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Brexit & Trump = Capitalism & Meritocracy at a Crossroad

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At first glance, readers would likely think that I have missed something. Isn’t democracy (also) at a crossroad?

Definitely not.

The campaigning/electioneering and voting went like clockwork, only more exciting than usual. Protests against both outcomes further confirmed that democracy lives! Weren’t the protesters dumb? Really, were the outcomes different, would they accept if those who voted otherwise demanded a re-vote? Ahh, never mind. Bremain’ and ‘Not My President’ were just free people throwing a tantrum. They say what democracy is much about…let’s just hope non-violence prevails.

Friends who engaged me pre-Brexit knew that I supported Brexit. But with Trump, while I didn’t buy his message or method, I wished him to win. I expected neither to win but am glad to be proven wrong!

Here’s why.

Experts point to 14th century agrarian Britain as the origins of capitalism. It got a spurt from “16th century merchants and small urban workshops“(Marx). Then it went “international” with “the geographic exploration of the foreign lands by merchant traders, especially from England” in the 18th century. The Industrial Revolution then gave it further impetus with assembly lines and mass production. Today, modern capitalism birthed us a web of Free Trade Agreements and globalization that have touched almost every corner of the inhabited earth.

The history and evolving characteristics of capitalism are complex. At the risk of oversimplification, I discuss only 2 key features.

First, renowned Hungarian economist, Dr János Kornai makes the obvious but seldom highlighted observation that, vis-a-vis socialism, the distinctive “virtue of capitalism is its innovative and dynamic nature”. In a list of more than 100 “revolutionary innovations” (the criterion being its “relevance for large groups of users, well-known to the majority of people, and not only to small groups of experts”) only one product, surprise!, synthetic rubber, was a Russian innovation. The rest; from Band-aid in 1921 to ballpoint pen to black box (for airplane) to microprocessor to the Walkman to e-commerce and to Youtube in 2005 all originated from capitalist countries. (Dynamism, Rivalry & The Surplus Economy 2013 and Innovation & Dynamism)

Capitalism’s dynamism brings with it a surplus in goods and services. To illustrate; when the Berlin Wall fell in Nov 1989, Dr Kornai, even as a professor, had to wait 6 years for his Skoda. But not American Joe Everyman; he could casually walk into a showroom, flashed his cash and drove off his Ford (sorry, Singapore Ah Tan could only dream about it in whether in 1989 or 2016). Surplus along with credit availability under capitalism imply affordability if not low prices, benefiting all.

Second, Thomas Piketty’s “Capital in the 21st Century” sparked a “broad and energetic debate on…: the outlook for global inequality“. Piketty documents and analyses how wealth has waxed and waned from the 18th century, its concentration or distribution being disrupted by the 2 World Wars. With copious data, he demonstrates that wealth is reasserting itself – with globalization and tech innovation as the backdrop. Oxfam’s research makes a similar but startling observation: the wealth of 1% is more than the other 99% of us. Likewise, Forbes 400 richest owned only US$93 bil in 1982 but topped US$2.3 tril in 2014 (+2473%) even as median household income rose a meagre +180%.

Piketty warns the soaring wealth inequality will mean instability down the road. Apposing that with Kornai’s capitalistic surplus, the world saw the rise of Occupy Wall Street (OWS) movement. Why should we be surprised then by Brexit & Trump? Without diminishing the impact of other issues (immigration, security etc), Brexit and Trump built on the momentum of OWS’ cries of dissatisfaction and disaffection in a world gone not right. The rich are getting disproportionally richer while the middle and low incomers are given a raw deal with growing FTAs and globalization.

That message could only have been heard with a true democracy in action.

So, despite leading humanity’s progress with innovations, the Brits and Americans are telling their ruling elites – and the world – STOP!

Why? Meritocracy, perhaps?

Meritocracy emerged with China’s system of government in 6th century BC. Whilst some form of meritocracy was practised in government appointments in US from 1883, modern 20th-century meritocracy was signposted by Michael Young who coined the term.

