Countries around the world are suffering through the same basic crisis: a loss of public confidence in both government and the market. Preventing a further erosion of social cohesion will require a broad-based effort to replace outdated nostrums of the left and the right with a new social contract built from the political center.
SINGAPORE – Although the mass protests in several cities around the world in 2019 erupted spontaneously, they were not bolts from the blue. Trust in either governments or markets to give people a fair chance in life has faded in many countries. Compounding this, a sense of togetherness among people has given way to one of “us versus them.”
These tensions manifest themselves differently depending on where one looks. But they reflect underlying realities. Social mobility is stubbornly low in many countries, economic growth has slowed, younger people see fewer prospects of getting good jobs and owning a home, and income and wealth gaps have widened. Globalization and new technologies have contributed to these trends, but they are not at the core of the issue. The few countries that have avoided wage stagnation and the hollowing out of the middle class – Sweden and Singapore, for example – have actually been more exposed to these forces than most. What matters is the policy response, and whether governments, businesses, and unions take responsibility for addressing the difficulties.
The problem is that the loss of trust and solidarity is fragmenting politics and undermining democratic institutions’ capacity to muster an effective response. That, in turn, is weakening countries’ ability to cooperate to secure global growth, avert crises, and ensure a sustainable world.
The task, then, is to rebuild confidence in the broad center of politics. It requires, most fundamentally, a bolder social ambition. We need more committed and sustained investment in the social foundations of broad-based prosperity if we are to restore optimism in the future. These foundations are in disrepair in much of the advanced world, and woefully inadequate in most developing countries. We must give people a better chance early in life, and second and third chances later, so that no one’s path is determined from where they start. And through our politics, and in our schools, neighborhoods and employment, we must develop the sense of affinity among people of different social and ethnic backgrounds that is critical to reducing the appeal of the populist right.
It is much easier to promote relative social mobility when you have absolute mobility, where everyone is progressing. We must ensure this moving escalator continues. When the escalator slows or stops, those in the middle tend to become more anxious not just about those who are moving farther ahead of them, but also about those who might catch up from behind. Reversing the prolonged trend of weak productivity growth and restoring economic dynamism is thus a necessary first step.
But governing from the center must also involve intervening upstream to redress the sources of inequality. We must close the gaps in maternal health and early childhood development, to avoid lifelong disadvantages. We must upskill workers and match them to new tasks while they are on the job, rather than waiting for them to be displaced by new labor-saving technologies. And we must redress the problem of increasingly segregated neighborhoods, which have created growing social distances between people and shaped different aspirations. None of these is easy, but it is far more difficult to tackle the larger problems that form downstream.
These tasks cannot be left to the market, which on its own tends to amplify initial disadvantages and advantages – through assortative mating, better-educated parents investing more time and resources in their kids, hiring practices based on educational or social pedigree, and the like. It is facile to object to upstream interventions on the grounds that they amount to “social engineering.” The state, and all of us collectively, must mitigate the “social engineering” of the market, make opportunities less unequal, and prevent an underclass and other legacies from becoming too entrenched to solve in democratically acceptable ways.
The social contract of the new center must engender both collective solidarity and personal responsibility, transcending the traditional narratives of both the right and the left. The right tends to attribute life’s outcomes to whether people take responsibility for themselves. But there has not been any surge in personal irresponsibility that can explain prolonged low productivity and wage growth, the loss of jobs in the middle, or widening regional disparities in so many countries.
Likewise, the left’s focus on redistribution as a response to inequality is based on too narrow a view of the state’s role and of our collective responsibilities to one another. This view has lost appeal even within the major social democracies. The traditional left would otherwise have performed much better than it did in the aftermath of the 2008 global financial crisis, considering the great difficulties imposed on ordinary working families.
Rather than viewing collective solidarity and personal responsibility as alternatives, we should look for ways in which they reinforce each other. The state and its social partners must broaden opportunities and provide the support that people often need to seize them and earn their own success in education, employment, and contributing to the community themselves. This compact of personal and collective responsibility is what makes strategies for social upliftment succeed. Society never tires of supporting people who are making an effort to help themselves.
