Introduction
In a world where economic indicators seem to be on the rise and productivity is at an all-time high, one might expect people to be content and satisfied. However, the reality is quite different. Across the globe, we're witnessing widespread protests and a growing sense of anger among populations. Eric Lonergan's book "Angrynomics" delves into this paradox, exploring the intersection of the financial world and our emotional well-being.
This insightful work examines why people are so angry despite apparent economic success. It draws connections between economic policy, populist movements, and the feelings of stress, anger, and uncertainty that many of us experience daily. Lonergan provides a passionate critique of how elite institutions structuring the global economy have mismanaged their responsibilities, while also offering a deep dive into the various types of anger and emotional fallout that this failure exacerbates.
The Nature of Anger in Society
Justified Anger vs. Tribalism
Anger, despite its negative connotations, can serve a useful purpose in society. It often acts as a reinforcement mechanism for social norms that protect the collective good. When individuals violate these norms through actions like cheating or stealing, they face the collective anger of their peers. This form of anger, which we can call "moral outrage," can be a powerful force for positive change.
For instance, in Iceland in 2017, when the "Panama Papers" leak revealed that top government officials were operating offshore tax havens, citizens' moral outrage led to protests that ultimately toppled the government. This is an example of justified anger – anger directed at the roots of actual injustice.
However, not all collective anger is beneficial. There's another form that manifests as tribalism, encouraging people to adhere to an identity group and aggressively attack those perceived as outsiders. This type of anger is often a collective response to stress, fear, and uncertainty. In modern politics, it frequently takes the form of nationalism.
Politicians around the world, such as Narendra Modi in India, Viktor Orbán in Hungary, and Donald Trump in the United States, have effectively used this tribal anger to build political support. They appeal to nationalism, transforming the dissatisfaction felt by people in economically depressed regions into anger against perceived outsiders, particularly immigrants. While this approach may be effective in winning elections, it doesn't address the underlying policy problems.
Sources of Public Anger
Economic Insecurity and Unresponsive Politicians
The 2008 financial crisis and the subsequent Eurozone crisis a few years later left millions of people in the United States and Europe feeling betrayed by a system that failed to live up to its promises. These crises were just the latest in a series of events that have reshaped the global political and economic landscape over the past few decades.
One major cause of public outrage is mounting economic inequality. Since the 1970s, many countries have adopted neoliberal economic policies that cut taxes, reduce social spending, and prioritize markets as central forces in society. The result has been a widening gap between the rich and the poor. Globally, the richest 1 percent have taken home 90 percent of income gains since 2012.
This upward distribution of wealth means many people are working more but earning less. In the United States, for example, the real median income hasn't grown for three decades. This stagnation means most people have seen little improvement in their standard of living. The situation is even worse for those living in small towns with declining economies, who must also contend with the visible success of wealthier individuals in big cities.
Adding to this problem is the inadequate response from political institutions. Since the end of the Cold War, dominant political parties in most democracies have shifted to the right. Instead of offering real policy solutions, leaders often resort to blaming problems on vague forces like "globalization" or, worse, turn to nationalism. As a result, many people with legitimate grievances feel that no one in government is addressing their concerns, leaving them feeling angry and unheard.
The Need for Redesigning Capitalism
Capitalism as a Computer System
To understand the current state of capitalism and why it needs redesigning, we can use the analogy of a computer system. In this analogy, capitalism's hardware consists of society's institutions, such as banks, stock markets, and governments. The software is the ideology that dictates how these institutions interact, such as free market liberalism or social democracy.
Just like a computer, a capitalist society can be designed with different combinations of hardware and software. Some arrangements work well and are relatively stable, while others are prone to problems. Over time, the software can generate bugs, the hardware can overheat, and the whole system can crash – leading to widespread anger and dissatisfaction.
Three Versions of Capitalism
Since the mid-1800s, there have been three major versions of the capitalism "machine":
The first iteration ran on software that believed markets were always right and that the state should never interfere. This system eventually produced widespread poverty and unemployment, leading to the Great Depression and contributing to World War II.
After 1945, a new version of capitalism emerged, running on Keynesian economic models. This gave more power to labor unions and the state, and less to investors and markets. While this configuration generated widespread economic growth and a strong middle class, it also produced high inflation and disappointing returns on investments.
In the 1970s and 1980s, capitalism was redesigned again, this time running on neoliberal software. This version featured weaker labor unions, unfettered free trade, and governments that deferred to the market. However, this system has produced high inequality and banks that overlend and inevitably collapse, as seen in the 2008 financial crisis.
