Extreme wealth’s devastating threat to democracy

Hans Kundnani

Hello, everyone, apologies for the technical problems that we’ve been having. Hopefully people are now able to join, I can see the numbers going up. We’re going to go straight into this because we’re 17 minutes behind now. So, my name’s Hans Kundnani. I’m the Director of the Europe Programme at Chatham House. Welcome to this members’ event on Extreme Wealth’s Devastating Threat to Democracy. Basically, the problem of oligarchy. I won’t do a long introduction, as I did before you were able to join us, but it’s the problem of how economic inequality translates into political inequality. We have four fantastic speakers. Peter Goodman from The New York Times, who’s joining us from New York, Professor Leslie McCall, Associate Director at the Stone Center, who’s also joining us from New York, then Professor Matt Goodwin, who many of you will know. He used to be a Associate Fellow at Chatham House and has spoken at many events and finally, Professor Karen Rowlingson, who is Professor of Social Policy at the University of Birmingham and joins us from there.

This event is on the record. There’ll be a recording made available afterwards. I’m going to ask the four speakers to be even more brief than I’d already asked them to be, given that we’re now running behind and then hopefully we’ll still have plenty of time for questions and comments. The way we’re going to do that, and I’ll remind you of this once the four speakers have spoken, but the way we’re going to do this is through the Q&A function. If you write a brief version of your question in the Q&A function, and then I will see it and then we will ask you to unmute yourself, so that you can ask your question yourself, either on camera or just on audio if you prefer. But if you can keep that question relatively brief, that would help me, so that I can read them quickly, and you can also use the chat box for side conversations, but I won’t be monitoring that.

So, as I say, I’ve asked each of our four speakers to be relatively brief. Peter, apologies, you were mid-flow when we stopped first attempt at this, so can you tell us all over again, how billionaires devoured the world.

Peter Goodman

Yeah, so I’m not going to tell you all over again, I’m going to tell you that my book, which is called, yes, “Davos Man: How the Billionaires Devoured the World” might just as well have been called The Oligarchs because we – let’s not get carried away. We’re not living in an oligarchy, those of us living in developed democracies, we still have freedom of expression, here we are using it right now. We still have elections, though the people I write about, the billionaire class would have us believe that they’re the solution to all of our problems if we just cut taxes and deregulate, then their interests are our interests, the benefits will magically trickle down.

They have used their power and their money to not only concoct tax codes that serve to send more and more wealth their way at the expense of just about everyone else, to liberate themselves from anti-trust enforcement, to get out from under collective bargaining and other forms of labour power. But they’ve insinuated into our political discourse the idea, I think quite effectively, that our interests are all collective, and actually we can see that in this current moment where we’re supposed to be depending upon sanctions in the EU, in the UK, in the US, tailored to hurt Putin’s oligarchs, and this is supposed to turn into pressure on Putin to relent his invasion of Ukraine. But of course, we’re not all equal. Our interests are not collective and the people I call ‘Davos Man’, but let’s call them our oligarchs, are benefiting from extreme opacity in the financial system, which actually makes it very difficult to figure out where the Russian oligarchs have stashed their money.

So, here’s a clear example of where the collective interest of sanctions is being undermined by the narrow interests of people who actually have most – have had outside share of political power, thanks to their savvy use of political lobby shops, public relations firms, compliant think tanks, friendly access Journalists. And if we hadn’t realised that this was a problem before the pandemic, the pandemic brought that home courtesy of the failure of most of our healthcare systems in large part, because of the degree to which the people again, I call Davos Man, managed to get healthcare policies tailored to their interests at the expense of everyone else’s interests, through privatisation, through a diminishing of spending on healthcare, with the proceeds transferred to the billionaire class through tax cuts. And we would hope that there would be a mechanism where we would all wake up and discover that our societies have been rendered increasingly volatile and our governments unable to satisfy collective needs because of the billionaire class and there’d be consequences. But the billionaire class is extremely good at exploiting any kind of volatility to insulate itself from accountability. So, you know, I’m looking at the UK, at the US, at Sweden, Italy, France.

In all of these cases, where we see the rise of right-wing populous movements, we have a gradual, almost invisible systematic transfer of wealth from the bottom up over decades, followed by some on-the-surface shock. The migration crisis, China, our hollowing out middleclass jobs in places like Italy or the United States or really just about anywhere, and the result is political opportunist blame, you know, the most recent arrivals. This is a story we’ve seen in Italy; we’ve seen it in Sweden, this explains Trump, this largely explains Brexit, these nativist responses to declining living standards, hollowing out of manufacturing and again, the real culprits are not the people who’ve ended up with most of the money, the billionaire class, the – those people will go scot-free while we end up demonising immigrants.

Finally, I’ll say Davos Man or the oligarchs or the billionaire class, whichever one you prefer, they’re very good at coming up with new terms to signal to us that we don’t have to regulate, we don’t have to impose progressive taxation. You know, they’ll take care of our problems. The latest version of this is stakeholder capitalism. This is an idea that you hear a lot of talk of in places like Davos, this notion that Milton Friedmanism is over, companies aren’t just organised around returning profit to their shareholders, they’re now catering to stakeholders like Labour, never Labour Unions, but always Labour, local communities and the pandemic was a pretty powerful test of the concept and the billionaire class has failed abysmally.

I mean, Amazon pledged to live by stakeholder capitalism. They kept their warehouse workers labouring without protection in the worst part of the pandemic. Pfizer signed a famous stakeholder capitalism pledge and then they took their vaccines and they sold them around the world to the highest bidder, resulting in tremendous inequality in vaccine distribution, which means that we’re all subsidising Pfizer’s monopoly profits on publicly financed research, through the extension of the pandemic.

Let me stop there ‘cause we’re supposed to be brief. Thanks very much.

