Social Europe

politics, economy and employment & labour

  • Themes
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Confronting The Global Threat To Democracy

Ngaire Woods 9th June 2016

Ngaire Woods

Ngaire Woods

Across the world, populists are attracting votes with their promises to protect ordinary people from the harsh realities of globalization. The democratic establishment, they assert, cannot be trusted to fulfill this purpose, as it is too busy protecting the wealthy – a habit that globalization has only intensified.

For decades, globalization promised to bring benefits to all. On an international scale, it facilitated the rise of the Asian tigers and the BRICS countries (Brazil, Russia, India, China, and South Africa), produced rapid growth across Africa, and facilitated the boom in developed countries through 2007. It also created new opportunities and augmented growth within countries. But since the 2008 crash, many rich countries have been locked into austerity; the Asian economies have been slowing; the BRICS’ progress has been stalling; and many African countries have fallen back into debt.

All of this has contributed to rising inequality, which is now fueling discontent. Emmanuel Saez and Gabriel Zucman calculate that in the United States, the wealth gap is already wider than at any time since the Great Depression, with the richest 1% of households now holding almost half the country’s wealth.

In the United Kingdom, the Office for National Statistics reports that in the period from 2012 to 2014, the wealthiest 10% of households owned 45% of total aggregate household wealth. Since July 2010, the top decile’s wealth has increased three times faster than that of the bottom 50% of the population.

In Nigeria, astonishing economic growth, averaging 7% per year since 2000, may well have reduced poverty in the southwest of the country; but in the northeast (where the extremist group Boko Haram is most active), shocking levels of wealth inequality and poverty have emerged. Similar trends are apparent from China to Egypt to Greece.

Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content.


We will never send you spam and you can unsubscribe anytime.

Thank you!

Please check your inbox and click on the link in the confirmation email to complete your newsletter subscription.

.

Alongside inequality, declining public trust fuels the revolt against globalization and democracy. Across the developed and developing worlds, many suspect that the rich are getting richer because they are not held to the same rules as everyone else.

It’s not hard to see why. As the global economy slows, breaches of trust by those at the top become more apparent. In the United Kingdom, Amazon, Starbucks, and Google attracted public outrage in 2013 for using loopholes to pay almost no tax, prompting the UK government to lead a G8 tax announcement aimed at reducing tax evasion and avoidance. In 2015, an audit of the state-owned Nigerian National Petroleum Corporation revealed that about $20 billion in revenue was never remitted to the authorities under the previous administration.

And the problem appears to be systemic. This year, the Panama Papers exposed how the global rich create secretive offshore companies, permitting them to avoid financial scrutiny and taxation. And the world’s largest banks have faced unprecedented fines in recent years for brazen violations of the law.

But, despite the negative publicity generated by such cases, the public has seen virtually no one held to account. Almost a decade after the global financial crisis of 2008, only one bank executive has gone to prison. Many bankers instead followed a path similar to Fred Goodwin, the head of Britain’s Royal Bank of Scotland, who racked up £24.1 billion ($34.2 billion) in losses, then resigned with a huge pension. Ordinary people – like the father of three who was imprisoned in the UK in September 2015 for accumulating £500,000 in gambling debts – do not enjoy such impunity.

All of this helps explain why anti-establishment movements are gaining momentum around the world. These movements share a sense of disenfranchisement – a sense that the “establishment” is failing to give ordinary citizens a “fair shake.” They point to election results “bought” by special interests, and to arcane legal and regulatory frameworks that seem rigged to benefit the rich, such as banking regulations that only large institutions can navigate and investment treaties negotiated in secret.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Governments have permitted globalization – and peripatetic wealth-holders – to outpace them. Globalization requires regulation and management. It requires responsible business leaders. And it requires deep and effective global cooperation. When governments failed to cooperate in the 1930s, globalization came to a crashing halt.

It took a series of careful, highly managed efforts after World War II to open up the world economy and permit globalization to take off again. Still, while many countries liberalized trade, capital controls ensured that “hot money” could not race in and out of their economies. Meanwhile, governments invested the returns on growth in high-quality education, health care, and welfare systems that benefited the many. As the business of government grew, so did the resources put into it.

By the 1970s, wealthy countries’ leaders in both government and business had become complacent. They took on faith the promise of self-equilibrating, self-restraining markets that would deliver continued growth. By the time this new orthodoxy spread to the leveraged financial sector, the world was on a crash course. Unfortunately, many governments had already lost the capacity to manage the forces they had unleashed, and business leaders had lost their sense of responsibility for the welfare of the societies within which they were flourishing.

In 2016, we are re-learning that, politically, globalization needs to be managed not just to permit the winners to win, but also to ensure that they do not cheat or neglect their responsibilities to their societies. There is no place for corrupt politicians pandering to corrupt business leaders.

