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A crisis of legitimacy could strike Britain too A crisis of legitimacy could strike Britain too
(3 months later)
Taksim Square, Sofia and now São Paulo: the images of protest that have flashed across our TVs suggest what began in Egypt and Tunisia was not a uniquely Arab Spring. We have watched these scenes unfold with a mix of fascination, relief and arrogance. Fascination, at how these protests have spread across countries, then continents and, in many cases, across ages, gender and classes. Relief, that in Britain, exercising the right to protest does not mean bearing the force of water cannons or tear gas stinging the eyes. And arrogance, that our robust democratic and economic institutions mean that it never will.Taksim Square, Sofia and now São Paulo: the images of protest that have flashed across our TVs suggest what began in Egypt and Tunisia was not a uniquely Arab Spring. We have watched these scenes unfold with a mix of fascination, relief and arrogance. Fascination, at how these protests have spread across countries, then continents and, in many cases, across ages, gender and classes. Relief, that in Britain, exercising the right to protest does not mean bearing the force of water cannons or tear gas stinging the eyes. And arrogance, that our robust democratic and economic institutions mean that it never will.
It is easy to forget that barely five years ago there were those who predicted political unrest on the streets of London, New York and Berlin in the wake of global financial collapse. This never materialised: the Occupy protesters in London could be counted by the hundreds, not thousands. Yet since 2008, the ranks of institutions that have been racked by crises of legitimacy have swelled: alongside the banks now sit Parliament, newspapers, energy companies and tax-avoiding corporations. Last week's revelations about the Care Quality Commission mean regulators have just joined the list.It is easy to forget that barely five years ago there were those who predicted political unrest on the streets of London, New York and Berlin in the wake of global financial collapse. This never materialised: the Occupy protesters in London could be counted by the hundreds, not thousands. Yet since 2008, the ranks of institutions that have been racked by crises of legitimacy have swelled: alongside the banks now sit Parliament, newspapers, energy companies and tax-avoiding corporations. Last week's revelations about the Care Quality Commission mean regulators have just joined the list.
Little surprise, then, that there is a growing popular sentiment that a British culture of probity has been eroded and a growing sense that people with power do what they can get away with rather than what is right. It has caught our governing class off-guard. Successive governments have long attached conditions to foreign aid aimed at ridding corruption and abuse of power in beneficiary countries. There has always been an assumption that these are developing economy phenomena, which our parliamentary democracy and competitive capitalist economy – the envy of the world – would never allow to take root in the UK.Little surprise, then, that there is a growing popular sentiment that a British culture of probity has been eroded and a growing sense that people with power do what they can get away with rather than what is right. It has caught our governing class off-guard. Successive governments have long attached conditions to foreign aid aimed at ridding corruption and abuse of power in beneficiary countries. There has always been an assumption that these are developing economy phenomena, which our parliamentary democracy and competitive capitalist economy – the envy of the world – would never allow to take root in the UK.
Yet the scandals that have hit the British establishment suggest it has not been robust enough to guard against the concentration of power and erosion of accountability. When competitive markets work, they distribute economic power among the many, rather than the few. But in labour, consumer and investor markets, we have seen global corporations amass power at the expense of individual citizens. Globalisation, technological change and the decline of collective bargaining have shifted power from employees to employers.Yet the scandals that have hit the British establishment suggest it has not been robust enough to guard against the concentration of power and erosion of accountability. When competitive markets work, they distribute economic power among the many, rather than the few. But in labour, consumer and investor markets, we have seen global corporations amass power at the expense of individual citizens. Globalisation, technological change and the decline of collective bargaining have shifted power from employees to employers.
A failure to regulate monopolistic markets has led to price-fixing allegations in areas ranging from energy to banking. Financial products have become so complex they are barely understood by their creators, let alone their regulators. The decline of old-style pension funds means corporate boards are now accountable to asset managers rewarded for chasing quarterly returns, rather than securing decent retirement incomes. These power shifts are also reflected in our democratic system. Groups such as the young and renters have become increasingly disenfranchised, a trend that will only be accelerated by individual voter registration.A failure to regulate monopolistic markets has led to price-fixing allegations in areas ranging from energy to banking. Financial products have become so complex they are barely understood by their creators, let alone their regulators. The decline of old-style pension funds means corporate boards are now accountable to asset managers rewarded for chasing quarterly returns, rather than securing decent retirement incomes. These power shifts are also reflected in our democratic system. Groups such as the young and renters have become increasingly disenfranchised, a trend that will only be accelerated by individual voter registration.
The concentration of power has manifested itself in long-term, incremental change: growing inequality; increasing short-termism in corporate boardrooms; the declining vote share of the two main parties. But it has been most felt in the big bang crises and the spectacular rise of Ukip.The concentration of power has manifested itself in long-term, incremental change: growing inequality; increasing short-termism in corporate boardrooms; the declining vote share of the two main parties. But it has been most felt in the big bang crises and the spectacular rise of Ukip.