Hans Kundnani

Great, that was brilliant. Thank you, Peter, for doing that all over again, and thank you to the audience members that have joined us. Thank you for being patient and persistent. I’m going to turn to Leslie next, but many just briefly, Peter, can I just push you on how the billionaires have been able to do this? Because you said, you know, they use their power and money, you know, to rewrite tax codes, to undermine collective bargaining, and a whole series of things to insinuate themselves into our political discourse, but I don’t quite understand how you think they’ve done this. I mean, you started out by saying, “We do live in democracies.” How has this been possible?

Peter Goodman

Well, I mean, in the States, to pick the most obvious example, you know, we live under Citizens United where effectively, corporate interest can now funnel unlimited sums of money with no disclosure into the political system. Amazon has 100 lobbyists working in Washington. Oh, what a coincidence, many members of Congress are in the mood to pass laws that are beneficial to Amazon. Amazon – I mean, the United States is the only country on Earth where there’s no national paid sick leave policy. This means that in the middle of the pandemic, where supposedly Amazon’s governed by the dogma of stakeholder capitalism, but we’ve got a situation where people literally have to choose between going to work with no knowledge of the extent of the pandemic in their warehouses, no protective gear, or they lose their jobs and they can’t keep the lights on or feed their families. None of this happens by accident. It happens through campaigned finance aggressive lobbying.

Hans Kundnani

Yeah, so I’d love to come back later on maybe, to whether something different is happening. For example, in some of the European countries that you mentioned ‘cause I think that party finance doesn’t quite work in the same way. But let’s maybe drill a bit deeper on the US. Leslie, over to you.

Professor Leslie McCall

Thanks so much, really appreciate your organising this event. I hope to get to your question actually, Hans, maybe with a little bit of a different answer. So, I just want to make three quick points, hopefully quick.

So, the first one is that the issue of extreme inequality has been with us in the US for a very long time, since the early 1980s. And even on this is, I think this is the key point, even on the political front, many of the White economic nationalist themes that arose in the 2016 Presidential Election with Donald Trump were actually raised in the 1990s Presidential Campaigns of Ross Perot and Patrick Buchanan, almost word-for-word. And these themes were really hitting a nerve even back in the 1980s and there’s even a direct connection between these campaigns and Donald Trump because Donald Trump joined the Presidential Primaries of Ross Perot’s Reform Party in the year 2000.

You know, at the same time, in the early and mid-1990s, there was a lot of negative media attention focused on high CEO pay. That is, the negative attention on the economy was not only about globalisation and immigration. In fact, the US was seen as economically in decline, relative to Japan and Germany at that point and excessive CEO pay, relative to those countries, was pinpointed as one of the possible causes of US inefficiencies and inequalities. And at this time also, Bill Clinton was sort of shifting to focusing the Democratic Party on creating major new investments and jobs programmes, but those really fell way short of the promises that were made during the campaigns of the 1990s, and the same thing happened – the identical thing happened with Barack Obama in the late 2000s. And during this entire period public preferences for less inequality rose significantly, particularly in the 1990s and in the 2000s. And of course, we’ve seen no diminishment in inequality in the US over this entire period.

So, my point here is that this has been going on for a long time and I think some of the things that we’re seeing now, the sort of levels of frustration and crisis really are at new heights and I think that we have to attribute that in part to how long this has – this ‘conversation’, the same conversation we’re having right now, has been going on for at least a couple of decades.

The second point real quickly, and I’m going to be very quick on this, it’s because it’s related to one of the things I mentioned, which is that public views about inequality and the rich and public policies that would reduce inequality are very much at odds with what people commonly claim about the US. That they embrace free market, the free market are tolerant of inequality or admire and envy the rich, you know, and this might be the reason, right, getting to the transmission. That it’s because the public, you know, tolerates these high levels of inequality and envy the rich and so on. But just, very little of this is actually backed up by data. And let me just give you one little titbit from the 2020 American National Election Studies, which is the premier academic political survey in the US.

Americans felt more positively towards Labour Unions and the Black Lives Matter movement than they felt towards big business or capitalism. And that was in 2020, but I’ve seen consistent data with this, not the Black Lives Matter movement obviously, but going back to the early 2000s and the 1990s. And of course, all of the components, nearly all of the components in the major pandemic relief and infrastructural programmes had been very, very popular.

So, the third point, and final point gets, I think, more directly at this issue of transmission and that concerns the question of what’s to be done? So, my own views have evolved a lot over the past several years and I’d say the views of many others in the US working on issues of inequality have evolved. And the main threat now, I believe, is electoral politics, and political institutions that are small ‘c’ and, kind of, small ‘d’ conservative and undemocratic. And it’s not at all only about campaign finance, although you might be able to connect campaign finance to these issues. But these are undemocratic institutions.

It’s the Senate, it’s the Electoral College, it’s redistricting procedures, it’s the Supreme Court, you know, unless you’re willing to say that campaign finance is behind all of those then, you know, I think this is a much bigger problem. And, you know, I think focusing on electoral politics may sound kind of obvious, but really, the main debate still these days around inequality have to do with policies. Is it this policy, or that policy? Recently, it’s the wealth taxes and basic income grants that’s gotten a lot attention. The question often is, “Oh well, will it gain popular support?” But really, that’s not the issue at all, because there’s popular support across the board for a large number of policies that would reduce inequality. And just to comment briefly on a question that we had discussed earlier in preparation for this, this is a problem not of left versus right, but elites versus the public, which is why there is so much progressive activism in economically rich, blue states, here in New York State, in New York City, in Seattle, against Amazon. These are very progressive places, but you know, these are not the left-behind areas, alright, that you’re seeing this kind of mobilisation.

So, fundamentally, just to close, it’s the lack of democratic representation that I think is the key issue and it’s leading to, what is the solution? Which is, grassroots organising, political organising and electoral sphere, which I think is a relatively new phenomenon in the US and I think that’s where – you know, it’s going to take a long time, but it’s happening.

Hans Kundnani

Great.

Professor Leslie McCall

I’ll stop there, okay.

