist grounds, as they did in the Ireland that you grew up in. In most of the developed world, political identity during the Cold War years was grounded in what could legitimately be called an economic ideology – a collection of beliefs about the economy – concerning how it works, who owns what, who gets what, and why they do, or do not, deserve it. Whether you were pro-state, or pro-market, a clear set of beliefs about your economic interests, whether you were pro-business or pro-labour, was the name of the game. People also had a very clear sense of the real differences between political parties on fundamental issues of policy, and that their interests were being represented by one party and not the other. These ideologies motivated people to vote. Those identities were quite stable.

      The post-Cold War shift to neoliberalism was not just a huge shift in economic organization, it also destroyed the political identities of a great many people, and not just the annoyed folk singer in our parable. Most people still trundled out to vote for “their” party after the Berlin Wall came down – Labour, the Social Democrats, the Democrats – but did it really matter anymore? The post-Cold War era was defined by a loss of political identity and the political disengagement of large parts of the population, especially by those most hurt by the economic changes of the period.¹¹

      In the Blair, Schroder, Clinton, Obama, centrist era there simply were no strongly motivating political identities or competing ideologies. Everyone was assumed to believe in some variant of a market economy and to embrace a cosmopolitan individualism. If you did not, you were considered a relic, or worse, a nationalist. When those ideas went up in smoke in the financial crisis of 2008, politicians had to find something new, and they did. So much of what we see today is politicians attempting to fill the vacuum created by a discredited neoliberal consensus with a more motivating set of political identities.

      ERIC: So this rise in tribal anger, and its exploitation by the media and the political class, is not a consequence of the financial crisis alone, or even the sources of legitimate moral outrage such as the neglect of the US Midwest or environmental degradation. It significantly precedes these phenomena, and it exists even in economies that have been far less economically stressed. The hollowing out of democracy, the corruption of the political classes, the seeming irrelevance of elections, the inability to prevent recessions, increases in wealth and income inequality, and rapid technological change, all matter. But these stresses are channeled in different ways in different countries due to the coincidence of interests between politicians’ need to motivate a minority to win elections and the legitimate grievances of those most affected. Modern tribalism has its origins in a loss of motivating political identity. The political classes have responded to the dilemma of how to get people out to vote in the absence of motivating ideas by reverting to tribalism.

      I think the most instructive examples are to be found in central and eastern Europe. Why is it that the most successful cheerleaders of nationalist tribalism are to be found in places like Hungary and in Poland? These countries have two similar features, they were at the heart of the Cold-War victory of liberal, free-markets, and they are, relatively speaking, economic successes – they have had very strong real wage growth. Although Hungary was at the front line of the financial crisis in eastern Europe, Poland was one of the least affected countries in Europe. Since the crisis, both countries have seen big increases in living standards and a collapse in unemployment to historically low levels. But this has not hindered aggressive tribalism. Hungary’s President Orban is very explicit about his strategy. He says that he abandoned liberalism to win elections. Being anti-European, anti-immigrant, and sectarian, wins elections in Hungary. The moral case for freedom and free-markets made by this once youthful anti-communist is a distant dream.

      MARK: Okay, so let me summarize and set up where we are going next. When we analyze anger in our politics – especially public anger – it is important to keep tribal anger and moral outrage distinct. The financial crisis, the brutal recession in its wake, the euro crisis, rising income and wealth inequality, and an abject failure of political representation, are at the core of our problems. They are and should be objects of moral rebuke. But while these factors motivate anger, and that anger finds its way into politics, this has to be separated from the energy of tribes and the cynical exploitation by politicians and the media of latent nationalistic identities to get elected and to sell copy – how they chose to fill the vacuum created by an anodyne, identity-free, political centrism. The former we can and should do something about, and the policies we shall discuss later are designed to do just that. The latter we should expose and disarm since they are more harmful than the grievances that they are a response to. Okay, so let’s turn to the lessons we can learn from legitimate anger?

DIALOGUE 2

       The moral mobs and their handlers

      “I am your voice”

      DONALD TRUMP

       The parable of the Spanish family who played by the rules

      Pedro Garcia graduated in economics from the University of Cadiz in 1998. The Spanish economy was booming, and it didn’t take him long to get a job working for a local bank in the mortgage approval department. Soon after graduating, he married his university girlfriend, Valeria. After a year of teacher-training, Valeria got her first job as a schoolteacher in a local school. In 2001, their first child, Anna Maria, was born.

      Unsurprisingly, the Spanish housing market was much debated in Pedro’s office. Young families like his were struggling to afford to buy properties like those of their parents. Prices had been booming for almost ten years. Some economists were saying there was a bubble. Pedro wasn’t sure. He worried about the coastal property boom, but in towns and cities where he and Valeria wanted to live there would always be demand for good properties. Spain was in the European Union and had just joined the euro. Interest rates were lower than ever before, and the euro represented stability relative to Spain’s past.

      Pedro wanted to take out a big mortgage and buy a three-bedroom apartment in Cadiz, which they could just about afford. Valeria wasn’t sure. Wouldn’t it be wise to save more and perhaps wait for property prices to calm down? Pedro, and her parents, convinced her otherwise. “He has a good job in the bank, and you are a public employee, with high job security. Take out the mortgage and make a nice home for Anna Maria.” They signed the deal in 2002.

      Over the course of the next ten years, their plans fell apart. Pedro and Valeria saw the value of their house collapse. Initially, Pedro held on to his job, protected by Spanish labour laws, but his salary was cut. Despite working in the public sector, Valeria first saw her salary reduced by 30 per cent, and was then made redundant in another round of budget cuts.

      Pedro and Valeria had never been interested in politics. They had open-minded attitudes about most things in life. They liked modern Spain and Europe. But Pedro also knew enough economics to know that you are not supposed to respond to a recession by making even more people unemployed in order to restore investor confidence – a policy called “austerity”. When unemployment is high, high school economics says to cut taxes and increase spending. This “punishment” coming from the EU, was motivated by some perverse desire for retribution and was a dishonest attempt to deflect blame.

      In reality, his bank, like all other banks, had miscalculated. They had assumed that property prices would always rise like they had in the past. He also knew that German banks had been encouraging banks like his to borrow from them and finance the property boom. The story being peddled by European politicians and central bankers of prudent Germans and spendthrift Spaniards was a lie. The German banks were bailed out by the European Central Bank, but it was public-sector workers in Spain, like his wife, who paid the price through budget cuts.

      This