Death of western democracies?

I told you so’: Trump showing off a copy of USA Today’s front page featuring his acquittal in the Senate impeachment trial, as he arrived to address the National Prayer Breakfast in Washington. — Reuters

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ANGOLA, Haiti and Cambodia are “Banana Republics”: countries where the rule of law has been traduced by a man or woman or group seeking their own aggrandisement.

There is a new addition to this list: the United States of America. As one of the oldest and proudest of the world’s democracies, this country’s appalling downgrade is testament to one man’s work.

His name is Donald Trump and he is the 45th President. TV reality show star, charlatan and bigot, Trump has tweeted his nation’s principles – as articulated by the Declaration of Independence, Constitution and Bill of Rights – into a pulp.

Of course, he had help. He has been ably assisted by a coterie of men and women known as “Republicans”. In the years to come, as historians pore over the catastrophe that is the Trump Presidency, tracking its dismal, neo-fascist trajectory, one of the most important dates will be his acquittal by the US Senate from impeachment charges of abuse of power and obstructing Congress on Feb 5,2020.

The Americans have demonstrated that the highest office in their land and the most powerful in the world – the Presidency – can be manipulated for personal gain, that their political elite will actively enable this.

Across the Atlantic, a buffoonish Old-Etonian turned hack journalist turned politician Boris Johnson has parlayed Brexit to not only propel himself to 10 Downing Street but also persuade the UK’s working-classes to vote against their own interests.

Membership in the European Union was more than just about common markets and free movement. It was limiting, but that’s precisely the point: all its members accepted the EU’s strictures to create confidence and hence, the conditions for peace as well as development in their continent.

All of that has gone out of the window now.

If the Yanks who want to “Make America Great Again” are living in a Banana Republic – their British cousins who want to “regain control” via Brexit exist in a posh-boy rerun of Downtown Abbey crossed with 1917 and the Raj Quartet.

What happened? How have centuries-old democracies become so fragile and even self-destructive?

First: inequality has gotten out of hand. The neoliberal, trickle-down economic policies launched by Ronald Reagan and Margaret Thatcher in the late 1970/80’s fuelled a massive shift in prosperity from workers and the middle-classes to owners and shareholders. Real wages stagnated and tax policies benefited the recipients of dividends not generated by their own labour.

Subsequently, more centrist leaders (such as Bill Clinton, Tony Blair and Barrack Obama) maintained much of the same policies. And the numbers don’t lie.

When Thatcher came to power in 1979, the UK manufacturing industry employed 6.8 million people – by 2016 this had fallen to 2.6 million.

In 2017, three of the US’ richest individuals collectively held more wealth than the bottom 50% of their country’s population –160 million people. Gini coefficients (a measure of inequality) are shooting up on both sides of the Atlantic.

Moreover, the advent of social media allowed fake and demagogic information to be spread quickly as well as unchecked, shifting the national discourse and mood almost at will.

Meanwhile, ethnic and religious minorities as well as women – rightfully – sought greater representation in the public life and culture of the West.

However, the failure of the Anglo-American elite to address the above-mentioned inequalities led the white-majority working classes to feel that their leaders were more interested in playing identity politics than protecting them.

At the same time, a refugee crisis emanating from the Middle East and North Africa (in the US, the refugee crisis is predominantly Latino) heightened white anxieties over being displaced in their own countries.

This gave the opportunity for Trump and other demagogues to rise. Economic inequities and cultural insecurities fuelled white nativist impulses.

It’s not clear if the progressives can blunt this wave (Labour’s Jeremy Corbyn failed dismally) and the chaos in Iowa Democratic Party caucuses only underlines the gloom.

We, in Southeast Asia must learn from the fragility of these Northern Atlantic democracies.

Their mistakes aside – democracy is still the best way forward – especially for multi-racial and multi-religious countries.

What’s key is to avoid the pitfalls the West fell for. We must address the growing inequality of our societies. Growth alone will not bring stability and peace.

A 2018 World Bank report found that Indonesia’s Gini Index worsened from 30.0 in the 1990s to 38.1 in 2017. Singapore (45.8 in 2016), Malaysia (45.5 in 2008) and the Philippines (44.4 in 2015) all had Gini Indexes above 40: signs of higher income inequality.