Hans Kundnani

Thanks, Leslie. We’re going to come back, I think, to solutions in a little bit, particularly with Karen but, on this question of – again, the sort of causes of this, I mean, in a way you’ve resolved it by saying this about political institutions rather than just campaign finance. But in a way, it’s still the same issue, which is, you know, all the un – in your – you know, the way you describe them, undemocratic institutions in the United States, the Senate, and the Supreme Court and so on, I mean, European countries don’t have the same democratic institutions. They have other democratic institutions and there’s a lot of variety within Europe.

The countries that Peter mentioned, Sweden, Italy and so on, they’re all very different from each other. The UK is also different. But you seem to have many of the same patterns in nearly all of those countries, you know, including some like Germany, you know, that I think a lot of people would say have pretty good democratic institutions, and yet, you know, you’ve had a massive increase in inequality, in particular, wealth inequality in Germany too. So, I kind of feel like there’s still a bit of a dilemma there, but we can maybe come back to that.

Matt, you look at sort of – you have a sort of – a bit of a global perspective, you look, I guess particularly at the UK and the US. What are your thoughts on this kind of – I suppose, the intersection between the economic and the political here?

Professor Matthew Goodwin

Well, firstly, thank you for inviting me along and thank you Hans and Chatham House for arranging this very timely conversation. I think against the backdrop of COVID, it’s been very tempting to fall into the narrative that, you know, everything is essentially – is getting worse and we’ve seen a fundamental shift in public opinion around inequality. I certainly am sympathetic to the argument that inequality has increased sharply during the pandemic. I’m less convinced by the argument that we’ve seen a fundamental change in the public mood.

There are two pieces of evidence that I was just reviewing ahead of this event. One, from the Pew Research Center in the US, which is a good, independent, rigorous research centre that found that only 29% of Americans now say that people who have personal fortunes of a billion dollars or more, it’s a bad thing for the country. The vast majority said that billionaires are neither a good thing, nor a bad thing, 55%.

In Britain, we have very similar evidence from the National Centre for Social Research, which is our most credible, independent research organisation. It found that between 2011 and 2019, on average, 59% of people felt that there was one law for the rich, and another for the poor. That’s been actually pretty consistent since the 1990s. In the summer of 2020, just after the pandemic arrived, that did increase, but it only increased to 64%. I mean, there was only a five point increase.

Another way of asking this is, “ordinary people do not get their fair share of the nation’s wealth, to what extent do you agree or disagree?” And again, between 2011 and 2019, the proportion who agreed was 60% and in the survey since the pandemic, it’s increased to 64%. So, you know, okay, a few points, but I mean, it’s basically broadly static. And nor, by the way, do they find much evidence that people have become more supportive of redistribution, which I think is actually quite a key point, given the discussion so far. Overall, they find that while there’s a little bit of evidence to suggest perceptions of inequality have increased, support for redistribution has actually held pretty steady.

So, I think the public mood aspect of this is more nuanced than some of our media discussions since COVID have had us believe. But I also think it’s true that we do still have a fundamental problem with political representation and inequality. So, we know in political science that when you have higher rates of inequality you have lower levels of trust in the political system. You also have lower levels of satisfaction with democracy and you also have lower levels of political engagement among working class and non-graduate voters in particular who are less likely to participate in a system that they see as being rigged.

And ironically, one of the side effects of populisms, especially in Europe, has actually been to bring those voters back into the political system. So, in Germany, for example, with the AfD, with the UK with Brexit and Boris Johnson, if you consider Boris Johnson to be a populist, I’m sure some people do. Actually, a lot of their support came from people who have previously given up on the political system and who had been essentially on the wrong end of rising inequality since the 1980s. So, you know, depending on your personal politics, some people might say, you know, there’s a silver lining in a sense in all of this, in that at least these voters are coming back into the political system, but of course, they had to go for more radical political alternatives to get there.

I think just lastly, ‘cause I know we want to get to the conversation, I actually don’t think billionaires are really the primary problem here, actually. I think the problem is much closer to home. I think if you look at the story of political representation in Western political system since the 90s, the story has basically been about middleclass university graduates from very privileged families overtaking and taking over national parliaments, legislatures, political parties, citizens assemblies, most, if not all, major institutions in society, newspapers, television programmes, creative industries, and that new elite, which really only represents a minority in society, it represents about 25% in Britain, for example, now basically dominates most of these policy designing institutions. And that new elite not only is more economically centrist than most voters, is also by the way more culturally liberal than most voters, which is why we’ve seen these populous revolts. So we’ve had this new policy priority, this new, sort of, policy focus that really hasn’t actually been very representative of a large number of groups in society, and that has really fanned the flames, both in terms of inequality, where we know most workers and non-graduates are much further to the left than many of the people who are representing them. But it’s also fanned the flames, in terms of populism on the right, not just because of economic redistribution, but because the new elite are also much more culturally liberal than the vast majority of people in their wider society.

So, if we can step back and think about representation in a slightly broader way, and think about the exclusion bias that is now operating within these political systems, I think we’ll go a lot further to fixing this problem than focusing on the top 0.01%.

Hans Kundnani

Great, thanks, Matt, and I’m really glad you spelled out that disagreement with Peter at the end that it’s – you know, it’s not the billionaires’ fault as it were. It’s a much more complicated problem that. Peter, I do want to give you a chance to respond to that in a minute, but maybe I’ll turn to Karen first. Karen, you’ve got some ideas about how we solve this problem?

Professor Karen Rowlingson

Well, I wish it was that easy, and we’ve already talked about a number of the different tools and different toolboxes we can use, so, of course, wealth taxation. We’ve seen a reduction in wealth taxation and wealth is taxed very lightly at the moment, compared to earned income and consumption. So, we could absolutely reform our tax system, introduce new taxes like a net-wealth tax, a land value tax. We could tweak existing taxes to increase the rates and reduce the thresholds and remove allowances and exemptions. There’s lots we could do in that wealth tax toolbox. But the issues we’re coming back to, is there the political will and the public appetite for that? We’ve had a bit of discussion-disagreement perhaps between Matt and Leslie about whether there is the public appetite. My view is that there is much more appetite than we are often given – that the public is given credit for, and a lot depends on how you frame the questions and the kind of discourse behind it. So, yeah, if you use the word ‘redistribution’ in a question, people don’t like it because the – our kind of discourse at the moment is very neoliberal. Redistribution is taking from one group, robbing the rich to give to the poor and that’s not a popular, kind of, idea. But if you talk about…

Hans Kundnani

Haven’t attitudes shifted on that in Britain, though?