There are seeds of a legitimacy crisis brewing. People are acutely aware that while they are struggling to make ends meet, the elite are pulling away: MPs feathering duck houses; corporations avoiding tax; bankers taking home million-pound bonuses, seemingly unaffected by the crisis they caused. At the same time, stoked by the toxic political debate, resentment has grown about a perceived underclass of welfare cheats and immigrants milking the benefits system.There are seeds of a legitimacy crisis brewing. People are acutely aware that while they are struggling to make ends meet, the elite are pulling away: MPs feathering duck houses; corporations avoiding tax; bankers taking home million-pound bonuses, seemingly unaffected by the crisis they caused. At the same time, stoked by the toxic political debate, resentment has grown about a perceived underclass of welfare cheats and immigrants milking the benefits system.
Politicians have sensed the public anger. Breaking up power cartels has been a theme of countless political speeches both on the left and right. But they have yet to succeed in convincing people they are part of the solution. There is a serious image problem: Cameron and Osborne cannot shake off the perception they belong to the business elite that benefits from conglomerated power; Miliband and Balls are still seen as part of a Labour set that helped cause the financial crisis.Politicians have sensed the public anger. Breaking up power cartels has been a theme of countless political speeches both on the left and right. But they have yet to succeed in convincing people they are part of the solution. There is a serious image problem: Cameron and Osborne cannot shake off the perception they belong to the business elite that benefits from conglomerated power; Miliband and Balls are still seen as part of a Labour set that helped cause the financial crisis.
More importantly, modern politics is not fluent in the vocabulary of shifting power and empowering citizens. The brave and risky stance Miliband took on phone-hacking shows for him, at least, that this is about much more than populist appeal. But social-movement politics has long been replaced by sales-pitch politics: marketing politicians and policies to the public. Labour has struggled to create a meaningful discourse about bringing together citizens, workers and consumers to hold power to account. Hence the policy prescriptions it has arrived at have a formulaic feel: throw the bankers in jail; stronger regulation for the press; force energy companies to offer lowest tariffs to pensioners. This is about government clamping down on abuse rather than building up people power; it does not feel like an agenda to reverse the slow but steady power shifts away from citizens.More importantly, modern politics is not fluent in the vocabulary of shifting power and empowering citizens. The brave and risky stance Miliband took on phone-hacking shows for him, at least, that this is about much more than populist appeal. But social-movement politics has long been replaced by sales-pitch politics: marketing politicians and policies to the public. Labour has struggled to create a meaningful discourse about bringing together citizens, workers and consumers to hold power to account. Hence the policy prescriptions it has arrived at have a formulaic feel: throw the bankers in jail; stronger regulation for the press; force energy companies to offer lowest tariffs to pensioners. This is about government clamping down on abuse rather than building up people power; it does not feel like an agenda to reverse the slow but steady power shifts away from citizens.
Both parties have sought to respond to public resentment about welfarism. The right has joined Ukip in stoking public fears and then enacting tough benefit cuts, although it may only be a matter of time before people realise they have been hoodwinked: four out of five pounds of welfare cuts are falling on working families. Labour's response has been to talk up restoring the contributory principle: those who have paid in should get more out.Both parties have sought to respond to public resentment about welfarism. The right has joined Ukip in stoking public fears and then enacting tough benefit cuts, although it may only be a matter of time before people realise they have been hoodwinked: four out of five pounds of welfare cuts are falling on working families. Labour's response has been to talk up restoring the contributory principle: those who have paid in should get more out.
This rather transactional approach to restoring public confidence is not without dangers. Far from building social solidarity, it risks reinforcing an insider-outsider culture, not between strivers and skivers but between the young and old. Contributory welfare would further advance the redistribution from young to old that has taken place through the housing market, the pension system and the protection of older-age benefits while support for the young unemployed has been cut.This rather transactional approach to restoring public confidence is not without dangers. Far from building social solidarity, it risks reinforcing an insider-outsider culture, not between strivers and skivers but between the young and old. Contributory welfare would further advance the redistribution from young to old that has taken place through the housing market, the pension system and the protection of older-age benefits while support for the young unemployed has been cut.
Despite the crises, it does not feel like anything fundamental has changed since 2008. The political response needs to be understood in the context of a public mood stuck in anger and resentment. There has been no groundswell of public appetite for more radical institutional reform that might lead to democratic and market outcomes that better reflect the interests of the majority, rather than the few. If the economy recovers, it is likely we'll settle back into an equilibrium of business as usual until the next crisis. But if we are stuck in an extended period of no or low growth, our political leaders may be forced towards a different type of solution.Despite the crises, it does not feel like anything fundamental has changed since 2008. The political response needs to be understood in the context of a public mood stuck in anger and resentment. There has been no groundswell of public appetite for more radical institutional reform that might lead to democratic and market outcomes that better reflect the interests of the majority, rather than the few. If the economy recovers, it is likely we'll settle back into an equilibrium of business as usual until the next crisis. But if we are stuck in an extended period of no or low growth, our political leaders may be forced towards a different type of solution.
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