tag:blogger.com,1999:blog-5043138489010794057.post2180873297241589330..comments2024-03-27T15:57:09.192+05:30Comments on Urbanomics: A primer on the rise of populism and a way forwardUrbanomicshttp://www.blogger.com/profile/16956198290294771298noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5043138489010794057.post-25870752702965478642017-11-20T02:36:24.028+05:302017-11-20T02:36:24.028+05:30@researchbyanand, thanks for your comments.
I am ...@researchbyanand, thanks for your comments.<br /><br />I am not convinced by the distinction you make between the two types of elites. Actually they have now come to overlap almost completely. For example, the children and wives/husbands of the political elite occupy the "meritocratic" elite group. Eric Schmidt and Annie Marie Slaughter belong as much to the political elite as much as Hillary Clinton and Donald Trump belong to the "meritocratic" elite. The fortunes of your 1% "meritocratic" elite, as Brink Lindsey and Steven Teles show, are in no small measure the result of elite capture of the political system and their setting the rules of the game. As I have blogged several times, the danger with such levels of income concentration and inequality is that it is invariably followed by political capture... <br /><br />Btw, what is meritocracy today? It is a simple Ovarian Lottery. Your life prospects are largely determined by the circumstances of your birth, the exposure and opportunities that this chance event endows you with. Isn't it true that education and personality development is more determined by your family environment, your networks, and external exposure than what is learnt in school? Is it any wonder that social mobility is at its lowest in the US today and the proportion of children earning more than their parents at the age of 30 has almost halved to just 50% since 1940?Urbanomicshttps://www.blogger.com/profile/16956198290294771298noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-58554629049634573612017-11-19T20:36:07.691+05:302017-11-19T20:36:07.691+05:30On the comment "One thing I am puzzled is by ...On the comment "One thing I am puzzled is by the absence of any stirrings of a popular revolt against the excesses and failings of the current order" - is this because the beneficiaries of the current round of excess are not the ruling class but a tiny section of elites, whom one cannot fault for curbing the benefits as they were entitled to it meritocratically. In history revolutions & rebellions happen when a section of society which feels left behind and turns against the ruling class as they are viewed as unjustly benefitting to the detriment of the section which has lagged. The 1% identified by Rothwell, while they benefitted due to a system which was loaded in their favour were not the ruling class. The "occupy wall street movement was a sort of popular revolt but it whittled down as the ruling class (democratically elected politicians) and the have not's joined hands against a supposed common enemy and just made the situation worse without realizing (by loading on more regulation). Specially in the financial sector the overdose of regulation is worsening the situation by concentrating more and more of the benefits into a narrower set of winners who are becoming larger to gain scale to handle the cost of regulation, in the process keeping out competition.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-32666461774474194582017-11-19T16:42:59.824+05:302017-11-19T16:42:59.824+05:30Thanks Ananth. The two points you raise as missing...Thanks Ananth. The two points you raise as missing are very important. A few thoughts<br /><br />1. Unlike the seventies, when there was a genuine ideological divide, today’s intelligentsia display a remarkable ideological consensus, with marginal variations towards either side of the spectrum. In fact, the post-Soviet consensus has been a hegemony of liberalism and the free-market. Isn’t it striking that the star economists of today (Chetty, Autor, Acemoglu etc) are spending their time using statistical software to tease out correlations from large data sets, stopping well short of drawing the obvious conclusions leave alone being inclined to debate the most pressing social issues of our times – inequality, automation, business concentration, executive compensation, excessive financialization. And when someone like Piketty shows the courage to call out on the widening inequality, the same intellectuals scatter the debate by indulging in arcane trivialities and hifalutin technical discussions.<br /><br />We know how the allures of large speaking fees and revolving door posts keep influential opinion leaders and intellectuals straying too far in critiquing the establishment and its consensus. Even when faced with absolutely clinching signatures of business concentration, monopoly profits, and attendant threats to social order and personal privacy, how many of these intellectuals have had the courage to hold the mirror on the consensus? As you say people like Borio, Helene Rey etc are dismissed as the “fringe”, just as people like Raghu Rajan were in the build-up to the GFC. Ask Annie Marie Slaughter, the poster child of liberalism and gender empowerment, who gets a cushy job and big public profile for playing along…<br /><br />https://www.nytimes.com/2017/08/30/us/politics/eric-schmidt-google-new-america.html?ref=oembed<br /><br />2. As to the lack of political leadership, I think the lack of any ideological movement and sharp cleavage makes anything other than populist leadership difficult to emerge. It is for this reason that someone has to come from outside, itself in turn made difficult without the house burning down.