Professor Karen Rowlingson

They have shifted. Not massively, but they have shifted, and I think now – I don’t think it’s actually, particularly ‘cause of COVID. I mean, we did a study with the public as part of the Wealth Tax Commission that the LSE led, and we asked people there about a new net-wealth tax and it was a very popular suggestion compared with other form – ways of trying to raise money to tackle problems and so on. And the main reason people said they thought it was a good idea, wasn’t to pay for COVID actually, and this was in 2020, during the height of the COVID pandemic. It was to tackle the gap between rich and poor, which the public said had been increasing. And we were quite staggered that it wasn’t COVID that was driving this support for a net-wealth tax. It was concern about wealth inequality. So, I think there is more support. I wouldn’t overstate it, but it is there and I think we need Politicians to be more courageous in making the case and that using positive narratives around why this is a worthwhile approach, but that toolbox is only one. And I think we do also need to look at the political reforms that Leslie has talked about and Peter as well.

And then, there’s also – we talk about democracy almost purely around political democracy. Peter did hint at, sort of, economic democracy and how we can involve workers in the boards of companies, there have been some ideas about that suggested, even by a Conservative Government in the UK, but we haven’t really taken that very far. We want – we should be thinking about the Trade Union representation, collective bargaining, and also supporting other forms of companies of – thinking about co-operatives, how do we support co-operatives so that workers – I know Peter said he was a bit sceptical about stakeholder approaches. But actually, if people are stakeholders in their firms and they get the benefits of the surplus that they make and so on, then that’s another way to kind of think about common forms of wealth and ownership. And I think we need to tackle this issue, and we do need our Politicians to be – to put the case more positively and be more courageous around this, because if we don’t do that, I think we will just see people lose patience with democracy and turn to alternatives, which are already happening, but will just increase further and we’ll be in a vicious circle. So, we’ve got to tackle this from a number of angles.

Hans Kundnani

Great, thanks, Karen, and thanks for spelling out also that it’s wealth inequality that’s a particular problem here, rather than income inequality. Again, to come back to the German case, income inequality is not that high, but wealth inequality is. And, you know, by the way, on your point, Leslie, as well, about worker representation on boards and so on, again, Germany has this, so, you know, it doesn’t seem to solve the problem at least on its own.

Peter, I want to come back to you and give you a chance to respond to Matt, but I wonder if I can also combine it with one of the questions that we’ve received from the audience from Michael Harvey who asks, “Please ask the panel the following question on my behalf. Recognising that the growth in inequality since the 1980s arose from the fiscal policies of Reagan and Thatcher, why have centre left administrations in the US and the UK remained shy at reintroducing progressive income inheritance and wealth taxes?” to your point Leslie, “which proved so effective in reducing in equality between 1945 and 1980?”

And if I can maybe add just something to that as well, ‘cause I was thinking about this as you were talking, Peter, earlier on, that it seems to me that, one part of this story which we haven’t talked about here, is that, you know, while it’s true that at a domestic level inequality is increased, there’s a different story at the global level, in terms of, you know, the distribution between countries. In some ways, during this same period over the last 30/40 years, we’ve seen – it’s complicated, but we’ve seen broadly a reduction of global inequality and I think, what some of – some centrists and perhaps some people at Davos, Peter, might say, is, “Well, you know, that’s a good trade-off.” I certainly heard Blairites kind of make precisely that argument, that, you know, yes, we’ve had some more inequality domestically, but you know, you’ve got to look at the big picture here, which is, this system that you’re criticising Peter, has lifted millions of people out of poverty outside of the West.

Peter Goodman

Yeah, so those questions all do combine fairly nicely. Let’s start with the last part. No question we should share a compression of global inequality, but we should also ask, what’s bringing it about and who’s getting most of the benefit? It’s tremendous that we have hundreds of millions of people lifted out of poverty in places like China. It’s not so tremendous that the benefits of globalisation in places like the US and the US is certainly, by any reasonable measure, a net-beneficiary of globalisation, have flowed overwhelmingly to people like Jeff Bezos and Steve Schwarzman and the other primary characters in my book.

Now, it’s nice to take note of what public perceptions are, depending upon how you craft your poll on any given moment in time on any issue. It’s much more interesting, I thin, to follow the money, to see where the money actually goes and to see what representative government is doing in response to lobbying and campaign contributions and yes, public perceptions that are more often than not, manipulated by interests that have outside influence over the process. I mean, until the pandemic, we had violent crime rates going down in just about every major city in the United States. But if you went and polled the public, in response to you know, shock TV, Fox constantly leading their local newscasts with a murder somewhere, because if it bleeds, it leads, a majority of Americans would tell you that violent crime was at epidemic levels. So, that’s generally not a very good way to figure out what’s really going on.

Now, in terms of this…

Hans Kundnani

But this is a very American story you’re telling.

Peter Goodman

Well, it may be an American story in that regard, but if you look at perceptions of CEOs in places like the UK, if you look at views on business and on Milton Friedman and neoliberal economics in places even like Sweden or Italy, there is a global story. And it’s a story that’s played out again, not by accident, but through the careful cultivating of political perceptions by the people who are benefiting from inequality. And, I think it’s fair to say, not just in the US, not just in the UK, but in much of the developed world, there is this buying into a false binary that I argue in my book, is very much the work of Davos Man, that we either have inequality and then we get the miracles of COVID vaccines and UBER and Google and all the other cool stuff that we like, or we can monkey around with the magic formula for wealth creation and innovation and we may as well be Venezuelans, you know, diving into dumpsters for our dinner. And I think that basic idea now has some animating force far beyond the United States. That basic idea has currency in much of Europe and that’s why we have seen policies that have been beneficial to the billionaire class.

