Post-Neoliberalism

Pathways for Transformative Economics and Politics

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Insecurity, Not Inequality

by Ian Shapiro


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This article forms part of Rubric 1
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The advent of populist politics has much more to do with the rise of insecurity than with the growth of inequality. The vast majority of working people are facing growing vulnerability and downward mobility. Understanding this is vital for finding the best political response. Economists who focus exclusively on inequality, and particularly income and wealth at the top, do the left a disservice.

In 2016 both Donald Trump and Bernie Sanders ran populist campaigns attacking mainstream parties and elites, trade agreements like NAFTA and the TPP, and job loss to globalization more generally. Both promised to restore working-class and middle-class jobs that had been atrophying since the 1970s. There were also major differences. Trump demonized minorities and unleashed an endless stream of racist and anti-immigrant invective. Sanders did not. Sanders campaigned on universal Medicare and free college for all. Trump did not.

Both garnered what was at the time astonishing traction. Trump vanquished sixteen Republican contenders and went on to win the Republican nomination and then the Presidency. Sanders didn’t do as well, but he gave Hillary Clinton a run for her money. He won 43.1 percent of Democratic primary voters to her 55.2 percent and underscored her image as an out-of-touch member of the privileged Eastern elite, in the pocket of Goldman Sachs, and agent of the globalist policies that were eroding middle-American incomes and prospects.

There was one other notable difference between the two campaigns. Sanders railed endlessly against inequality, particularly the obscene accumulations of wealth and the astronomical incomes of the top one percent and even the top zero point one percent, calling for aggressively redistributive policies. Trump boasted endlessly about his wealth (even exaggerating it) and never mentioned inequality, let alone promise to reduce it. Yet he still managed to garner 63 million votes in the general election, a third of which came from voters below the median income for a family of four ($50,000), a third from voters with family incomes between $50,000 and $100,000, and only a third above that.

Many factors account for the different fortunes of the two campaigns, but here I want to concentrate on this last one: Trump’s myopic focus on economic loss and insecurity as distinct from Sanders’s preoccupation with inequality, and in particular on the wealth of people at the top. This insecurity has been getting more extreme for decades in all the capitalist economies. It has more to do with the advent of populist politics in many countries than has been appreciated – especially on the political left. Understanding it is vital for thinking about the best political response.

The catalyst for these recent populist eruptions was the elite-centered response to the 2008 financial crisis and its aftermath (bailing out the banks and other financial institutions while doing comparatively little for those most badly hurt), but economic insecurity has been compounding since the 1970s. It has had four related causes: the disappearance of industrial jobs with the transition to service economies that provide lower paying and less stable jobs for most people, increased capital mobility due to globalization, the technological revolution, and the decline in the size and political power of trade unions.

Until the 1970s, most people in the older capitalist democracies spent their entire working lives in one job working for one employer. This ended with the baby boom generation. Today, on completing their education most workers will change jobs between twelve and fifteen times over their working lives. Moreover, only three or four of these changes are when they are in their early twenties (and perhaps accounted for things like college jobs). Most people will have to find new jobs multiple times throughout their working lives. This change has been most pronounced for middle-aged men, who used to have the most secure long-term employment of all demographic groups.

This doesn’t matter for everyone. Someone on the upside of the information revolution might graduate from an elite college, spend a few years consulting at somewhere like McKinsey or as an associate at a hedge fund or investment bank, or perhaps work in a few startups while paying off student loans and accumulating significant savings. Then they might get an MBA or other professional degree which creates access to new networks and opportunities. For them, changing jobs is moving from one lucrative opportunity to another.

But for the vast majority of working and – increasingly – middle-class workers, it’s an opposite reality: growing vulnerability and downward mobility. Full-time employment with union protections and good benefits gives way to intermittent or part-time employment with fewer or no benefits, working as an “independent contractor” in low-paying low-status service sector jobs. And they see no end in sight. In a historic first for the US, most people doubt that their children will do as well as them. Expectations of upward mobility were never as strong elsewhere in the older democracies as those embodied in the American Dream, but there is little reason to anticipate that many of them will do better.

Aggregate statistics show family incomes in the bottom 90 percent as stagnant in real terms since the 1970s, but that ignores the widespread move from one- to two-breadwinner households over that period. Most people are working harder and paid less to stay in the same place, and they do not save. They have virtually no margin for error. In 2022, 37 percent of Americans reported that they would be unable to find $400 for an emergency without borrowing it – up by 5 percent on the previous year and by 13 percent since 2013. People living in this world are one or two paychecks away from having their car repossessed, not to mention losing their home.

One indication that this insecurity is more potent, politically, than the endlessly documented rise in inequality is that right-wing populists like Trump and the far-right parties in Europe are picking up most of their support from less educated working- and lower middle-class voters. Social democratic and other traditionally left-of-center mainstream parties like the British Labour Party and the American Democrats rely increasingly on government workers and college-educated elites in high end service sector occupations like university teaching and financial services. They value the technical expertise that populists despise. They have mostly been incredulous that these economically vulnerable voters support parties and politicians that ignore inequality in favor of ethnic nativism or even – as with Trump – enact regressive tax policies once in power.

