A funeral for magical thinking

After Queen Elizabeth’s funeral, I promised myself not to write about Britain for a long time. Though I am native of those parts, my base is America, and has been for a long time. Yet Britain continues to be a world-leader in creating news, often dire. Moreover, what happens there is virally related to trends over here.

The entirely foreseeable calamity of Trussonomics — the new by-word, named after Liz Truss, for people who do not know what they are doing — finds strong echoes among American conservatives. Our politics have been plagued for years by the curse of magical thinking — promises that bear no relation to any realistic ability to deliver; extravagant lies that cater to some felt need for self-delusion; gullibility dressed up as hard-nosed “taking back control”.

Conservatism in the largest English-speaking democracies is locked in a race over which of them can find rock bottom more quickly. For the moment, the UK is in the lead. Apparently City traders have taken to calling sterling “shitcoin”, which says it all. I fear America’s Trump-contagion variety will have something to say about that in the coming months. My question to Swampians, which I will also try to answer, is whether our democracies can learn from the disastrous consequences of magical thinking. Or are we too screwed up as societies to regain that habit of pragmatism for which we were once fabled? Rana, it goes without saying that I am also posing this question to you.

It is impossible to answer it without examining how we reached this pretty pass. The conditions for Anglo-American populism were crystallised in the 2008 global financial crisis. It was really just a western meltdown (China and India kept growing and were relatively unscathed). In fact its main culprits were from the anglosphere. Nothing enrages people more than the wealthy and well-connected being bailed out while the rest are left to struggle.

As fate would have it, the job of cleaning the mess fell to centre-left governments on both sides of Atlantic — Gordon Brown’s Labour and Barack Obama’s young administration. The centre-left thus got branded with the recklessness that triggered the crisis and suffered most from its bad-tempered aftermath. One of the casualties of 2008 was “expertise” — the idea that people with degrees in economics or MBAs knew what they were doing. The Chicago School’s efficient market hypothesis has a lot to answer for.

In an accountable world, you would largely blame the right for the market fundamentalism that had become dominant since the 1980s. But it was the right that benefited politically from the 2008 fallout. The countercyclical stimulus that helped restart growth was delivered by the left. We then had six years of procyclical austerity from 2010 to 2016 in which the beleaguered middle classes bore the brunt of the fiscal tightening brought about by the Tea Party Republicans in the US, and David Cameron’s Conservative government in the UK. Again, it was the right that perversely reaped the gains from the rage and insecurity that resulted. But it was a different kind of right to what we grew up with. The twin shocks of Brexit and Trump’s election in 2016 were the high water mark of magical thinking. At least I hope they were.

Opinion polls in Britain show rising regret over Brexit — “regrexit”, as some call it. Of course, it’s too late to re-enter the European Union, and would be politically very hard to pull off. But it’s a sign that people are digesting lessons from that notorious referendum. Keir Starmer’s Labour party also has a 30-point lead over the Conservatives, which reinforces that point. That would never have happened under Jeremy Corbyn.

Perhaps we really are now at a low point in Britain’s misgovernance. I hope the same applies to America but would only give slightly than better than even odds of Biden beating Trump in a 2024 rematch. Should the latter return to power, or indeed one of his mimics, such as Ron DeSantis, America’s magical mystery rollercoaster would take another nosedive, possibly fatal.

The one clear plan that Trump has for a second term, which more assiduous types have been working on, is to give him the power to fire the federal bureaucracy and replace them with loyalists. That’s anti-expertise, anti-qualification politics on steroids. Rana, how should experts win back public trust? I thought the scientists behind the vaccine would be sufficient proof of concept but apparently not.

Join the FT on October 6 for the inaugural Investing in America Summit in conjunction with the launch of the FT-Nikkei Investing in America Rankings. We will discuss the proactive role that American states and cities are taking to attract international business and investment.

Recommended reading

• No Swamp Note about magical thinking could fail to mention Vladimir Putin. As I write in my column this week, western liberalism is still skating on thin ice. “If Russia’s ‘partial mobilisation’, and the west’s economic slowdown, fail to weaken Ukraine, Putin would be left with one silver bullet — Trump’s return to power in 2024.”

• While we’re on the subject, I strongly recommend my colleague Robert Shrimsley’s breaking of Britain’s vow of silence on Brexit to point to its originating role in today’s expensive pantomime — Brexit ideology lies behind UK market’s rout.

• In this context, it would also be remiss not to emphasise wealth inequality — something that Kwasi Kwarteng’s “mini” Budget has just made worse in Britain. Bad politics and bad economics: quite a combination. Do read the latest very stark Congressional Budget Office’s report on trends in the distribution of family wealth in the US between 1989 and 2019. It makes for sobering — and very relevant — reading. The bottom half of America accounts for just 2 per cent of the nation’s wealth. The richest 10 per cent had their share go up, and up, and up . . . 

Rana Foroohar responds

Ed, three words: truth and reconciliation. That’s the only way that either the US or the UK governing class can regain the trust of their populations.

I’ve written extensively about how I don’t think that we got a clear or honest narrative following the financial crises about what went wrong in Anglo-American capitalism (for more on that, see my first book). We have been reaping the political harvest of that ever since.

But I would go back even further, to the 1990s, and the shift in the labour parties of both countries away from working people and towards neoliberalism. That’s the topic of my upcoming book, Homecoming: The Path to Prosperity in a Post-Global World, which is out October 18 (sorry, shameless plug, but it’s totally relevant to your question). That failed political philosophy locked the left as well as the right into assumptions about trickle down “efficiency” theory, and unfettered globalisation itself, which ended up being both untrue and devastating to many in both countries.

So while I agree that both Trump and Truss are horrors, you’d have to go back to Bill Clinton and Tony Blair to understand the full story. I’ll be writing a lot about the book in the next few weeks (and have adapted it for an upcoming FT Weekend piece, as well as an FT film series) and talking about it with you, soon, at our Global Boardroom Summit.

Your feedback

And now a word from our Swampians . . .

In response to ‘A no good, very bad week for autocrats’:
“One can’t be blasé about nuclear threats but Putin is quite predictable and far less of the loose cannon he would have us believe. Saying ‘this is not a bluff’ is the surest sign that it is. Since February 24 he has been making threats, nuclear being one of his favourites, yet the west has backed Ukraine even more. Putin’s problem is that in the Siloviki gangster culture of the Kremlin, your violence is supposed to cow your opponent into submission. If the opponent hits back harder the only thing to do is to pretend that you are still a threat and hope for the best. If that fails the rest of the gang may decide to get rid of the ‘loser’. After all the KGB made sure it survived the fall of the USSR and engineered Putin’s rise: it surely plans to survive him.” — Simon Noble, Madrid, Spain