Martin Wolf — Why elites aren’t trusted
‘The outcome of individual economic freedom can be great inequality, which hollows out realistic notions of democracy,’ argues FT columnist Martin Wolf, who says the elites have to move closer to the people. He talks to Frederick Studemann.
Studio filmed by Nicola Stansfield. Produced by Josh de la Mare.
FREDERICK STUDEMANN: Individual economic freedom is a great thing. But it can also bring with it great inequality, which in turn poses a threat to our very notions of democracy. Thus argues FT Columnist Martin Wolf. Who warns that the world's elites must reconnect with the people if liberal democracy is to avoid a crisis of legitimacy. But is there really any chance of that? Well, Martin joins me here to answer that question. Martin, why is it time to worry about the elites?
MARTIN WOLF: Well the most obvious are signs, which we can see on both sides of the Atlantic, is the increasing potency of populists. Both the left and the right. It's most obvious in the presidential election campaign. With Bernie Sanders on the left, and Donald Trump and Ted Cruz on the right. But we're also seeing it in France with Marie Le Pen. In the UK with Nigel Farage. Which is one of the reasons we're now having the vote on Brexit.
So I think it's very, very clear that angry popular emotions, resentments are bubbling up to top of our politics. And making it very difficult to preserve stable and sensible policies.
FREDERICK STUDEMANN: And what do you see is driving that? Is it raw economics? That just a bigger slice of the pie is going to a smaller number of people? Or is it, I mean, you've identified areas such as migration and such. What do you see is really driving--
MARTIN WOLF: I think underneath it is the fact, and it's now becoming increasingly widespread across the Western world, is that a very large part of the population are no longer seeing any significant rise in their standards of living. There's very clear evidence that this has been happening in the US now for really quite a long time. With an enormous proportion of the gains, almost half of all the gains in real incomes of post-tax over the last 30, 40 years, going to just the top 1%.
But we're actually seeing stagnation in living standards in the UK. Very high unemployment and relatively stagnant living standards in France. And I think given that background, people are angry, they're concerned, they're resentful, they lash out, of course, against immigrants. That's pretty standard. They resent elites.
And then beyond that, and I've stressed this, the crisis has enormously damaged, I think, the legitimacy, the sense of decency, and competence, even honesty of the economic and political elites.
FREDERICK STUDEMANN: I mean there are people though who would say, yes. You're right in that. But we've been there before. And that ultimately, in Western liberal democracy, we found that the centre, if you want to describe it, is that does hold. That sort of, in the political domain sense of politics, prevails. We won't end up with a populist in the White House.
MARTIN WOLF: That's likely, though I think they can still do a lot of damage through bad policy. For example, the inability to pursue any sensible immigration reform in the US is an example of that. But I also suggest that the reasons the centre has been successful in the past, notably in the Western world after the '30s, was because we reformed. And one of the things I've done in this piece is suggest a number of reforms, fairly modest, but nonetheless important. We should be thinking about.
FREDERICK STUDEMANN: So what does need to be done? Tell us a bit more about what's--
MARTIN WOLF: Well I think one of the things we have to do is make it seem that the tax system is fair. That everybody is paying their share. I think it's crucial that people again feel that companies are being run in such a way that everybody benefits.
I do suggest, it's very clear given the pressures, we have to get control of our borders again. And make it clear, yes. We are allowing in immigrants. But we control it. We're doing it for reasons. We're aware of the tensions, costs that this imposes. Particularly on the more vulnerable members of our society.
So there are a range of things I think we need to do. Because the compact between the elites and the people at large has to be reforged.
FREDERICK STUDEMANN: But how confident are you that anyone's going to pick up those batons and really reform? It's great to suggest. But do you see any evidence anyone is--
MARTIN WOLF: As a columnist I always hope that people will pick it up. I think there are some sensible policymakers who are aware of the dangers and want to do something about it. I think actually a lot of work that President Obama's been talking about in this area is quite sensible.
But I just think people have to realise now that the signs of stress in our political systems are very, very substantial. I don't know how close we are to a real crisis. And they really should be worried about the stability of our remarkably successful system of politics and economics.
FREDERICK STUDEMANN: Well on that bright note. Martin, thank you very much. And thank you for watching. For more on this and other topics covered by commenting please go to FT.com/Comment