Unlike previous crashes, the 2008 crisis didn't lead to a significant update of the capitalist system. Instead, those in power made only minor tweaks before restarting the same flawed system. As a result, we're likely to see the same problems recurring, potentially with even worse consequences.
Economic Forces Driving Anger
Stress and Uncertainty in Daily Life
The current economic system is creating an environment of stress and uncertainty for many people. There are four main trends driving this anxiety:
Rapidly evolving markets: Industrial deregulation and technological change have made the economy highly competitive. Companies must constantly innovate to stay afloat, which puts pressure on workers to adapt and accommodate. This often means putting in extra hours or constantly learning new skills, which can be extremely stressful.
Fear of job automation: While there's limited concrete evidence that AI will eliminate a significant number of jobs in the near future, the perceived possibility is still a major source of stress for many workers. With companies eager to adopt cost-saving measures, it's difficult for employees in many industries to feel secure in their long-term prospects.
Economic orientation toward older generations: The post-war generation (Baby Boomers) enjoyed many social programs, such as affordable education and a strong labor market, which allowed them to accumulate significant wealth and political influence. Today's younger generations face fewer opportunities and a steeper path to attaining financial security.
Perceived competition from immigration: While evidence shows that immigrants generally strengthen economies, many people, particularly in economically depressed areas, see newcomers as a threat to their livelihoods. This perception is often exacerbated by politicians who stigmatize immigrant populations as drains on social programs.
These trends combine to create an atmosphere where few people feel secure about their economic future, leading to increased stress, anxiety, and anger.
Rearranging Economies for Equality and Reduced Anger
Keeping What Works, Fixing What Doesn't
Despite the many problems with the current economic system, it's not necessary to completely dismantle it. Some countries, like Canada and Australia, have managed to rein in their banks and create positive outcomes such as real wage growth. The goal should be to keep the parts of the system that work well while fixing the faults that don't.
The current version of capitalism has delivered some positive outcomes, such as long periods of high employment rates without generating inflation in most countries. When updating our economic "hardware" and "software," we should aim to maintain these benefits while addressing the major downsides – specifically, inequality and instability.
Strategies for Reducing Inequality
To tackle inequality, we need to provide the bottom 80 percent of the population with more wealth and assets. One way to do this is by taking advantage of historically low interest rates to set up a National Wealth Fund. In this system, a government borrows money by selling bonds and then invests that capital in a diverse mutual fund. Every few years, the returns (typically 4 to 6 percent) are distributed to citizens to spend on housing, education, and healthcare.
Similar systems are already in place in countries like Norway, Singapore, and some Gulf States, demonstrating that this approach can be successful.
Promoting Regional Autonomy
While supranational entities like the European Union are valuable for international coordination, they can sometimes be less responsive to regional needs, leaving people feeling voiceless. To address this, countries and regions should be given more freedom to experiment with novel policies. This would allow them to tailor solutions directly to their population's needs while testing out new ideas.
Other Potential Solutions
There are many other concepts worth exploring to address economic inequality and reduce public anger:
- Redistributing wealth by requiring big tech firms to pay licenses for using public data.
- Central banks offering preferential interest rates to businesses investing in decarbonization.
- Implementing direct support for consumption during recessions, rather than relying on corporate bailouts.
The overall goal is to find solutions that curb the economic trends feeding public outrage and private stress. By implementing policies that serve a greater number of people, we can calm anger before it leads to dangerous outcomes.
Conclusion
"Angrynomics" provides a compelling analysis of the disconnect between apparent economic success and widespread public anger. Eric Lonergan argues that while many countries are experiencing economic growth, the benefits of our contemporary version of capitalism are not evenly distributed. This has led to financial insecurity and an uncertain future for large portions of the population.
The book highlights how those at the top of the economic ladder seem uninterested in addressing the legitimate outrage of the majority. This failure to address public concerns is feeding dangerous forms of tribalism, such as racism and nationalism.
To avoid these negative outcomes, Lonergan suggests we need to build more equitable economies using new tools like national wealth funds and increased regional autonomy. By implementing policies that serve a greater number of people and address the root causes of economic anxiety, we can hope to reduce the anger and frustration that are currently dominating public discourse.
The key takeaway from "Angrynomics" is that economic policy cannot be divorced from its emotional impact on society. By understanding and addressing the emotional aspects of economic systems, we can work towards creating a more stable, equitable, and less angry world.
As we move forward, it's crucial that policymakers, business leaders, and citizens alike consider not just the raw economic data, but also the human experience of living within our economic systems. Only by addressing both the financial and emotional aspects of our economies can we hope to create a more harmonious and prosperous society for all.