<br /><br />In the US, I like Elizabeth Warren, because I see her as a very very rare member of the same elite, who has realised the corrosive effects of the prevailing economic order. If people like her can help burn down the economic order, then the conditions for building a new house become available. Instead, if Trump is replaced by someone else from the establishment like a Bloomberg, we will continue to grapple with the same set of problems…<br /><br />3. One thing I am puzzled is by the absence of any stirrings of a popular revolt against the excesses and failings of the current order, especially given the presence of platforms like social media which can easily help organise and consolidate such campaigns.<br /><br />It is now well documented that some of the actions of Wall Street leaders during the sub-prime bubble and its aftermath were clearly illegal and amounted to criminal misdemeanour. But not one top executive has been indicted or jailed for their actions. Where is the equivalent of the social resentment and pressures that led to the Pecora trials in the aftermath of the 1929 crash? Where is the indignation from the countless examples of egregious misdemeanours that the large investment banks, consulting firms, accounting agencies, and credit raters indulge in with alarming frequency?Urbanomicshttps://www.blogger.com/profile/16956198290294771298noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-4658564786973899642017-11-19T07:28:30.628+05:302017-11-19T07:28:30.628+05:30A very comprehensive post. I am pleased to see tha...A very comprehensive post. I am pleased to see that you had linked to the perceptive essay by Jonathan Rothwell in NYT on the elite interests that have gamed the system and the rules in their favour. <br /><br />As we discussed bilaterally, to a degree, the McKinsey recommendation on more digitisation and more technology to restore the 'glory' of U.S. manufacturing (mind you, the ostensible problem they were dealing with was the declining labour share of income) vindicates Rothwell above!<br /><br />Also, although Tony Rothman in 'Project Syndicate' (https://www.project-syndicate.org/commentary/pitfalls-of-technological-progress-by-tony-rothman-2017-11) focuses more on customer convenience and the 'ends' of technological upgrades being lost (motion is not progress) in the welter of mindless 'improvements' and 'enhancements', that too is part of the problem.<br /><br />As you conclude, the solution is to 'burn the house down' completely. But, that leads us to a cul-de-sac. In the Seventies, the pendulum swung (the house was brought down, as it existed then) due to a combination of factors:<br /><br />Excessive abuse of labour power, <br />Economic misery - stagflation, <br />The turning of the intellectual tide in favour of rules over discretion, Disgust with politics as usual (Nixon's impeachment, Ford's pardon and Carter's perceived or real ineffectiveness)<br />Rise of alternative leaders who were not exactly perceived 'extreme' like in the case of Donald Trump<br /><br />May be, I am missing out some. <br /><br />But, if we try to develop a comparable checklist now, we do have<br /><br />Excessive abuse of the power of capital by capitalists<br />Instead of stagflation, we have extreme inequality<br />There was disgust with politics as usual - it is demonstrated in the multiple political election and referendum results across Europe and the United States<br /><br />But, what is missing are these two,<br /><br />- There is intellectual resistance to changing the status quo - many would lose out on their personal perks and influence. Notice how many are writing as boldly as Dani Rodrik is writing. Very few. Those who do are not deemed 'mainstream'. For example, the monetary policy establishment has managed to brand even the BIS and folks like William White and Claudio Borio, et al, as 'extreme' or 'fringes'.<br /><br />The '99%' is unable to mobilise and have a sane leadership with clarity of purpose and goals as capitalists on either side of the Atlantic were able to achieve in the Seventies.<br /><br />Usually, crises help overcome all these drawbacks and throw up policy and personnel (leadership) alternatives. One thought that the 2008 crisis would do that. To a degree, it has. It has cracked open the door. But, the door is still being manned and protected well, despite cracks in the door and in the castle.<br /><br />Perhaps, it needs another crisis to 'burn the house down' as you put it. Unknownhttps://www.blogger.com/profile/16978858400004505965noreply@blogger.com