Edward Luce’s new book, The Retreat of Western Liberalism, looks at the causes of the discontent and anger that rile America and Europe. Luce, a columnist at the Financial Times, argues that a lack of steady economic growth and the declining fortunes of the middle class have emboldened a wave of populist demagogues. But once elected to office, those demagogues only worsen the kinds of problems they were elected to solve, exacerbating our already dire predicament.
To discuss his book and these subjects more broadly, I spoke by phone with Luce recently. During the course of our conversation, which has been edited and condensed for clarity, we talked about why Germany has avoided a right-wing uprising, whether Jeremy Corbyn and Bernie Sanders have the solution to working-class grievances, and why Iran, of all places, shows how Trumpism might be survived.
Isaac Chotiner: Why did you want to write this book, and what did you think you had to say that was not already being said about this topic?
Edward Luce: Well the answer to the first question is my publishers suggested it to me.
That’s a very honest answer. I like that.
I will try to keep that standard going.
I don’t want to compare myself with other people, but I will tell you what my analysis is. Without understanding the very big macroeconomic trends, generationlong trends in some cases, such as the catching up of the non-West with the West, which has been taking place all my lifetime and I think will span the rest of my lifetime too, and of course the technological dimensions of that—without understanding the impact very big, really unshakable trends are having on the middle of our societies, and therefore on the sort of bedrock of our democracies, I think it’s very hard to understand what is going on across much of the West. And of course each particular democracy in the West, like each particular unhappy Tolstoyan family, is manifesting its reaction to this in different ways, some way better than others.
What is happening is an overwhelmingly positive thing for the bulk of humanity and for us. But our reaction to this has been poor. There’s really no excuse for how poor it’s been through mainstream politics in the last 10, 20 years. Now, of course, with the election of Trump and events like Brexit, it’s gone from poor to really, drastically bad.
Why is it an overwhelmingly positive thing even if our response has not been good?
A global economy with 6, 7 billion people plugged into it, the brain power of 6, 7 billion people as opposed to 1 or 2 billion people is a dramatically innovative and exciting place to live in. So just from the self-interested point of the West it adds to the sum of human knowledge and the sum of human progress to enlarge the global economy and to enlarge the cognitive dimension to it.
It’s also incredibly beneficial from a humanitarian point of view that fewer and fewer under-five kids, as a ratio of the world’s population, are dying from whatever it might be, dysentery, other preventable diseases, that more and more women are surviving childbirth and are able themselves to lead fulfilling lives as educated members of the workforce, free to choose how they live in most parts of the world, which has never been the case for women.
And so I think you can look at the humanitarian and the economic benefits of this but you can also potentially, although it’s very hard to do that right now, look at the longer term geopolitical benefits of a world that is less unequal at least as measured between nations. There’s a whole different sort of inequality story within nations and within the global economy.
So how have we handled it badly?
It is no accident that the country that’s least affected by this is Germany. Germany has a very, very good program for absorbing skilled middle-class jobs, training people, and giving them vocational ability to succeed in the workplace without getting a college degree. A point that needs particular emphasis in the English-speaking democracies is that we confuse having a college degree with being skilled. And they are quite different things. You and I both know people with college degrees who are unskilled and we know people without college degrees who are highly skilled. And I think that part of the—
You are talking to one of the former.
You’re talking to one too, so I think we have something in common. But that’s part of the answer to what we’ve missed. I think there’s what some people call the hegemony of the degree, of the college degree, and it’s a vast blind spot that has disabled our policymakers in Britain and America and elsewhere from looking at how to equip the middle classes with the skills for the economy.
In what other ways has, say, America, blown an opportunity to deal with the changes brought by globalization?
If you look at the federal budget, the pattern of public expenditure and tax expenditure of subsidies and direct spending is increasingly being skewed toward those who don’t need it but those who’ve got the lobbying power to protect it. So I think that the role that the state played very well for many decades after the New Deal in the United States of providing insurance to people when a rainy day hit and when they needed the assistance of government to tide them between periods has receded really quite dramatically, and at a time when the level of subsidies for those who are better off, for example, for mortgage interest subsidy, has been protected and expanded.
So that’s a huge change in the role of federal government in the last generation or so, really since the Reagan revolution, that I think has come at a particularly bad time for the American middle class. It’s just as these pressures we’ve been talking about of the sort of hyperglobalization has really begun to intensify.
