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The model of Western democracy is broken: unemployment stats questioned

The model of Western-style democracy is now broken. Exhibit Number One is Donald Trump, but there's lots of other evidence too.

By Gwynne Dyer - If the model is broken, should you try to fix it, or scrap it and get a new one? In questions of technology, increasingly the answer is: scrap it. Computer repair shops are dying out: if your laptop doesn't work, just buy a new one. What applies to consumer technology, however, does not necessarily apply to politics.

 The model of Western-style democracy is now broken. Exhibit Number One is Donald Trump, but there's lots of other evidence too.

One-third of French voters backed Marine Le Pen, a cleaned-up, user-friendly neo-fascist, in last year's presidential election. In last September's German election, one-eighth of the electorate voted for Alternative for Germany, a party whose more extreme wing is neo-Nazi but which now leads the Opposition in the German parliament.

Last month in Italy, the two biggest parties to emerge from the election were both led by populist rabble-rousers, one from the left and one from the right. Not to mention Brexit in Britain. And in every case the themes that dominated the populists' rhetoric were racism, nationalism, hostility to immigrants — and jobs.

Trump rarely talked about anything else during the election campaign: immigrants are stealing the jobs, free-trading American businessmen are exporting the jobs, the foreigners are eating America's lunch. Down with free trade! America First! Etc! (Hint: Donald Trump is not a Republican. He is a populist.)

Trump may not know a lot, but he knows One Big Thing. We are living in a new era of mass unemployment, and nobody has noticed. As Trump said after he won the New Hampshire primary in February 2016: “Don't believe those phony numbers when you hear 4.9 and 5 per cent unemployment. The number's probably 28, 29, as high as 35. In fact, I even heard recently 42.”

It's not really 42 per cent, but it's not 4.1 per cent (the current official US rate) either. According to Nicholas Eberstadt's Men Without Work, the real unemployment rate among US men of prime working age (24-55) is 17 per cent.

Why didn't we notice? Because the unemployed weren't protesting in the streets like they did in the Great Depression of the 1930s, although the rate is getting up to Depression era levels. After World War II, all the Western democracies built welfare states, mainly so a new generation of radical populist leaders would not come to power the next time there was mass unemployment.

It has worked, in the sense that there is no blood in the streets, but the jobless millions are very angry. They vote, and unless something is done to ease their anger, next time they may elect somebody who makes Trump look good.

But if the problem is unemployment, the answer is not obvious, because the main cause of unemployment in Western countries is not immigration or “off-shoring” jobs, as Trump pretends. It is computers.

One-third of US manufacturing jobs have vanished in the past 20 years, and 85 per cent were destroyed by automation. The algorithms and robot arms have already killed the Rust Belt, and there is a plausible prediction that almost half of existing US jobs may be automated out of existence in the next 20 years.

What would our politics look like then? Not very democratic, unless we ease the anger of the unemployed. This doesn't just mean giving them more money but also finding ways to take away the shame, because it is the humiliation of being seen as a loser that breeds the anger.

The leading proposal right now is called universal basic income (UBI). Every citizen would get enough for a decent life whether working or not, although most people would probably keep working as well. And making it “universal” takes the shame and anger out of it: UBI would be a birthright, not charity.

UBI may not work in practice, but at least it is addressing the right problem. And there is enough money: the jobs are being destroyed, but Western economies are still growing richer.

Whatever the solution is, it has to tick two boxes: putting money in the pockets of those without work (which is very much in the interest of the owners and managers, whose business model is also broken unless their customers have money to buy their goods and services), and doing it in a way that does not breed humiliation, resentment and radicalism.

Some may argue that this is saving capitalism, not smashing it, and they would be right. But evolution is better than revolution.

* Gwynne Dyer