When designed well, progressive fiscal systems – taxes and transfers that are fair to the poor and middle class – can support both growth and inclusivity. They are also critical in sustaining support for open, market-based democratic systems.
But the progressivity of the new center must place much greater emphasis on strategies for social mobility, and on helping people, towns, and regions to regenerate themselves when jobs and whole industries are lost. Successful examples of how local networks of public, private, and educational actors have spurred regrowth reflect strategies that seek to empower people, and are fundamentally different from traditional redistributive schemes that “compensate the losers” and which have done little to redress a sense of exclusion.
Part of the solution must also be to refocus attention on public goods. Fiscal policy in many countries has undergone a decades-long drift toward spending on short-term over long-term objectives, and on individuals over the social bases of welfare. To be sure, subsidies for poor and middle-income individuals are essential to ensure fair access to education, health care, and housing, as are policies to top up low wages, such as through negative income taxes. But investments in public goods – efficient public transport, quality public schools, research and development, museums and parks, renewable-energy infrastructure, and the like – are ultimately vital to the quality of life for ordinary citizens, and to restore optimism in the future.
Finally, the new political center must take responsibility for building a more sustainable world, and marshal the energies of the young to help us get there. We cannot keep postponing the large-scale collective action needed to arrest the climate crisis and the already dangerous shifts in the world’s ecological balance. To delay any further is to risk crippling consequences for future generations everywhere.
Likewise, we cannot keep pushing the burden of unfunded health-care and pension systems on to the next generation. The new political center must commit to reforms that are socially equitable but sustainable. This requires developing in our democracies the collective capacity to recognize the costs and benefits of our choices. Some societies are developing this capacity, but many have seen an increasing tendency to promise benefits without acknowledging the costs that must be met either today or tomorrow.
Rebuilding confidence in the center will require forging consensus in support of the basic social and political orientations described above. It will take leadership, a strong sense of moral purpose, and agility in today’s fragmented political landscapes. But the longer it takes to build this new consensus, the more lasting the damage to both the quality of democracies and to the multilateral order, and the more difficult it will be to restore them.
SINGAPORE – Although the mass protests in several cities around the world in 2019 erupted spontaneously, they were not bolts from the blue. Trust in either governments or markets to give people a fair chance in life has faded in many countries. Compounding this, a sense of togetherness among people has given way to one of “us versus them.”
These tensions manifest themselves differently depending on where one looks. But they reflect underlying realities. Social mobility is stubbornly low in many countries, economic growth has slowed, younger people see fewer prospects of getting good jobs and owning a home, and income and wealth gaps have widened. Globalization and new technologies have contributed to these trends, but they are not at the core of the issue. The few countries that have avoided wage stagnation and the hollowing out of the middle class – Sweden and Singapore, for example – have actually been more exposed to these forces than most. What matters is the policy response, and whether governments, businesses, and unions take responsibility for addressing the difficulties.
The problem is that the loss of trust and solidarity is fragmenting politics and undermining democratic institutions’ capacity to muster an effective response. That, in turn, is weakening countries’ ability to cooperate to secure global growth, avert crises, and ensure a sustainable world.
The task, then, is to rebuild confidence in the broad center of politics. It requires, most fundamentally, a bolder social ambition. We need more committed and sustained investment in the social foundations of broad-based prosperity if we are to restore optimism in the future. These foundations are in disrepair in much of the advanced world, and woefully inadequate in most developing countries. We must give people a better chance early in life, and second and third chances later, so that no one’s path is determined from where they start. And through our politics, and in our schools, neighborhoods and employment, we must develop the sense of affinity among people of different social and ethnic backgrounds that is critical to reducing the appeal of the populist right.
It is much easier to promote relative social mobility when you have absolute mobility, where everyone is progressing. We must ensure this moving escalator continues. When the escalator slows or stops, those in the middle tend to become more anxious not just about those who are moving farther ahead of them, but also about those who might catch up from behind. Reversing the prolonged trend of weak productivity growth and restoring economic dynamism is thus a necessary first step.
