America Tears Itself Apart – closely followed by Britain

The consequences of industrial decay, lack of investment in quality employment and the development of huge gaps in income and wealth; leaving a mass of people on the breadline with little social support are showing starkly in both America and Britain.

Although the effects of gross inequality were showing for decades before 2007, the worst of the problems originated from the collapse of the global banking system in 2007/8. Large numbers of people were impoverished by this, and the perpetrators, senior politicians and top managers of financial institutions, essentially escaped scot free – or left with huge payouts. The fact that this disaster was entirely predictable is a blot on the economics profession and particularly on the culture of greed and arrogance in the global financial sector.

The dominance of the Free Market and in particular, the financial sector, influenced a lack of investment in technology and manufacturing; the growth of relatively low quality services, and massive growth in consumer spending and debt.

In Britain, the collapse of the banking system was exacerbated by the Conservative government that followed that of Labour Prime Minister Gordon Brown, who at least managed to encourage state intervention to stop complete collapse.

The Conservative finance minister, George Osborne, concocted the story that the collapse was due entirely to “Socialist overspending”. His remedy was deeply ideological – violent cutbacks and decimation of the public sector, in a programme of “slash and burn” of public services.

The effects of this grossly right-wing, free market ideology have come home to roost in the 10 years following the Crash:

• Virtually nothing has been done to effectively reform the banking and finance sectors, which continue in the same ways with essentially the same cultures and leadership
• Real earnings for the lower paid have hardly reached 2007 levels – whilst those with wealth and the higher paid have continued to prosper
• Public services at national and local levels have been reduced by as much as 50% in Britain.
• Investment levels in industry and infrastructure have plummeted
• In America, national public services never have been anything less than disgraceful for a rich, civilised country. The results have been gross impoverishment, especially in the once-prosperous mining and steel producing states. Despite attempts to remove it “Obamacare”, which at least provides some comfort to the poor has survived, but the state of public health in America is shocking to European eyes, and epidemics of narcotic addiction are rife.
• GDP growth boosted by borrowing and consumer spending rather than investment

The State of Society*

Gross inequality has been proven to cause separation and schisms in a society. The poor tend to be driven into ghettos and economic wastelands, where repeating cycles of poverty, poor education and social inclusion tend to feed ill-health, crime and economic deprivation. On the other hand, more wealthy citizens tend to become physically separated from the poor, and to develop theories about the causes of poverty (“their own fault”), spurred by the popular media. Meanwhile the very rich are able to exclude themselves from civil society, exercise power to secure their positions and avoid paying their dues to the societies that actually support them. The congregation of the super-rich in certain parts of London, with very negative effects on the city around them is a very good example of this.

Good evidence by many researchers shows that extreme inequality has an effect, not only on the poor, but increases stress and intolerance in society as a whole. Politics becomes more conflictual - and the capacity of a society to escape from a descending spiral of inequality and social decay becomes less and less. Thus the very fabric of society begins to degrade.

The alienation of the 'middle'

This example is drawn from British experience, but seems to be consistent also with that of the US.*

“People with middle income and wealth levels located somewhere between the 30th and 70th percentiles are trapped between the two extremes of rich and poor. Despite having fared better than the relatively poor, they are beginning to react to emerging facts about the growing divide between them and the rich and their mood is becoming increasingly sour. They are assailed by stories of the wealth of those in the financial markets and top management and for those living in London and the South East. They are beginning to understand that the soaring price of housing is caused by the burgeoning wealth and consumption patterns of people in the financial markets.

It is this group that suffers most from the plethora of scandals and scams caused by the behaviour of the banking, mortgage, insurance and financial services industries. Several million people have been adversely affected by pensions mis-selling, dodgy endowments, sub-prime mortgages and a host of other well-publicised swindles and mistakes. So as a group, the income and wealth they have now appears to be far more stretched – housing, energy costs, provisions for old age, costs of university education and longer financial dependence of their children all eat away at what should be a comfortable life style.

At the same time, experience in the workplace is often of increasing stress and pressure, declining security of employment and apparently, work satisfaction. And in the world around them, they are likely to be most aware of and affected by those aspects of society that appear to be in decline.

To cap it all, they are constantly bombarded by the media with stories of crime, failings in the healthcare system, runaway immigration and a continual negative narrative about the state of society. When there is good news, it tends to be drowned out by a chorus of gloomy stories.

Is it any wonder that they are so easily influenced by the doomsayers and the culture of blame which is the one part of the traditional middle class newspapers that they tend to believe?