With meritocracy widely practised in government, business and academia particularly in the last 50 years, the meritocratic elites running the show are quick to claim credit for the good in today’s world while disclaiming any responsibility for the ills or malfunctions therefrom. They either tacitly or ostentatiously assert that “all those not on TV only have themselves to blame”. Should that surprise us?

Chris Hayes, in “Twilight of The Elites – America After Meritocracy”, observes how meritocracy over the decades in America is failing her people:-

  • Institutions designed to reward merit are being gamed by the privileged, who create a self-perpetuating elite. The most familiar example concerns admission to prestigious schools via admissions tests…a level playing field. (But) thanks to test prep, the rich get lots of time to practice on it, while even smart poor kids don’t.
  • More broadly, inequality begets more inequality. “Those who climb up the ladder will always find a way to pull it up after them, or to selectively lower it down to allow their friends, allies and kin to scramble up.” Thus the astonishingly outsized gains seen at the very top of American society.
  • The intense competition inherent in meritocracy creates powerful incentives to cheat, and encourages the attitude that whatever you do in pursuit of dominance is fine as long as you profit or win. (Hence) Enron traders who broke the law weren’t punished if they were making money. And in Major League Baseball, everyone pretended that steroids weren’t around.
  • When elites break the rules they aren’t punished like regular people. They’re bailed out of trouble, or spared criminal prosecution for their lawlessness.
  • There is too much social distance separating the people in charge with the folks subject to their decisions. Thus (meritocracy produced) Catholic bishops who sympathized more with molesting priests than their victims, Senators who send men from a class they rarely encounter to fight the wars they approve, and the disaster planners who couldn’t conceive of how the timing of Hurricane Katrina at the end of the month would affect the ability of poor residents to evacuate.(The above abridged summary is from The Atlantic. Sounds familiar to the Singapore story?)

Meritocracy, at its most basic, believes it can and seeks to rank “intelligent people in order from most to least smart, and that the right person for a job is always the one deemed smartest.” But Hayes argues that “while smartness is necessary for competent elites, it is far from sufficient: wisdom, judgment, empathy, and ethical rigor are all as important, even if those traits are far less valued.”

Hence, we see the elites’ solutions to the 2008 financial crisis producing outcomes mostly favouring the elites’ own and their cheque-writers – never mind that none of those responsible for the crisis were “bailed out or spared criminal prosecution for their lawlessness.

Puttng together Kornai’s, Piketty’s and Hayes’ key observations, we get the picture of a world created by the meritocratic elites who have “grabbed all they can, canned all they grabbed, sat on the can” and for those not on TV, well, in Singapore lingo, “you die your business”.

With capitalism globalized, other than fresh oxygen in shorter supply, almost everything else is in surplus capacity and supply. Yet, Mr Everyman v.2016 is struggling to meet mortgage payments, banks circle like vultures ever ready to pounce on repossession while the threat of losing his job hangs over him like a cold dark cloud that he can never rise above.

So, in effect, the less rich British and Americans gifted us Brexit and Trump.

I support Brexit and Trump’s election also because both countries probably have the best institutional checks and balances in place such that doomsday scenarios of detractors will be just that, scenarios. Both, too, have the people in place to force a more meaningful discussion to address and redress the excesses of meritocracy and capitalism.

But while I think that Brexit and Trump bring us to a crossroad, that merely gives us pause to join in the needed conversation. Changes will be small, slow, sashaying and slaloming.

Still, it’s an opportunity.

So, raise your countenance. Speak up – right here in Singapore! Vote wisely the next GE.

No, take a stand at the next Presidential Election 2017.

Law Kim Hwee


One thought on “Brexit & Trump = Capitalism & Meritocracy at a Crossroad

  1. Here is a recommended read on Brexit/Trumpism –

    Mark Blyth: “Global Trumpism” And The Revolt Against The Creditor Class

    Foreign Affairs – Global Trumpism by Mark Blyth, Professor of Political Economy at Brown University


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