It’s hardly news that workers seldom display much class solidarity. Marx was surprised that the Revolutions of 1830 and 1848 didn’t morph into revolutionary politics. As he rethought his theory in the basement of the British Museum, he and Engles eventually began flirting with “the parliamentary road to socialism” – hoping that the workers would do at the ballot box what they had not done at the barricades. When they failed even to do that and many of them even supported fascist movements in the 1930s, neo-Marxists and critical theorists posited one theory after another to explain the failure of class consciousness to materialize – from “the authoritarian personality” to “the relative autonomy of ideology,” to class relations being determinative only “in the last instance.” Liberal intellectuals in the non-Marxist tradition have often been no less incredulous when working-class voters fail to act in their class interest, demanding to know: What’s the Matter with Kansas!

There have always been skeptics. Many have noticed that it’s easier to mobilize political support with appeals to nationalism or national liberation, ethnicity, and other tribal forms of identification than universalist ideals like equality, socialism, democracy, or human rights. Benjamin Disraeli championed expanding the franchise in 1867 because he believed that the Tories would benefit from the conservatism of the English lower orders who the Liberals disdained. His Times obituary summed it up:

“In the inarticulate mass of the English populace which they held at arm’s length he discerned the Conservative working man, as the sculptor perceives the angel prisoned in a block of marble.”

It turned out to be a pretty good bet. The Second International collapsed in 1916 after it failed to persuade European workers that they had no interest in fighting one another in national armies. That was a portent of things to come. Even after World War II, workers in capitalist democracies voted in significant numbers for social democracies, but these never became way stations on a path to socialism – let alone communism. And the resurgent conservatism that began in the 1980s garnered significant lower middle-class and even working-class support.

Egalitarians today who think they will achieve change by pointing to the top one percent are preaching to the converted. They are unlikely to mobilize anyone who does not agree with them already. In this respect, economists who study inequality do the left a disservice by focusing so much attention on the returns to capital of the very rich and calling for new political institutions with broad redistributive powers. Outside their usual constituencies, they are shouting at the wind.

It’s not that people abjure invidious comparisons; they don’t. But the evidence from anthropology, sociology, and social psychology is that they compare themselves to similarly situated others. Auto workers compare themselves to steel workers, not to their CEOs. This is true up and down the socio-economic ladder. A professor will be much more upset to learn she earns $10,000 less than the professor down the corridor than to learn that she earns $500,000 less than the attorney down the street. Knowledge about what others have does move people, but it must be about others who are close to their lived experience – what philosophers refer to as knowledge by acquaintance rather than knowledge by description. Otherwise, the empathy gulfs are just too big. There is some evidence that people who live in heterogeneous communities demand redistribution more than those in homogeneous ones. But in a world that is increasingly stratified by geography and media habits as well as race, ethnicity, occupation and income, the prospects for far-reaching egalitarian demands are – if anything – receding. And vulnerable people focus first and foremost on their vulnerability, not the success of others.

The thesis that fear and insecurity trump other sources of human motivation has been around at least since Hobbes wrote Leviathan. And we know from Kahneman and Tversky that it need not be fear of destitution. Anticipating losing anything of value leads people to violate basic canons of economic rationality – even to forgo larger possible gains. As the experience and fear of loss that has been creeping up the socio-economic ladder accelerates due to the technological revolution, those who appeal to that fear will keep finding it easy to mobilize political support.

Activists and aspiring leaders ignore this reality at their peril. The brilliance of “Make America Great Again!” and Trump’s Inaugural slogan “American Carnage Stops Right Here, Right Now!” was their premise that something had been taken away from middle Americans that he would stop and reverse. Hillary Clinton’s recycling Ronald Reagan’s “America’s Best Days Lie Ahead!” was tone deaf to their world. Reagan used it effectively in 1980. But that was just at the beginning of what would become decades of working- and middle-class economic stagnation. In 2016, invoking that sunny optimism signaled that she lived in a bubble.

The identity politics that populists invoke and many on the left are reluctant to criticize operates as a giant diversion from the underlying causes of economic insecurity and the remedies that are needed to address it: substantial and ongoing investments in rebuilding the human capital of displaced workers for the endlessly changing economy we now live in and meaningful safety nets that guarantee health insurance, childcare, and adequate retirement income regardless of employment status. The best agenda for the left is to build as broad as possible a coalition of the economically precarious in support of these goals, not to get caught up in conflicts over affirmative action, gender, religion or other social issues. Failing to do this makes it more likely that the politics of the coming decades will be a replay of the 1930s. That didn’t end well, and there is no reason to believe that this would either.

 


Ian Shapiro is Sterling Professor of Political Science and Global Affairs at Yale University. He has written widely and influentially on democracy, justice, and the methods of social inquiry. His most recent book is The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It, with Michael Graetz (Harvard University Press, 2020). His new book, Uncommon Sense, will be published by Yale University Press in 2024.

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