Hans Kundnani

But, Peter, was it not a much broader, kind of, consensus? You know, in other words, you – it almost seems as if you’re sort of almost – I mean, this is unfair, but you’re almost – this is – almost seems like in your account, it’s a sort of conspiracy by the billionaires, where it…

Peter Goodman

No, it’s not a conspiracy.

Hans Kundnani

It’s much broader…

Peter Goodman

It’s much more – no, for a conspiracy, that would be a much simpler story. It’s more like climate change. It’s happened so gradually, but so persistently, that it’s almost invisible. So, in the same way that like, no one care if the sea level rises by some fraction of a millimetre, until some major city is underwater, nobody really cares about inequality until, “Oh, we don’t have any hospitals in the middle of a pandemic, we don’t have ventilators in the richest country on Earth. How did that happen?”

Hans Kundnani

But it was a very broad consensus that was shared, you know, including newspapers like The New York Times, right?

Peter Goodman

Well, I don’t know, I don’t see any newspaper in those terms. We don’t have a sort of, house – I mean, there are plenty of people, yes, who bought into neoliberal economics at The New York Times. That’s a separate conversation. But certainly, amongst many Journalists, there has been a celebration of the CEO class and that’s contributed to the protection of the CEO class.

Hans Kundnani

Yeah. Leslie or Karen or Matt, do you want to come back on any of that?

Professor Karen Rowlingson

Yeah, if I can, just on – I mean, thinking about the 1980s as the questioner asked about the centre-left and I mean, at that time in the UK – well, in 1997 obviously a new Labour Government comes in with Tony Blair as Prime Minister who – and Peter Mandelson, also very prominent in that government, in that party. And Peter Mandelson famously said he was very relaxed about people being filthy rich. He had no concern about – well, no concern about the wealthy. It was the concerns with poverty and people – and they didn’t see the links between the two, and they didn’t kind of look to reversing the Trade Union legislation, to increase democracy in our economic sphere, as well as our political sphere. So, I think New Labour just bought the ideology actually, and partly to get into power, they thought they had to do that perhaps. But also, I think, genuinely, Tony Blair actually believed in – that these kind of ideas of, yeah, wealth creation and giving the city freedom to expand and so on. So I think that it’s ideologically at the time, the Labour Government was not opposed to inequality at all. It didn’t see it as a problem, and I think we’re seeing more and more research and evidence that it’s not only growing, but it is a real problem and nobody really denies that now, but now we’ve got a Labour Party in the UK where we’re not seeing, I think, the radical policies that we need and there’s again, a kind of drawing back, following on the defeat of the last election from those more radical policies. And I do think that the Labour opposition needs to be again, more courageous in putting forward more radical solutions.

Hans Kundnani

Great. I’m going to take some questions from the audience, but Matt or Leslie, do you want to quickly come in on this?

Professor Leslie McCall

Sure, real quickly. Just to answer this question too, ‘cause I think it’s a great question. What was happening in the 1990s was that, there was very – that was the beginning of slow growth as well. So it was not only high inequality, it was also slow growth and there was a major recession in the early 90s, as well as in the – deeper one in early 80s. So, what was – what the administrations were responding to at that point were, many of the Wall Street Advisors like Robert Rubin, who were – and Larry Summers later, who were saying, “No, you cannot do deficit spend to create jobs programmes and so on. Yes, we do need to open up international trade with NAFTA in order to jump start the economy.” So, I think you have to look at that, and then you see Obama getting trapped in the same sorts of discourses and then, very importantly, Biden is saying, “I can’t do that anymore,” right? Clearly, those policies have not worked. And so, Biden is the first Democrat to pushback on those but obviously, he’s having major problems in the Congress getting those very popular policies passed.

Hans Kundnani

Yeah, Matt.

Professor Matthew Goodwin

Well, I think, to go back to Peter’s point, I think – I certainly am sympathetic to the argument that there’s been an accumulation of, you know, laws and measures that have allowed the kind of financial elite, if you want to call them that, to sort of navigate around the economic and political system. I don’t think anybody’s denying that. I think the problem I – where I’m perhaps more sceptical is whether the vast majority of voters are actually wanting the very interventionists to pick these state-led radical reforms that were being talked about.

I mean, for example, classic case of this is the last general election in the UK, where the reason the Labour Party’s more radical reforms didn’t really go very well is because people didn’t view them as feasible and also didn’t view them as being particularly competent. And all the evidence and polling, I would argue really, shows that quite clearly and I think this is where perhaps, this debate over inequality, kind of, constantly runs into a bit of a blocker, in that many of the measures that are put forward, you know, often lack widespread public support because they’re not always in tune with the more aspirational parts of society that often don’t want a state-led, or what they see as a top-down response to these issues. So, you know, that alongside the fact that we’ve now got the sort of cultural dimension in politics that’s become really just as important to voters as the economic dimension, has made it very difficult for parties, particularly on the radical left to kind of offer these unifying appeals to voters because if you’re now on the radical left, you’re not only pro-economic…

Hans Kundnani

Yeah.

Professor Matthew Goodwin

…reform and redistribution, but you are also typically highly liberal on a lot of issues that really put you diametrically opposed to the vast majority of the working class on these issues. So, it’s very difficult within that context to put forward a winning formula that voters actually find very appealing.

Hans Kundnani

But Matt, I thought that your argument was that, with the sweet spot, at least in British politics, was precisely sort of left-wing economics and right-wing on culture and that there had been this shift on economic policy towards the left.

Professor Matthew Goodwin

I think there’s been some. There’s not been shifts to the extent that this conversation is pointing to. So, you’d not have, for example, what I would call, the new generation of Conservatives who actively distance themselves from the 1980s. I think you’d find – you would struggle to find many people, within today’s Conservative Party, that would look back at Thatcherite reforms and say those are the answer for the current moment. I think what you’ve seen is a party that is trying to, you know, do things around – for example, levelling up regions and towns that have been left behind, that won’t go as far on issues like redistribution that as say, par – people on the left would. But nonetheless, has been trying to move away from 80s’ economic policy of Thatcher and Reagan, combining that with support for things like Brexit and reforming migration and that is ultimately what gave Boris Johnson, for example, the biggest majority since the late 80s. And the inability I think, in the US, of the Democrats to respond to these cross-cutting diving lines in politics, is where we’ve seen the Biden Presidency really come off the rails, right? I mean, you know, Biden has struggled, really not only because of economic policy, he’s struggled primarily because he’s also lost large numbers of non-graduate, Hispanic and Latino voters among others, on cultural questions around policing and law and order, as well as economic policy. So, it’s that sort of interaction of the two now, that is proving so problematic for some groups within this debate.

Hans Kundnani

Great, so, I know Peter and Leslie want to jump in. I really must take some questions from the audience. We’re going to – I think we’re going to overrun, since we started late, so we’ll go until about ten past six, maybe quarter past six, so we’ve still got plenty of time.

Peter and Leslie, do you want to jump in briefly now? Shall I take some questions and then…?

Peter Goodman

Super, really. I just want to say, I think if we can find our conversation about solutions to inequality to what seems politically permissible, according to our polling apparatus at any moment in time, we’re done. We’re cooked. Because the special interests who benefit from the status quo are so much more powerful than anyone else that they’re always going to be able to fearmonger. That is their prophylactic against democracy itself. So, it’s like a weird, mutant version of democracy, if that’s how we determine what we can afford or what’s doable.

Hans Kundnani

I still don’t understand how that works in Europe though, Peter. I can see how that works in the United States, but I think it works differently in Europe.

Peter Goodman

Well, I mean, Macron comes in and he’s doing the bidding of Bernard Arnault and the other billionaires who want to get out from under wealth taxes. So, he cuts wealth taxes, he increases gas taxes, you get the Yellow Vest movement and you get a further destruction of any faith in the elite. And if you have no faith in the elite, if your lived experience tells you that you don’t matter very much, your ability to support your family doesn’t matter very much to the people running your country, then how do you have a serious conversation about pandemic politics? How do you have a conversation about climate change? Nobody’s going to sacrifice if no-one has faith in their leaders.

Hans Kundnani

But why is it in Macron’s interest to do that? Or, why does he see it is being France’s interest to do that?

Peter Goodman

Well, that’s a long conversation, but in part, it’s the victory of the CEO class convincing people that places like Davos, where Macron hangs out and spends much of his life, that that’s a good way to orient your economics. And it’s certainly a good way to raise funds for a political campaign.

Hans Kundnani

Okay, Leslie.

Professor Leslie McCall

Okay, really quick. You know, the reason why public opinion is so important is actually because we don’t have a representative democracy. You know, we need to know what people think.

Hans Kundnani

Who’s ‘we’? Is that America again, or is that everywhere in the world?

Professor Leslie McCall

I mean, I’m talking about the US, but I think that that’s something that has been shown to be an issue in Europe as well. So, that – there’s a discordance between the public opinion measures, because that’s what we have as an indicator of people’s positions on these issues, economic and cultural. Versus what Politicians are doing, right? So there’s that disconnect between actually voting and popular opinion on policy. So, this is not – I’m not saying this because I think public opinion is the be-all and end-all, it’s because we have a real problem with representing how people do think about these issues and a lot of misrepresentation of them. And so, one last point which is that, you know, I have never claimed, and others who have made the sorts of arguments that I’m making have claimed, that people have become increasingly concerned about inequality. Our argument, and the whole point of what I had said in the beginning of my comments is that, actually, people have been opposed to high levels of inequality for a long time now. So, this is not so much about an increase, I can completely can see that point, but that there are actually high levels of opposition.

Hans Kundnani

Okay.

Professor Leslie McCall

I’ll stop there.

Hans Kundnani

Matt was shaking his head, and he may want to come back later on, but I must take some questions from the audience. So, I want to ask John Mason, who has a question about Thomas Piketty, “Capital in the Twenty-First Century”. If you’d like to ask your question live and then perhaps we can go to Yosef Isaac.

John Mason

Okay, so was Piketty’s analysis and capital in the 21st Century helpful in this debate i.e., his book argues “he world today is returning towards patrimonial capitalism in which much of the economy is dominated by inheritance wealth, the power of this economic class is increasing, threatening to create an oligarchy?” That’s what he argues in his book.

Hans Kundnani

Great, thanks, John, and that’s helpful also because Piketty is talking about, you know, the world, but also particularly obviously about Europe.

Yosef Isaac

Yeah, thank you. During the pandemic, although inequality has risen, at the same time the role of the state, at least in the distribution of some resources, has increased and the market efficiency approach has retreated. So, could this help in decreasing inequality, adopting such policies? Thank you.

Hans Kundnani

Yeah, that’s great. Let’s stick with those two for the moment. So, Piketty, patrimonial capitalism, inherited wealth and the sort of return of the state in the pandemic. Who wants to have a go at either of those?

Peter Goodman

I’ll take a shot at that. Oh, go ahead. No, go ahead then.

Professor Matthew Goodwin

No, no, after you Peter, it’s okay.

Peter Goodman

Oh, well, just briefly, yeah, I think Piketty’s work has been incredibly valuable in highlighting the degree to which fewer and fewer people are walking away with the gains of global capitalism while, in terms of the tax picture, people who are actually, you know, scrubbing the toilets of the billionaire class are contributing, again, not just in the US, but in much of the developed world, a greater share of their income and wealth to local and national governments than their employers. And that’s a problem just in terms of the credibility of systems. And I don’t buy this supposition that, you know, we’ve returned to the big state. I mean, we have, in some instances, in terms of European Union action, on the fiscal side, in terms of the role of the state perhaps in the UK, in terms of, you know, pandemic rescues, but the solutions to inequality don’t involve some sort of revolution, some sort of set of radical positions. They, in fact, involve a return to things that we mostly already had in most of our societies, and that’s progressive taxation and collective bargaining, anti-trust enforcement, that’s – it’s not much more complicated than that.

Hans Kundnani

Matt.

Professor Matthew Goodwin

Yeah, thank you. I mean, I think obviously Piketty’s got interesting things to say. I wanted to make an observation more about his follow-up to capital, looking at the way in which politics has responded to that environment and Piketty makes the important point that, essentially, one of the reasons why the last 20 years has been so difficult for Social Democrats, especially it’s been that effectively their parties have been taken over by groups who do not share the economic values and the economic views of working class non-graduate voters. I think actually, Piketty is partly right on that but misses another important point, which is me almost repeating myself in saying that it’s not only that the highly educated, new middleclass are more economically centrist than a lot of voters, but is also, as we see the rise of the cultural dimension in politics, they’re also just in a world of their own, when it comes to a whole range of issues relating to policing, borders, Europe, identity, diversity and that’s really also undermined the pushback against inequality. Because it’s made it much harder to get the coherent political coalitions that you would have had in the 20th Century, for example, and I agree actually, with the previous speakers that when you go back to real moments like, New Labour and Clinton, there’s a massive lost opportunity there for those governments to do many more radical reforms to try and meet that moment and they really failed.

And just a last defence of my friends in the polling industry and where I constructively disagree with Peter. I think that evidence and data is absolutely crucial for the framework of these conversations, not because that data is manipulated. It’s very difficult for a billionaire to manipulate a national election survey, which is designed and administered by academics. It’s crucial because I’ve seen so many people in this debate over the last 20 years spend their time dreaming of things that are simply never going to be politically or electorally feasible. And so, I think that any evidence is really important to keep this conversation anchored in projects and policies that are politically feasible and appealing to voters.

Hans Kundnani

Leslie or Karen? In fact, maybe Karen specifically on that question about the solutions ‘cause it relates back to what you were saying about some possible solutions.

Professor Karen Rowlingson

Sorry, the particular point Matt made, I was thinking more about Piketty.

Hans Kundnani

About unrealistic, you know, basically…

Professor Karen Rowlingson

Oh yes.

Hans Kundnani

…the solutions that…

Professor Karen Rowlingson

…feasible solutions, yeah. I think – so, I don’t – public opinion really matters, and we need to understand it better and explore it, not just with surveys, but also with qualitative work with people, so we understand why people feel the way they do and how they see the world and so on. So, I think we need mixed methods around that. But public opinion shouldn’t – we shouldn’t necessarily be completely led by public opinion. Politicians should also lead public opinion, listen to it, engage with the public and have a debate with them and so it’s – Politicians should lead as well as listen and respond and I think that’s really important, in terms of developing a case for change. So, not simply following, but also leading, and that’s – I think that was quite an interesting dynamic in relation to politics.

I will just take Matt up on the 2019 general election. I think, ‘Get Brexit Done’ was such a powerful slogan and reason for the outcome of that election that I think the many Labour Party policies were actually pretty popular, if you look at some of the polling at the time. But that whole mantra and that agenda just overtook. And also, there were lots of other things going on at the time, but I don’t think the policies were never – were as unpopular as perhaps you do.

Hans Kundnani

Leslie, is what Karen has just said about Politicians leading, not the opposite of what you said about bottom-up, grassroots action?

Professor Leslie McCall

Not really, actually, because what’s happening with the bottom-up, grassroots action, actually, is that those Politicians at the local level are the ones who are leading, you know, in saying, “Actually, we can get this done.” You know, it’s not going to be the end of the world. We’re not going to lose jobs as a result of maybe taking on some of these progressive taxes or raising the minimum wage or creating wage boards and sector and regional bargaining, things like that, you know. It does take exactly what I think Karen said, which is, courage, on the part of Politicians to really challenge the neoliberal economic dominance that holds across parties. And that – I just want to second also something that – I can’t remember who said it. These are not radical left policies. Everything that I was quoting, in terms of public opinion support, these are not radical left. You know, these are barely centrist to left, let’s say, positions.

Hans Kundnani

Yeah, okay. So, I want to thank everybody that’s been patient and stayed with us and we will sort of wrap-up shortly. Maybe just a couple more questions and then I’ll give you a chance to make any last – share any last thoughts you might have. Can we take a question live from Dina Mufti, who has a question about, particularly about inflation, which hasn’t come up so far? “How will rising inflation change things?” Dina, can you ask your question live? I think Dina is there. Okay, I think I’ll just ask her question then. She asks, “Will you see a fundamental change in the public mood over the coming two years as inflation is increasing and becoming entrenched, it will most definitely affect the quality of people’s lives and increase resentment at inequalities? How will governments handle this?”

I’m also going to throw in – several people have asked about tax havens, how central is the problem of tax havens to this? This is particularly relevant in the UK. So, any thoughts on either of those two things, inflation, tax havens and then my sort of final question for you to, sort of, you know, to sort of where we are the end of this really is, I mean, this – I think there is a little bit of a fault line in this conversation between optimists and pessimists, but also about the extent to which some of the things that have happened in the last few years, particularly in the pandemic, have been a bit of a gamechanger on some of these issues. So, I’d like to ask each of you, you know, are you optimistic and has something changed?

Shall we start with you, Karen?

Professor Karen Rowlingson

Gosh, there’s a lot there really. On tax havens, I’m not a particular expert, but I believe that there has been quite a lot reform globally around closing some loopholes. So, there is a myth really, that one of the reasons we don’t introduce wealth taxes is because people will take themselves or their capital elsewhere and find loopholes and actually, the evidence for that is not as strong as again, it’s sometimes held up to be. So, I think we have to challenge some of the myths around the barriers to increasing wealth taxation.

Optimistic, oh gosh. I’m kind of – I always quote Gramsci around some of this, “I’m a pessimist of the intellect, an optimist of the will.” Yeah, things are pretty bad globally in many ways and in US and the UK, but we can do better and I absolutely agree with Leslie, when I talk about Politicians leading, it is at all levels of people kind of having that confidence and the belief, the hope, ‘cause if we don’t have hope that we can change it, we never will. So, we have to try to take – be optimists that we can change and we’ve seen – I always talk to my students about different countries and different approaches that are actually there now. So, we’re not asking for anything that is not possible. Many people feel that there’s a kind of inevitability about this, we can’t change it. Well, we can, and we can show examples in different times and different places where we can do things differently and better.

And I must just – my last point will be about we have to bring in issues about climate change here, you know, in terms of the impact of the wealthy on the climate and that’s a problem for us, we have to tackle that. And we have to think about more sustainable approaches to – in relation to policy and wellbeing, which can be again, a new narrative, a different narrative. So, let’s not go kind of back to some old, you know, tax and spend big state, you know, it’s about new approaches to changing policy in a range of dimensions that will be to the benefit of all.

Hans Kundnani

Great. Matt, over to you, last thoughts.

Professor Matthew Goodwin

Yeah, I mean, I think we’ve certainly seen some important shifts during COVID. I’m instinctively sceptical that it’s been as big a change in the zeitgeist than some of our media debates would have us believe. I’m cautiously optimistic that perhaps we’re entering into a space where, you know, we now at least can see what the state has been able to do, when it’s been motivated to do so, which I think potentially could have a longer-term impact on politics going forward. But I’m very pessimistic about the extent to which many of the groups who are on the wrong side of inequality remain massively underrepresented in almost every major political institution and I do think representation here absolutely matters.

There’s a wonderful book by two Dutch colleagues called “Diploma Democracy” which really sets this out, that even today, as we enter the 2020s, you know, a lot of the groups who have now fallen further behind during the COVID pandemic and are now, are going to get hit very hard by the biggest cost of living crisis that we have seen really, at least in Britain, for more than a decade, which is not only going to include high inflation, but is going to include a massive increase in energy costs and food prices, alongside low rates of growth, which today were confirmed to be just basically 1.8% for the next four or five years which, by historic standards, is very low. This is going to have seismic political effects. I mean, just – we only need to go back to the early 2010s to see the lingering political effects of the great financial crisis and the squeeze on living standards that then rippled through Southern Europe and rippled through the US and the UK for the rest of that decade in different forms. So, I think that gives us good reason to expect the current moment to have similar political effects through the 2020s. I’m, you know, I’m hopeful that that will also bring new voices into that conversation and that debate. People who can make some of the arguments around different reforms and inequalities and so on. But I’m also equally hopeful that people can find a way to give these voters more of a voice within the national debates that they’ve not currently had, and I do think that’s critically important and that’s where I agree with Piketty, the political aspect of this. We have to change political institutions to get some of these things done, I think.

Hans Kundnani

Thanks, Matt. Leslie.

Professor Leslie McCall

Yes, so I agree, actually with a lot of what’s already been said, so let me just sum it up with saying that we are in a very dark period, I think, you know, in terms of my own experience working on these issues for several decades now. I have not ever seen us at a point where there are so many major issues from climate change to inequality and now we have major healthcare issues, as well as inflation, as was mentioned by one of the questions, so yes. We’re in a pretty difficult spot and we don’t have the democratic representation, which again, is not something new with Piketty. This is something that’s been documented for, you know, a long time now, both in the UK and in the US. But those – my optimistic side is that at least, in the US, there is a lot of grassroots organising going on already, you know. And it started, I think we have to say that it really started in force in 2016 after the – and it’s worked after the election of Donald Trump. But it’s working, you know, but it’s going to take a long time.

Hans Kundnani

Thank you, Leslie, and last word to you, Peter.

Peter Goodman

Well, I think the inflation conversation highlights the degree to which our democratic systems are really broken. I mean, let’s look at the UK where it was just, what, a few weeks ago, where Boris Johnson was pointing to the shortage of truck drivers, which is a phenomenon that’s mostly about Brexit, as a sign that, “Well, at least you know, unemployment’s being solved, you know, we’ve got all these great opportunities for English people to go become truck drivers.” And, you know, of course this is a clear use of something that’s bad for most people to try to vindicate this elaborate act of self-harm of Brexit that was really about this Civil War within the Tory Party that put Boris Johnson in office.

In the US, inflation is in large part about monopoly power that’s profiteering on short-term problems in the supply change, and we’re having a conversation about too much fiscal stimulus, you know, we always seem to have money for new tax cuts for wealthy people, but the minute we start talking about things like helping people who are unemployed, well, we can’t possibly afford that. And that just proves, you know, this disaster we’ve got, in the form of inflation, though of course that’s a global phenomenon.

I would call myself a realist. The apparatus that the beneficiaries of inequality have at their disposal to protect themselves, to perpetuate the status quo is great, but I think Leslie makes an excellent point. I think there is grassroots mobilisation underway and I think that will ultimately be the solution because we simply can’t count on the people who’ve gotten hold of the levers of our democracies, to just decide to disarm and give us our democracies back.

Hans Kundnani

Great, thanks, Peter. We sadly don’t have time to get into Brexit at this point. I’m sure Matt would have a few things to say about that. Maybe we can do that another time. In the meantime, thank you all very much, as I say, to the audience members who stayed with us. Sorry for technical problems and that we started late. This turned into a really lively discussion, actually, there’s more disagreement than I thought there might be, which is great.

As I mentioned at the beginning in my first attempt to introduce this members’ event, we have a project on Democracy in Europe in the Europe Programme at Chatham House and we’re focusing part of that project on exactly these questions around inequality and also technocracy, which we didn’t get into much. You touched on it, Peter, when you mentioned the fiscal rules, but it seems to me that’s actually a big part of the story in Europe. So, we’ll be doing more events and papers on this, look out for those. In the meantime, thank you all very much for coming. Sorry for the technical problems again and thank you to our four panellists for a great discussion. Good evening, good afternoon, good morning, depending on where in the world you are. Thank you.