Leaders ignore warning signs like this at their peril. We must invest in our people: their safety, health, education and skills.

Next, social media must be brought to heel. Hate speech and deliberately provocative postings must be curbed without resorting to undue repression.

The obvious racial and religious fissures in our societies must be managed very carefully. Common ground needs to be found – or created – between our majority and minority communities.

And we must remain engaged: both informed about the issues and vigilant against cynical manipulators of our insecurities.

It may seem like a daunting task when our former colonial masters and role models have failed so miserably. There is no choice. We cannot join the Americans and the British in rubbish dump of history

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US electoral democracy is failing, enter the China model? 21st century belongs to strivers

Washington and the Art of the Possible

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Raghuram Rajan

CHICAGO – These days, the United States media are full of ordinary Americans venting their rage at the incompetence and immaturity of their politicians. Even though the US government’s debt limit was raised in the nick of time, the process was – and remains – fraught with risk. Why, the public asks, can’t politicians sit down together like sensible adults and come up with a timely agreement that commands broad consensus? If we can balance our household budgets, they ask irately, why can’t our political leaders?

The reality, though, is that US politicians reflect the views of the American electorate – views that are fundamentally inconsistent. The absence of broad consensus is no wonder. Indeed, the last-minute agreement to raise the debt ceiling is proof that the politicians did what they were sent to Washington to do: represent their constituencies and only compromise in the interests of the country as a whole.

The key question is whether the political gridlock exposed by the debt-ceiling debate will worsen in the run-up to the 2012 presidential and congressional elections – if not beyond. That is possible, but we should not overlook cause for hope in what America’s politicians just accomplished.

Let’s start with why the electorate is so polarized. There are two key divisive factors: income and age. Income inequality has been growing in the US over the last three decades, largely because the labor market has increasingly demanded skills that the education system has been unable to supply. The everyday consequence for the middle class is a stagnant paycheck and growing employment insecurity, as the old economy of well-paying low-skilled jobs with good benefits withers away.



Until the financial crisis, the easy availability of credit, especially against home equity, enabled the middle class to sustain higher consumption despite stagnant incomes. With the collapse of the housing bubble, many people lost their jobs and health insurance, risked losing their homes, and suddenly had little reason for economic optimism. The response from America’s Democratic Party, which has traditionally represented this constituency, was to promise affordable universal health care and more education spending, while also protecting government jobs and entitlement programs.

When added up, such spending is unaffordable, especially with current federal revenues at just 15% of GDP. The solution for many Democrats is to raise revenues by taxing the rich. But the rich are not the idle rich of the past; they are the working rich. To balance the budget only by taxing the rich will require a significant increase in income taxes, to the point that it would lower incentives for work and entrepreneurial activity considerably.

This is not to say that taxes on the rich cannot be increased at all; but such increases cannot be the primary way of balancing the budget. Republicans, trying to give voice to many working Americans’ ambient uneasiness with rising government expenditures, as well as to the growing anger of the working rich, find it easier to defend a principle than a particular constituency. Hence their mantra: no additional taxes.

The neat divide based on income is muddled by the elderly. It is understandable that older Americans who have few savings want to protect their Social Security and Medicare benefits. However, even elderly Tea Party Republicans, who are typically against big government, defend these programs because they view them as a form of property right, paid for when they worked.

In truth, rising life expectancy and growing health-care costs mean that today’s elderly have contributed only a fraction of what they expect to receive from Social Security and Medicare. The government made a mistake in the past by not raising taxes to finance these programs or reducing the benefits that they promised. Unless the growth of these entitlement programs is curbed now, today’s young will pay dearly for that mistake, in the form of higher taxes now and lower benefits when they are old.

But the elderly are politically active and powerful. Not only do many defend their entitlements strongly; some oppose growth in other types of public spending for fear that it will weaken the government’s ability to pay for the benefits that they believe they are owed.

