Part 2 - Social and Political Challenges:
2.1 Western Democracy in Crisis?
In many Western democracies, traditional mainstream political parties are in crisis. They are struggling to respond to rapid changes in the political landscape as voters’ disaffection expresses itself in lower turnouts or rising support for previously peripheral movements.1 The unexpected triumphs in 2016 for the Brexit campaign in the United Kingdom and President-elect Donald Trump’s campaign in the United States are the most high profile indicators of a febrile political environment.
But is democracy itself in crisis? Some point out that voters punishing politicians who have failed to represent them adequately is one of the essential virtues of the democratic process. Others argue that the current crisis in mainstream politics goes deeper, fundamentally threatening how politics works. This chapter considers three related reasons to be concerned about the future of democracy: the impacts of rapid economic and technological change; the deepening of social and cultural polarization; and the emergence of “post-truth” political debate.
The chapter then looks at three challenges Western policy-makers will have to try to resolve if they are to tackle these issues successfully: how to make economic growth more inclusive; how to deliver the change voters want while maintaining continuity in systems of government; and how to reconcile growing identity nationalism with diverse societies. The chapter concludes that restoring the health of democracy may prove challenging, but some potential ways forward can be identified.
Rising Support for Anti-Establishment Parties
The recent increase in support and influence enjoyed by anti-establishment, populist political parties and movements in many Western countries is the continuation of a trend with long roots.2 Anti-establishment populism expresses itself differently in different countries: there are left-wing and right-wing strands, and domestic factors are significant. But there are also common themes: appeals to national sovereignty and criticism that elites have failed to protect electorates from the negative impacts of globalization are threads that run through both left- and right-wing strands. In many cases, there are also appeals to the rights of native citizens, as opposed to immigrants, and the importance of restoring “traditional” values and hierarchies.
The political impact of anti-establishment sentiment has already been dramatic. Most notably, the cluster of anti-elitism, cultural nativism and economic nationalism formed important parts of the winning 2016 campaigns in the United Kingdom (UK) referendum on European Union (EU) membership and both the United States (US) Republican primary and the subsequent presidential election. This cluster has resonated particularly strongly in Europe, where Eurozone and EU problems provide fertile ground for populists calling for a return to national sovereignty. Support for far-right parties has increased in Europe’s four largest countries – Germany, the United Kingdom, France and Italy – as well as others, including Austria, Belgium, Denmark, Greece, Hungary, the Netherlands, Poland, Sweden, and Switzerland.3
Anti-establishment politicians have not yet won many elections in Europe. Nonetheless, in many countries these movements have already succeeded in shifting the political centre of gravity, forcing mainstream parties to adopt elements of their policy platforms. In some countries – such as Spain and Ireland – they have contributed to a fragmentation of parliamentary forces that has complicated the process of forming stable governments and implementing effective policies. There is even some contested evidence that young people, in particular, are becoming willing to entertain the idea that democracy itself is failing to deliver and to consider non-democratic alternatives.4
Three Trends Undermining Democracy
Numerous factors have been suggested as playing a role in weakening democratic legitimacy and effectiveness. While all related, they can be grouped under three main headings.
1. Rapid economic and technological change
Statistics show clearly that globalization and trade have created growth, promoted competitiveness and efficiency,5 cut poverty and global inequality, and narrowed the gap between emerging economies and the rich world. Overall, global prosperity is at its highest point in a decade.6 But globalization and trade feature prominently in anti-establishment sentiment in Western democracies because the benefits of growth have been unequally experienced.