This same mood towards those above them - ('Fat cats') - and below - (‘yobs, immigrants, scroungers and criminals’) generates little sympathy for taking action to rectify the problems caused by inequality. "I've got enough problems taking care of myself and family in an increasingly insecure, unfair and dangerous world", might be the motto of the middle.

So the glue that holds society together becomes degraded, and society more and more resistant to being governed. This in turn fosters the growth of political extremism and political movements based on nostalgia and protest”.

*Sustainable Paths to Community Development, Charlotte and Don Young; School for Social Entrepreneurs, 2011.

“Brexit”, founded on distrust, anger and growing hatred of “The Others”

In Britain, the recent vote to leave the European Union has similar roots. The majority of the populace has felt powerless to influence government to act in their interests as inequality has burgeoned. The resulting anger has been a rich recruiting ground for populist and often mendacious politicians who are only too willing to blame “others”, immigrants and a distant European Union for the sufferings they feel.

The result is an angry and hugely disunited country, political chaos and outbreaks of racist violence, which risks still further decline that will affect the poorest still further, and a descending spiral of reducing personal and societal wellbeing.

United States

The administration of President Donald Trump has been notable by its tone of ego-centric aggression towards internal and external “Enemies”. The US is in the process of tearing up a number of key international relationships and denigrating multi-lateral institutions such as the United Nations.

The influence of Womens’ interests has gained traction over the last few decades

The “Me Too” movement has emboldened vast numbers of women, especially in previously male-dominated Western societies, to come forward and speak out about abusive behaviour by many men. This clip from the relatively conservative “Daily Telegraph” captures the flavour of the times:

“The first anniversary of the #MeToo movement will soon be upon us: that moment when the litany of sexual misconduct allegations against Harvey Weinstein prompted Hollywood womanhood – and then what seemed like all womanhood – to throw up their hands and declare: “This happened to them, this happened to me, this happens to all of us, and, frankly, we’ve had enough.”

And we should not forget that Trump has been accused of sexual misconduct, as has Kavanaugh. Many, many women have been grossly abused by men, and white male society has chosen to ignore, denigrate or patronise them. The behaviour of many members of the Senate illustrates the point. A phalanx of elderly white males made patronising noises about the plight of Blasey Ford; but expressed sympathy and in some cases rage, at the way they believed Kavanaugh had been wronged.

It is quite possible that this case offers hope to a nation, as whatever the outcome, womens’ voices are more likely to be heard.

The latest manifestation of internal division and distrust is the appointment of Judge Kavanaugh to the Supreme Court.

This proposal by the Republican majority would have caused considerable conflict by itself, as Kavanaugh is known to possess right wing, conservative views that are likely to manifest themselves in such sensitive areas as Gay Rights and the right to abortion. Thus the proposal, supported strongly by president Trump, has roused considerable opposition. A routine political row between Republicans and Democrats has been supercharged by the accusation that Kavanaugh, in the distant past, been guilty of sexual impropriety, fuelled by alcohol. One of his alleged victims, Dr. Christine Blasey Ford, has testified in front of the Senate Judiciary Committee. Judge Kavanaugh, then testified in a remarkably emotional manner, denying all charges. This encounter lit the fuse for an explosive furore, the ingredients of which were multifold:

• Women’s sexual rights
• The right of elderly white men to decide on matters of state
• Violent political disagreements between various political factions
• How justice might be served in a violently conflictual context

At the time of writing, the FBI has been asked to investigate the claims of the conflicting parties – and even this has raised a storm about the supposed involvement of the White House and the time allotted for the investigation.

This clip from the “Observer” newspaper of 30 September captures the issues precisely:

“Ford vs Kavanaugh is more than a dispute about a serious sexual assault that occurred one evening 36 years ago. It is more than a mere human tragedy, although the Senate hearing will undoubtedly leave both individuals wounded. It was about much more than the constant never-mitigated tensions between the sexes that are as old as the world itself.

This clash, nominally over Brett Kavanaugh’s fitness to serve as a justice in the highest US court, embodies and symbolises the stark cultural divisions weakening, disfiguring and confounding a country, that, increasingly unconvincingly,still calls itself the United States.

It is about politics, it is about power and the law, it is about gender equality and is about mutual trust and respect, without which any relationship, let alone a sprawling intimately connected country of 325 million people, cannot hope to thrive”.

We live in an age when it is increasingly difficult to hide Social dysfunction. Even today (October 3) the crippling difficulties suffered by the poor in Britain, reported in many media outlets, contrasted with the wonderful fantasy world portrayed by premier Theresa May in a conference speech.