Copyright Project Syndicate
ATHENS – France, the United Kingdom, the United States, and even Germany are all in fiscal jeopardy, with ballooning liabilities for pensions, welfare programs, and military expenditure that politicians dare not shrink nor fund through higher taxes. Some conclude that democracy cannot deliver fiscal prudence because the demos cannot be persuaded to live within its means. But there is an alternative explanation: The cause of our fiscal woes is that we live not in democracies but, rather, under oligarchic rule punctuated by periodic elections. Free and fair elections enable people with spare time and money to win office, which is a very different thing from gaining power. Once elected, central-bank independence denies them control over monetary policy, while already overburdened budgets and fear of bond vigilantes limit what they can do in the fiscal domain. Is it any wonder that talented people turn their backs on a political career, rather than helplessly observing forces beyond their control? Meanwhile, extortionate power is exercised elsewhere. In France, the latest ground zero of fiscal distress, the richest 500 families’ wealth has soared from 6% of national income in 1996 to 42% in 2024. Something similar has happened across the rest of Europe, including in Germany and even the Nordic social-democratic havens. Almost none of this surge in the fortunes of the wealthy can be reasonably attributed to their swelling productivity or their exceptional entrepreneurial spirit. The main drivers of wealth concentration are a secular reduction in real hourly wages and the descent of large segments of the population into precarity; new schemes that enable big business to extract value from the state in a manner that degrades public services and amplifies governments’ future liabilities; and new opportunities for tax avoidance for those with significant resources. As capital owners exploit labor and state resources with a degree of efficiency unseen in the 1950s and 1960s, they are also skimping on their insurance premia – the taxes that enable the state to pacify the discontented and safeguard property rights. Additionally, states bail them out when their bets go south, pay them exorbitant fees for steadily worsening privatized services, and maintain cartels of formerly public utilities that further deplete most people’s disposable incomes through skyrocketing prices. Hemorrhaging public support, governing politicians respond by piling unfunded social welfare and pension liabilities on increasingly impecunious states. When the bond markets inevitably throw a tantrum, the news media fill the airwaves with warnings of an imminent debt crisis, often featuring vintage footage of Greek demonstrators rioting against the International Monetary Fund and external creditors. “Everyone must tighten their belt,” is the message, “lest we become another Greece.” Except that, when they say “everyone,” they don’t mean it. While few dare openly dispute the ethical case for taxing the super-rich more, the moment proposals for wealth taxes surface, the oligarchs trot out a seemingly irresistible argument: if you tax us, we will flee to Dubai, Monaco, maybe even Mars. Viewing it as axiomatic that this would be a bad thing, the governing politicians buckle and take wealth taxes off the table. In the middle of this one-sided class war, governments feel increasingly squeezed between jittery bond markets and populists who make all kinds of promises while whipping up nationalist sentiment and targeting convenient scapegoats – from single cat ladies and trans people to Muslims, Jews, and desperate refugees. Once in government, xenophobic populists develop selective amnesia, forgetting their promise to look after the suffering multitudes. Invoking the government’s permanent fiscal woes, they embrace the same austerian cuts that caused the discontent which they exploited to win power. They slash social security. They lecture the overtaxed, exploited, underpaid, and underserved on their patriotic duty to grin and bear it. And, of course, none of this belt tightening advances the declared goal of fiscal consolidation, because they offer tax cuts to those who have turned tax avoidance into an Olympic sport. To keep their base agitated and on side, they stage vile scenes of gross cruelty toward the chosen scapegoats, a pastiche of medieval authoritarianism reeking of militarism, patriarchy, and divine providence. With liberalism tainted as the freedom of the elites to rob the many, the absolutist promise of “One People, One Party, One Leader” becomes their ideological touchstone. Good people incensed with this rendition of a hideous past fill the streets in response, proclaiming “No Kings.” But while the sight of so many refusing to accept the Great Leader’s power grab is uplifting, it is hard to be optimistic. Listening to the lofty humanist speeches and reading the fiery editorials in support of the No Kings movement, what is striking is the lack of introspection about what propelled Donald Trump to the White House: the recklessness of the Democrat Barons who, in partnership with the Reagans and the Bushes, gamed the system for a half-century, impoverishing the state, marginalizing workers, and subjecting entire generations to lives of persistent insecurity. What would happen if, by some miracle, the centrists were returned to government? Judging by the track record of mainstream Democrats in the US, of President Emmanuel Macron in France, and of Prime Minister Keir Starmer in the UK, the discontented masses will once again be told that they must accept the delinking of their pensions from the consumer price index, or that cuts in disability payments are essential to counter idleness and sloth. Turning the spotlight on the King while letting the barons off the hook will not stop Trump and his copycats from amassing feudal powers. The illusion of the strong man who will fix everything cannot be dispelled by reviving the illusion that oligarchy offers the population democratic choices. The King will be safe as long as the barons remain unchallenged.