How do you see the impact of immigration on the American economy, and how do you think it has affected the political opinions of middle-class white people?
The scapegoating of course is easier to do when there’s more immigration. But just to the first part of your question: Is immigration a good thing or a bad thing? It’s an unmixed blessing economically. Almost regardless of the type of immigrant, whether skilled or unskilled, documented or undocumented, not just in the broad American sense of “this is part of your tradition and your creed, the American creed” but also for very basic economic reasons, first and foremost it adds to the labor force, which adds to growth.
Secondly, it diversifies the skillset and is a net positive for the economy. There is some debate about whether it has a downward effect on certain kinds of middle-class—particularly lower-income—jobs. There might be a marginal downward effect there but nothing compared to the benefits that it brings. And that of course includes the benefits to the taxpayer of generating greater taxable income that shows that immigrants put in far more than they take out.
But I think there is a big problem with how politics has handled immigration, because there are clearly some communities that have had more immigration than others, that have changed quicker than others. The attempt to simply do what I’ve just done and say, “Look, it’s a net benefit to everybody” is just the kind of low-EQ politics that really puts people’s backs up because politics is about perception. People do, rightly or wrongly—I think wrongly—perceive that immigration brings down wages. And there has to be a better response than simply saying, “No, it doesn’t.”
There have to be programs in place to help bring up wages and help re-equip people for jobs that pay higher wages. What we’ve had in the last 20 years is an increase in immigration, although not of course in the last five years. It’s kind of stopped from the Mexican border. In the last 20 years, we had an increase of immigration at the same time that we’ve had a decline in the real value of things like Social Security and other public benefits. And when—I think I quote several people on this topic, including Francis Fukuyama—you simultaneously widen access to something and reduce its value, you’re going to create some opportunity for political backlash. And that’s exactly what an unscrupulous politician like Donald Trump is born to exploit.
What have you made of the leftist attempt in the case of Bernie Sanders in the United States and Jeremy Corbyn in the U.K. to address these issues about the hollowing-out of the middle class?
I certainly have a higher expectation it can compete after watching Bernie Sanders’ extraordinary close run that he gave to Hillary Clinton, but also watching the revival of Jeremy Corbyn. I think a large part of it was [Corbyn’s] very consistent argument that austerity is not working and that people have had enough of austerity. That’s very much about the middle classes and it’s about the erosion, particularly since the 2008 financial crisis, of the benefits they had been experiencing. But also the amenities, the public libraries being closed, the evening classes, the early learning facilities, and so forth. That has a very strong resonance in different forms in the United States and in Britain. One thing that goes to the heart of it is free tuition for public universities.
OK, but how does that fit with what you were saying about how a college degree isn’t necessarily the cure-all?
Well it doesn’t have to just apply to college degrees; it’s community college too. It’s basically public assistance for gaining new skills. This is something that applies to vocational education after leaving high school as well as it does to four-year college degree education.
One of the most depressing things about your book is that when people like Trump come to power they make every social and economic problem that they were elected to solve much worse. Is there anything that gets you hopeful, or is this just a horrific picture with no upside?
So let me say one unhopeful thing before I say one hopeful thing. The unhopeful thing is that we are living through what my colleague Martin Wolf labels very correctly as pluto-populism. We’ve got a plutocratic sort of class and Trump is executing well. Perhaps he’s not competent enough to execute it, but at any rate he’s hoping to push through, I guess, the most plutocratic fiscal plans we’ve ever seen in terms of the shift of public resources and the tax windfalls for the wealthiest people. That is very, very Latin American. It tends to happen in the most unequal societies with no middle, a big bottom, and a powerful top. And so that’s my fear.
My hope is that we actually do learn as societies from our mistakes. I’m going to give you a really odd example here, which is Iran. There’s just zero chance, as I understand from people who do know Iran well, that a clown like Ahmadinejad could be elected in the foreseeable future back to the presidency. They’ve been through this pantomime and they’ve stuck with Rouhani because they understand—it being in very recent memory—what the theatrical and highly damaging diversions do to their pocketbooks and to their stability as a society. So that’s my hope: that we actually have to make all these mistakes in order to learn not to make them.
But of course, implicit in your question is that things are going to get a lot worse before they get better. And I find it hard to argue that something’s going stop Trumpism from happening in the next three years. It’s very, very difficult to believe in anything other than his incompetence right now.