But governing from the center must also involve intervening upstream to redress the sources of inequality. We must close the gaps in maternal health and early childhood development, to avoid lifelong disadvantages. We must upskill workers and match them to new tasks while they are on the job, rather than waiting for them to be displaced by new labor-saving technologies. And we must redress the problem of increasingly segregated neighborhoods, which have created growing social distances between people and shaped different aspirations. None of these is easy, but it is far more difficult to tackle the larger problems that form downstream.
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These tasks cannot be left to the market, which on its own tends to amplify initial disadvantages and advantages – through assortative mating, better-educated parents investing more time and resources in their kids, hiring practices based on educational or social pedigree, and the like. It is facile to object to upstream interventions on the grounds that they amount to “social engineering.” The state, and all of us collectively, must mitigate the “social engineering” of the market, make opportunities less unequal, and prevent an underclass and other legacies from becoming too entrenched to solve in democratically acceptable ways.
The social contract of the new center must engender both collective solidarity and personal responsibility, transcending the traditional narratives of both the right and the left. The right tends to attribute life’s outcomes to whether people take responsibility for themselves. But there has not been any surge in personal irresponsibility that can explain prolonged low productivity and wage growth, the loss of jobs in the middle, or widening regional disparities in so many countries.
Likewise, the left’s focus on redistribution as a response to inequality is based on too narrow a view of the state’s role and of our collective responsibilities to one another. This view has lost appeal even within the major social democracies. The traditional left would otherwise have performed much better than it did in the aftermath of the 2008 global financial crisis, considering the great difficulties imposed on ordinary working families.
Rather than viewing collective solidarity and personal responsibility as alternatives, we should look for ways in which they reinforce each other. The state and its social partners must broaden opportunities and provide the support that people often need to seize them and earn their own success in education, employment, and contributing to the community themselves. This compact of personal and collective responsibility is what makes strategies for social upliftment succeed. Society never tires of supporting people who are making an effort to help themselves.
When designed well, progressive fiscal systems – taxes and transfers that are fair to the poor and middle class – can support both growth and inclusivity. They are also critical in sustaining support for open, market-based democratic systems.
But the progressivity of the new center must place much greater emphasis on strategies for social mobility, and on helping people, towns, and regions to regenerate themselves when jobs and whole industries are lost. Successful examples of how local networks of public, private, and educational actors have spurred regrowth reflect strategies that seek to empower people, and are fundamentally different from traditional redistributive schemes that “compensate the losers” and which have done little to redress a sense of exclusion.
Part of the solution must also be to refocus attention on public goods. Fiscal policy in many countries has undergone a decades-long drift toward spending on short-term over long-term objectives, and on individuals over the social bases of welfare. To be sure, subsidies for poor and middle-income individuals are essential to ensure fair access to education, health care, and housing, as are policies to top up low wages, such as through negative income taxes. But investments in public goods – efficient public transport, quality public schools, research and development, museums and parks, renewable-energy infrastructure, and the like – are ultimately vital to the quality of life for ordinary citizens, and to restore optimism in the future.
Finally, the new political center must take responsibility for building a more sustainable world, and marshal the energies of the young to help us get there. We cannot keep postponing the large-scale collective action needed to arrest the climate crisis and the already dangerous shifts in the world’s ecological balance. To delay any further is to risk crippling consequences for future generations everywhere.
Likewise, we cannot keep pushing the burden of unfunded health-care and pension systems on to the next generation. The new political center must commit to reforms that are socially equitable but sustainable. This requires developing in our democracies the collective capacity to recognize the costs and benefits of our choices. Some societies are developing this capacity, but many have seen an increasing tendency to promise benefits without acknowledging the costs that must be met either today or tomorrow.
Rebuilding confidence in the center will require forging consensus in support of the basic social and political orientations described above. It will take leadership, a strong sense of moral purpose, and agility in today’s fragmented political landscapes. But the longer it takes to build this new consensus, the more lasting the damage to both the quality of democracies and to the multilateral order, and the more difficult it will be to restore them.