There’s no way out but a new politics of fairness
TheGlobeandMail.com – news/politics
Published Friday, Dec. 30, 2011.Last updated Sunday, Jan. 01, 2012. Michael Ignatieff
It has taken three years of this recession for me to appreciate something my father, a Russian immigrant who came of age in the Depression, once told me about hard times. When I asked him what it was like in the Dirty Thirties, he said that if you had a job it was okay: In fact, it was like being in the heated parlour car in the front of the train, while the unemployed were in the unheated freight cars at the back.
The same is true today. Three years into our great Depression, the cardinal political fact of hard times is: We are not all in this together.
When the fallen (and unlamented) Italian prime minister Silvio Berlusconi was asked how serious the economic crisis was, he replied, “What crisis?” The restaurants in Milan were full. Similarly in North America, restaurants in our cities are doing a brisk trade. For people with jobs – not just the 1 per cent – the guilty pleasures of recession include rising house prices, cheap money and good meals.
The recession is highly selective: a nightmare for some, no more than distant thunder for many. Unionized workers in the public sector are better protected than non-unionized workers in the private sector. Native-born workers are less likely to be fired than recently arrived immigrants. The skilled fare better than the unskilled, the educated better than the uneducated, and aboriginals worst of all.
The same holds true across the world. In Europe, Germans are better off than Greeks – northern countries are better off than southern ones. Common action to save the euro took so long because resentmenttowards their feckless southern partners blinded the Germans to their own interests. Or ask Brazilians: Crisis? What crisis? They’ve never had it so good.
Ask Canadians, too. Our unemployment rate is 2 per cent lower than south of the border and our banks are not about to fail. The struggles of high-tech champions such as Research in Motion are masked, for most, by the surging resource rents from commodities markets. The full burden falls on relatively few regions and few shoulders – aboriginals, young people without post-secondary education, older workers in declining resource sectors and recent immigrants.
Yet in the end no one escapes the great fear.
Even those with secure jobs understand that this is an epochal restructuring of the global economy, the first downturn in which the developing world is gaining power, wealth and jobs at the expense of the developed. In the emerging division of labour with Asia, jobs will not come back for millions of middle-class Westerners who grew up working in manufacturing and services. The jobs of the future will be in health and elder care, and in high-skill areas requiring either advanced computer literacy or doctorates. No one, especially workers in their 50s, can feel secure.
The political response is fragmented. In the United States, the Republicans defend tax cuts designed to render the new inequality permanent, while the Democrats want to hike taxes on the rich to save public services. Each party’s approach is less a solution than an attempt to entrench the privileges of the groups that support them.
The age is crying out for a different kind of politics, one that rallies people around the idea of fighting the great fear together. President Obama’s Osawatomie speech earlier this month – in which he denounced inequality and called for restoring middle-class security – can be the start for that new politics, but its success will come down to persuading the majority who are holding on that their future depends on doing something for those who are slipping back.
Recessions at first divide, but as they persist and deepen, even the rich discover that their own prosperity will be threatened. The Germans thought they could cut the Greeks and Italians loose: They’ve learned that the weak can bring down the strong. Societies torn apart by resentment, fear and anger are not much better for the rich than they are for the poor. The message the young people in Occupy Wall Street want us to hear is that societies that cannot face a crisis together are sick. Societies that cannot fix their injustices will eventually break down.
A company president who takes home a good salary plus bonuses tied to performance while providing employment to workers and dividends to investors ought not to be a problematic figure for anyone. The company president whose compensation package does not include any penalties for failure, and whose profit seeking exposes his employees to bankruptcy, his investors to loss and the economy to shock waves is another matter entirely.
Government regulators must be there to protect people from predatory profit-taking that puts the rest of us at risk. Regulating corporate governance will do more than reform the boardrooms. It will rebuild a good society’s most important asset – the sense that our system is fair.
Many of the worst excesses of the age of greed occurred in markets that were anything but free, anything but transparent. Government must be there to clean up markets riven by fraud, corruption, insider trading and toxic products that made risk systemic. Competition demands that governments are prepared to use their anti-trust, anti-monopoly functions to dismantle institutions that have become “too big to fail.”
We should tax the rich, not to punish them for their success or use them as a cash cow to fund social programs, but so that they pay for a fair portion of the public goods that account for so much of their private wealth – and so that we can reduce taxation on those who can least afford it. Fairness also means a simpler tax system with fewer exemptions. This would help remedy one of the cardinal reasons our society feels unfair – that some get all the breaks.
A politics of fairness is also a politics of growth. Fair societies are more dynamic and more innovative. In fair societies, people don’t think the game is rigged before it begins. Success goes by what you know, not who you know. And people don’t waste emotions and energy on resentment and anger. They are too busy thinking up the next big thing.
Nobody can say we are fair now. Anyone in the parlour car knows the freight cars behind are packed with cold and angry people. Realizing that we are actually on the same train would be a start.
Michael Ignatieff is a Senior Resident at Massey College, University of Toronto.
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