These then are the roots of America fiscal impasse, which has produced passionate constituencies viscerally opposed to compromise. Any political deal significantly before the debt-ceiling deadline would have exposed politicians to charges of betrayal from their constituents. And, given that President Barack Obama would ultimately be held responsible for a default, he needed the deal more than the Republicans did. So he had to coerce his party into accepting a deal full of spending cuts and devoid of tax increases.

Will the deal deliver what it promises? A bipartisan committee has to propose $1.5 trillion in deficit reduction by the end of this year, and Congress must either accept that proposal, or see immediate, politically painful expenditure cuts, which would include defense spending – an area that America’s Republicans care about strongly.

If this structure works as advertised, Congress will be forced to reach a compromise, which can be sold once again by politicians to their polarized constituencies as being necessary to avoid a worse outcome. This time, Obama’s Democrats will be on a level playing field, because both parties will be held equally responsible for a failure to reach a deal.

Ultimately, the big necessary decisions on curbing entitlement growth and reforming the tax code will probably have to wait until after the next election, giving the divided electorate an opportunity to reflect on its own inconsistency and send a clearer message. In the meantime, US politicians might have done just about enough to convince debt markets that America’s credit is still good. For that, Americans – and others around the world – should stop pillorying them and give them their due credit.

Raghuram Rajan, a former chief economist of the IMF, is Professor of Finance at the University of Chicago’s Booth School of Business and author of Fault Lines: How Hidden Fractures Still Threaten the World Economy, the Financial Times Business Book of the Year.

The great leap forward!

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By Ben Blanchard, Reuters

China says no expiry date on Communist Party rule

Looking at Mao's life, his achievements should be put first, and his mistakes second ...

BEIJING (Reuters) - China's Communist Party sees no reason why it cannot stay in power indefinitely, having made the nation into the envy of the world with its economic success, one of the Party's top official historians said on Thursday.

Li Zhongjie, a deputy head of the Party's History Research Centre, made it clear that China will use the impending 90th anniversary of the Party's founding as a time for rousing pride, rather than reflection on a history that has spanned war, revolution, mass famine and deadly purges.

Under the Party's rule, China had made leapfrog developments, Li told a news conference, and he said it was foolish to expect any party to want to give up power.

"Over the last 90 years, especially the last 30 years of reform and opening up, we have made major achievements. This is something the world basically recognises," Li said, ahead of the Party's anniversary of its 1921 founding on July 1.

"I could ask, 'Mr. Obama, does your Democratic Party still want to contest the election'? Do you still want to stay in power? They would think that a weird question. Of course our Party hopes to remain in power.

"...Objectively, the issue is rather: how is your rule, and how effective is it? Is it welcomed by the people? Are you running the country well, or into the ground? The Communist Party has built China to what it is today. Many countries in the world are extremely envious.

So why can't we carry on? It's a very simple question."



His impassioned answer drew applause from the audience, made up mainly of state media and Chinese academics, with a smattering of foreign reporters.

While the Party's rule has seen China become the world's second-largest economy, lift millions out of abject poverty and put men in space, critics say it has come at the expense of individual freedoms, with the Party brooking no dissent.

Under the late Mao Zedong, China went through disasters such as the 1958 Great Leap Forward campaign to catapult it to prosperity, but ended in a three-year famine in which an estimated 30 million people starved to death.

"Objectively speaking, Comrade Mao made some mistakes later in his life, which created major damage," Li said. "But looking at Mao's whole life, his achievements should be put first, and his mistakes second ... He established 'New China' and socialism's basic system.

"We should 'seek truth from the facts' in analysing and researching the lessons from Mao's mistakes," he added. "What Mao hoped to do, we should ensure we do even better."

Pressed after the news conference on whether China would one day set up a public memorial to those who suffered during the Great Leap Forward, or the chaos of the 1966-76 Cultural Revolution, Li answered cryptically: "We are making overall plans. It's being considered."

But there would be no atonement for the bloody crackdown on pro-democracy demonstrators around Tiananmen Square in 1989, which the Party these days labels a "political disturbance."

"We have already reached a solemn conclusion," Li said. "There's really nothing more to say."

(Editing by Nick Macfie)