Restoring confidence will be difficult. Business leaders will need to secure a “license to operate” from society at large, and contribute visibly to sustaining the conditions that support their prosperity. They can start by paying their taxes.

Governments will need to distance themselves from the companies that fail to do their part. Moreover, they must overhaul their own operations, to prove their impartiality. Robust regulation will require significant investment in government capacity and the legal services that support it.

Finally, global cooperation will be crucial. Globalization cannot be undone. But with a strong, shared commitment, it can be managed.

© Project Syndicate

post-Brexit
Ngaire Woods

Ngaire Woods is dean of the Blavatnik School of Government at the University of Oxford.

Home ・ Politics ・ Confronting The Global Threat To Democracy

Most Popular Posts

schools,Sweden,Swedish,voucher,choice Sweden’s schools: Milton Friedman’s wet dreamLisa Pelling
world order,Russia,China,Europe,United States,US The coming world orderMarc Saxer
south working,remote work ‘South working’: the future of remote workAntonio Aloisi and Luisa Corazza
Russia,Putin,assets,oligarchs Seizing the assets of Russian oligarchsBranko Milanovic
Russians,support,war,Ukraine Why do Russians support the war against Ukraine?Svetlana Erpyleva

Most Recent Posts

Big Tech,Big Oil,Big Pharma,agribusiness,wealth,capital,Oxfam,report,inequality,companies Control the vampire companiesJayati Ghosh
Labour,Australia,election,climate,Greens,teal Australian Labor’s climate policyAnna Skarbek and Anna Malos
trade,values,Russia,Ukraine,globalisation Peace and trade—a new perspectiveGustav Horn
biodiversity,COP15,China,climate COP15: negotiations must come out of the shadowsSandrine Maljean-Dubois
reproductive rights,abortion,hungary,eastern europe,united states,us,poland The uneven battlefield of reproductive rightsAndrea Pető

Other Social Europe Publications

The transatlantic relationship
Women and the coronavirus crisis
RE No. 12: Why No Economic Democracy in Sweden?
US election 2020
Corporate taxation in a globalised era

ETUI advertisement

Bilan social / Social policy in the EU: state of play 2021 and perspectives

The new edition of the Bilan social 2021, co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), reveals that while EU social policy-making took a blow in 2020, 2021 was guided by the re-emerging social aspirations of the European Commission and the launch of several important initiatives. Against the background of Covid-19, climate change and the debate on the future of Europe, the French presidency of the Council of the EU and the von der Leyen commission must now be closely scrutinised by EU citizens and social stakeholders.


AVAILABLE HERE

Eurofound advertisement

Living and working in Europe 2021

The Covid-19 pandemic continued to be a defining force in 2021, and Eurofound continued its work of examining and recording the many and diverse impacts across the EU. Living and working in Europe 2021 provides a snapshot of the changes to employment, work and living conditions in Europe. It also summarises the agency’s findings on issues such as gender equality in employment, wealth inequality and labour shortages. These will have a significant bearing on recovery from the pandemic, resilience in the face of the war in Ukraine and a successful transition to a green and digital future.


AVAILABLE HERE

Foundation for European Progressive Studies Advertisement

EU Care Atlas: a new interactive data map showing how care deficits affect the gender earnings gap in the EU

Browse through the EU Care Atlas, a new interactive data map to help uncover what the statistics are often hiding: how care deficits directly feed into the gender earnings gap.

While attention is often focused on the gender pay gap (13%), the EU Care Atlas brings to light the more worrisome and complex picture of women’s economic inequalities. The pay gap is just one of three main elements that explain the overall earnings gap, which is estimated at 36.7%. The EU Care Atlas illustrates the urgent need to look beyond the pay gap and understand the interplay between the overall earnings gap and care imbalances.


BROWSE THROUGH THE MAP

Hans Böckler Stiftung Advertisement

Towards a new Minimum Wage Policy in Germany and Europe: WSI minimum wage report 2022

The past year has seen a much higher political profile for the issue of minimum wages, not only in Germany, which has seen fresh initiatives to tackle low pay, but also in those many other countries in Europe that have embarked on substantial and sustained increases in statutory minimum wages. One key benchmark in determining what should count as an adequate minimum wage is the threshold of 60 per cent of the median wage, a ratio that has also played a role in the European Commission's proposals for an EU-level policy on minimum wages. This year's WSI Minimum Wage Report highlights the feasibility of achieving minimum wages that meet this criterion, given the political will. And with an increase to 12 euro per hour planned for autumn 2022, Germany might now find itself promoted from laggard to minimum-wage trailblazer.


FREE DOWNLOAD

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us on social media

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube