Yale Open Course <Power and Politics in Today's World>
Lecture 5: The Resurgent Right in the West
In the 1970s and 80s, the West saw a shift away from social democratic models of government towards those centered around undoing and opposing the postwar consensus. The collapse of communism and the changing labor market contributed to new geopolitical and economic conditions favorable to the conservative movement. The Reagan and Thatcher administrations' rhetoric of personal responsibility and absolute economic improvement, along with the unstable nature of distributive politics, further fueled this shift. During this time, the burgeoning welfare state and unions came under attack, although to a lesser degree in multi-party systems such as France and Germany compared to two-party systems exemplified by the UK and the US.
Notes
The “Postwar consensus” from 1950s in almost all capitalist societies
Strong welfare + social protections
Progressive redistribution through tax system
Substantially bipartisan
Ex.
US: “The Great Society” (LBJ) → civil rights, Medicare, expansion of welfare
Britain: Clement Attlee’s govt 1945 → British welfare state
European social democracies
Euro-communism
Social democracy not a byway to Marxist communism but a proper form of organization
70s, 80s → conservative attacks
Hostility towards unions and the welfare state
Against progressive taxes and regulations
“Government is the problem!”
Reagan elected 1980, Thatcher 1979
Weren’t initially considered a threat to the establishment
The Effect of the End of Communism
Good for the left?
Social democracy → acknowledged as a legitimate form of social organization, an equilibrium
got rid of the bogeyman for the right to mobilize against
Leftist agenda could no longer be seen as an attempt to promote communism if there is no communism
Money spent on arms race could be channeled into the economy
BUT
less favorable demography and geopolitics
Post-war social democracy and welfare state had depended on fortuitous circumstances
Demographically - big working age population
Dependency ratio ↑ = working age population / dependent population (<15 and >65)
in the 80s
working age population grew old to become the dependent population
Dependency ratio ↓ → fiscal stress
Economic health had been buttressed by American funds
Europe hadn’t needed to spend any money on defense
American interest in building Europe bulwark against USSR ↓
Alternative bogeyman
Islamic fundamentalism → not a threat to capitalism since there is no Islamic model of economy
↓ incentive to buy off working class discontent
post-depression fear among business elite of the spread of communism among workers → approved the New Deal
w/o USSR, no need to keep the expensive welfare state
No alternative system to win over people
Two logics of distributive politics → contributed to the rise of the right
Median always below the mean (the ultra rich pulling the average up)
Always more people below the average income
Median voter theorem: politicians seeking to win votes will be responsive to median votes
impetus for downward redistribution
But this doesn’t happen!
Why?
Another dimension other than income such as gender, race, etc.
Majority rule divide-a-dollar game
No matter how you divide it, there is always some potential majority to upset that division
Implications
Don’t need a second dimension to get distributive instability
Interest alone will not produce effective demand for downward redistribution
Then what about ideals and institutions?
Ideals
fairness?
people usually make local comparisons (within their groups)
Not fatal to solidarity but compete with other ideals of fairness
self-referential comparisons, “Pareto improvement”
Whether you are better off than you were before
gap between the rich and the poor
Thatcher / Reagan appealed to:
absolute improvements
prospects for upward mobility
Reagan’s (the new right) rhetoric: “everyone should be able to become a millionaire”
v. modern day pro-market conservatism revolving around loss aversion
responsible for:
“Make American Great Again” (Donald Trump)
Trump never promising to eliminate inequality but rather to deliver absolute improvements
“America’s best days lie ahead” (Hilary Clinton)
Benjamin Disraeli: possible to appeal to working class voters to vote conservative policies
Difficult to hold solidarity with the fairness ideal because factions within the group can be picked off with rewards (divide-a-dollar game)
Thatcher appealed to the lower-middle class with upwardly mobile aspiration
w/o a second dimension like race, solidarity vulnerable to breaking off by ideologies
Ideals of fairness not enough for redistributive politics?
Institutions to sustain working class solidarity?
Unions?
Reagan firing air traffic controllers / Thatcher breaking up miner’s union
new hostile attitude toward unions
Dramatic decline of union membership
Wagner Act 1935 protecting unions
Undone by Taft-Hartley Act of 1974 that cut back on union protection
America economy shifting from manufacturing to service
↓ union membership
↑ difficult to unionize in the service sector
free trade
can’t sustain unions when
exit cost for capital ↓
exit cost for labor ↑
As union membership ↓, inequality ↑
Middle class share of income ↓
Around the world, in major economies, unions getting smaller and weaker (except for Finland)
Unions tend to be relatively small in two-party systems
Can’t get a lot of redistribution
France/Germany = multiparty system
US/UK = two-party system
Multiparty system more responsive to redistribution/media voters?
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