Evidence compiled by economist Branko Milanovic shows that those people between the 75th and 90th percentiles of the global income distribution have been the non-winners from globalization.7 Meanwhile, the richest have made the biggest gains, especially since the global financial crisis: in the United States, between 2009 and 2012, the incomes of the top 1% grew by more than 31%, compared with less than 0.5% for the remaining 99% of the population (Figure 2.1.1).8 Middle-class income stagnation is particularly affecting youth: recent research shows that 540 million young people across 25 advanced economies face the prospect of growing up to be poorer than their parents.9
Alongside globalization, technological change has dramatically affected many people’s sense of economic security. Traditional manufacturing hubs in advanced economies have been hollowed out by a combination of labour-saving technology and outsourcing.10 Technology has historically been a net creator of jobs, but new jobs do not necessarily materialize quickly or in the same locations as jobs that have been displaced: economist Diane Coyle has argued that one of the drivers of current political disaffection in post-industrial regions is that job losses have eroded whole communities.11
2. Deepening social and cultural polarization
Issues related to national identity, cultural values and ethnic origins have been prominent in the rise of anti-establishment populism. Even in the Nordic countries – affluent, post-industrial knowledge societies, with comparatively homogenous populations and generous welfare models – there is evidence of a backlash against “progressive” changes in social values such as acceptance of same-sex marriage, gender identity and secularism.12 With the rapid spread of more cosmopolitan and egalitarian attitudes, especially among young people and the educated middle class, those who are older and less educated may feel left behind.13
Immigration has proven to be an extremely successful policy issue for anti-establishment populists, providing a common thread for their electoral advances across different countries.14 However, the links between immigration and populist voting are not straightforward: in the United Kingdom’s vote on EU membership, for instance, areas with more immigrants were more likely to support remaining in the European Union.15 One possible explanation is that what matters to the voters is not so much absolute levels of immigration but rates of change.16 Another is that voters are focusing on immigration policy for a complex range of reasons: to bolster national sovereignty in a globalized world;17 to reject the deep cultural changes of recent decades; or to express anger at mainstream politicians for breaking clear promises.18
3. Post-truth political debate
The cultural polarization of democratic societies has been exacerbated by profound changes in the way news and information is produced, distributed and shared (Box 2.1.1). The aftermath of the US presidential election featured a prominent debate about “fake news”.19 The Oxford English Dictionary chose as its word of the year “post-truth”, defined as “denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief”.20
Free speech and the lively contest of ideas are a fundamental part of the democratic process, but they depend on all participants accepting each other’s good faith and a shared set of underlying facts. Historically, relatively small numbers of media outlets provided a widely trusted common foundation for national debates. Increasingly, however, the media landscape is characterized by fragmentation, antagonism and mistrust, with individuals tending to segregate themselves according to their values and beliefs. Online “echo chambers” reinforce rather than challenge people’s existing biases, making it easier for misinformation to spread.21
Companies that run social media platforms face a commercial incentive to ensure that their users are presented with content with which they are more likely to engage – which, in political terms, implies presenting content with which they are likely to agree.22 If the resulting emergence of self-reinforcing communities of like-minded people undermines the health of democracy, it raises serious questions related to market capitalism reform, an issue discussed in Part 1 of this Report.
Box 2.1.1: Social Media and the Distortion of Information
by Walter Quattrociocchi, Northeastern University
Social media can liberate, inform, engage, mobilize, and encourage innovation and democracy. However, social media has also changed the way we get informed and form our opinions, with troubling results. According to one recent estimate,1-a approximately 63% of users acquire their news from social media. But news sourced in this way is subject to the same dynamics as other forms of online content, such as selfies and cat photos. It is the most popular content that spreads, regardless of its factual accuracy.
As a result of disintermediated access to information and algorithms used in content promotion, communication has become increasingly personalized, both in the way messages are framed and how they are shared across social networks. Recent studies show that, online, we seek information that supports existing viewpoints and predominantly engage with communities of like-minded people, leading to the problem of confirmation bias.2-a
Online discussion negatively influences users’ emotions and intensifies polarization,3-a creating “echo chambers” – closed, mostly non-interacting communities with different narratives, where beliefs become amplified or reinforced. With users on social media aiming to maximize the number of likes, information is frequently oversimplified. The combination of simplification and segregation provides a fertile environment for the diffusion and persistence of unsubstantiated rumours.4-a
Misinformation has always represented a political, social and economic risk. Social media’s power to misinform, manipulate and distort public opinion has become severe. Experimental evidence shows that confirmatory information is accepted even if it contains deliberately false claims, while dissenting information is mainly ignored or might even increase group polarization.5-a
This evidence suggests a real possibility that public opinion can be intentionally distorted by exploiting information overload and confirmation bias, with significant political, social and economic consequences. Strategies for mitigation remain uncertain.6-a Google has proposed trying to correct false claims by marking information as fact-checked; but confirmation bias might simply result in the claim of fact-checking being discounted. The problem behind misinformation is polarization – hence, we need to create synergies among institutions, scholars and communicators to reframe and smooth contrast in the information system.
Three Strategies to Improve Democracy
There is no consensus on what needs to be done to strengthen democratic processes, but three dilemmas can be identified as particularly significant.
1. Generating more inclusive growth
The availability of good, well-paying jobs is critical to persuading people that the economic system works for them. Evidence shows that there is no trade-off in principle between promoting social inclusion and competitiveness: growth and equity can go together.23 Governments can, in theory, deploy various tools, policies and institutions to make growth more inclusive. However, in practice, the current environment presents some serious challenges.
Technological change is diminishing the contribution of labour to GDP growth, as machines become more able to do a wider range of work. One study predicts that 47% of US jobs are at risk of automation,24 affecting over 80% of low-income workers.25 New technology has also historically increased labour productivity and created new and better jobs – but as machines become better at cognitive as well as physical tasks, there is significant uncertainty about the future of job creation.
Technology is also contributing to the changing nature of work, with secure and predictable jobs giving way to more sporadic, short-term self-employment.26 Research suggests that the number of people in “alternative work arrangements” increased faster than overall employment between 2005 and 2015.27 The rise of the “gig economy” threatens the stability of income people need to plan long-term investments such as home ownership and savings for old age. As discussed in Chapter 2.3, it also undermines social insurance schemes that are commonly linked to formal employment.
Populist movements tend to focus blame for job losses on globalization rather than technology, but evidence points to technology being much the bigger factor. As shown by Figure 2.1.2, manufacturing in the United States has not decreased: the country is producing as much as it ever has, only with fewer workers. In the United Kingdom, the share of manufacturing in the economy has decreased – but the manufacturing that remains is higher value,28 and cross-border services have massively expanded in parallel. Less openness is presented as a simple solution, but it would likely create more problems than it solves: trade barriers intended to protect local workers could, for example, cause job losses by increasing the cost of inputs for high value added companies.
Rather than seeking to reduce globalized trade flows, governments will ultimately need to work out a viable political offer for those negatively impacted. How best to support displaced workers is a complex problem that requires political will to tackle.29 In particular, an overhaul of labour regulations and employment contracts is likely to be needed to prevent gig economy workers from being left out of existing welfare schemes, and to ensure that governments continue to receive the contributions they need to maintain them.30
2. Maintaining continuity in government while accelerating change
The economic policies of historically mainstream political parties from the left and the right have converged in recent
decades.31 This has enabled once-fringe movements to rise by portraying the established parties as part of the same technocratic political class, focused on self-enrichment while the institutions of government are allowed to fail. Populist movements call for bold, dramatic action; when moderates point to public debt and overstretched monetary policy as constraining room for manoeuvre, they can be portrayed as patronizing.
Rebuilding public trust in the political process and in leaders will be a difficult task. This work needs to start with the recognition that some valid concerns underlie the rise of anti-establishment sentiment. For example, studies have shown that the preferences of constituents in the lowest third of income groups are not reflected in the votes of their representatives, which are instead overwhelmingly skewed toward the wealthy.32 Other studies demonstrate the extent to which the “revolving door” between government and business drives growing
The challenge is to deliver the short-term change voters demand, while also reforming institutions in a way that maintains the continuity of government and established checks and balances. Arguably, the US election result demonstrated a paradox: voters who responded to candidate Donald Trump’s “drain the swamp” message often also expressed reservations about his personal suitability for the presidency, implying that they trusted the existing system to be robust enough protect them from potential excesses even as they voted to shake that system up.34 Finding the right balance between change and continuity will not be easy.
An increasingly common response to popular disaffection with the political process has been for elected representatives to defer to referendums: the UK vote on EU exit was one of a spate of plebiscites in 2016. However, these are an imperfect solution. Representative democracies have typically evolved mechanisms to protect the rights of minorities from crude majoritarianism, and increased use of direct democracy may upset the balance. Countries that lack a historical tradition of direct democracy may also be more likely to struggle with the question of who should be held accountable for implementing the results of popular votes.
Moreover, boiling down complex issues to binary questions is an imperfect substitute for genuinely listening to the nuanced concerns of the electorate. One potential solution could be to make better use of technology in the process of government – not only to deliver services in a faster, more transparent, inclusive and consumer-oriented way, but also to establish a “digital public square” with more direct communication between leaders and people.35
3. Reconciling identity nationalism and multiculturalism
Ongoing humanitarian challenges will continue to create flows of people – and in countries where fertility rates are declining and numbers of pensioners are growing, immigration will be needed to bring in new workers. However, as with globalization, the overall economic benefits brought by immigration are not felt by all sections of society. And immigration creates cultural tensions: there is a need to allow space for religious tolerance without opening the door to extremism, and a need to encourage the diversity that brings innovation without fostering resentment.
In Western democracies, political parties are the traditional mechanism for resolving competing interests,36 but the rise of identity nationalism has exposed splits in society that cannot be mapped against existing party structures. This raises the need to find new ways to reconcile differences in opinion about immigration, encouraging assimilation while avoiding the risk of majorities – which represent the prevailing culture – flexing their muscles in a dangerously destabilising way.
Leaders will need to face up to a debate over how to allocate economic and residential entitlements to economic migrants and refugees. Some countries may want to link these entitlements to cultural assimilation or work, treating native populations and migrants unequally: the latter have to earn the rights that are fundamental to the native population’s citizenship. Other countries – this was an important driver of the United Kingdom’s Brexit vote – may choose to loosen their international economic ties in order to slow the pace of immigration.
To some extent, the cultural challenges associated with immigration could be tackled by getting better at communicating change:37 data show that voters will change their views on cultural changes in society if politicians highlight the assimilation already taking place.38
There is room for debate about the extent to which the rise of anti-establishment sentiment in Western democracies reflects a threat to the democratic process itself. Nonetheless, there are clear reasons to worry about the health of democracy, and challenges related to cultural polarization and economic dislocation have no straightforward answers. This could be a pivotal moment in political history, and it requires courageous new thinking about how best to manage the relationship between citizens and their elected representatives.
Chapter 2.1 was contributed by Stefan Hall, World Economic Forum, and Ngaire Woods, Blavatnik School of Government, University of Oxford.
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