{"id":"5f6905f26cee070006a72ce2","slug":"angrynomics-en","title":"Angrynomics","audio_url":"https://hls.blinkist.io/bibs/5f6905f26cee070006a72ce2/5f6905f26cee070006a72ce4-T1600718615.m4a?Expires=1653441857&Signature=QtMNb8bsbmf4qGO72GD0YW06JkYoWCcVE6W90rhy9ZGNMOPUwcFauFvQ7GvNx56qJqVKY8B0o64WjuJvMM5ylbrLqdtwvc-JwX~Hmu0MUEXwFUIB6TsbtFKwgSTWRgILefik5Nu4ms-26oLByLXm4eAJxkHl~FhJYsNheSn0T5ntwMcwtsvYZkm6P6fmnKJY6NoUgsMn3e1C9Uy5aVKDNvzEcnjqaQ4Ka4zomLUSzjCfZDJiwolBjE~QdtZ97BNLoF-YEeOUwOzhiVwxkxZNtTQnLehkd-GjQWAFrV2goVfNPgW3nI03nRD51njgKGFrhw141gGt2aFbVYAji3OSoQ__&Key-Pair-Id=APKAJXJM6BB7FFZXUB4A","chapters":[{"id":"5f6905f26cee070006a72ce4","title":"Anger can actually help societies succeed – but only when it’s justified.","text":"

Northern Ireland, 1980. The population is divided between those seeking reunification with Ireland and those loyal to Britain. Unfortunately, over the next decade, thousands are killed and wounded because of the conflict.

Iceland, 2017. The “Panama Papers” leak reveals that top government officials operate offshore tax havens. Reykjavik is flooded with protesters. They don’t leave until the government collapses.

Philadelphia, 2018. The Eagles win the Super Bowl. In the hours after the game, fans riot and tear up large parts of the city.

These seem like disparate actions, but they’re not. The uniting element is anger. This fiery emotion is a key driver of contemporary events. However, all anger isn’t the same. Indignation can work to rectify injustice, but it can also be used to discriminate and divide.

The key message here is: Anger can actually help societies succeed – but only when it’s justified.

Anger is an inherent part of society. Despite its bad reputation, it often serves a useful purpose. You see, anger reinforces the social norms we establish to protect the collective good. If an individual violates a norm by, say, cheating or stealing, they will be met with the collective ire of their peers.

This form of collective anger can be called “moral outrage.” Fear of this fury is great for preventing people from acting selfishly; it can also fuel the fire needed to fix injustices. This was the case in Iceland. When citizens found out that politicians had been secretly shirking their duties, their moral outrage toppled the administration in favor of a more fair government. This is justified anger – that is, anger directed at the roots of actual injustice.

However, there is another form of collective anger that presents itself as tribalism. This anger encourages people to adhere to an identity group and aggressively attack those perceived as outsiders. It’s a collective response to stress, fear, and uncertainty. In modern politics, this tribalism often takes the form of nationalism. As we’re witnessing today, appealing to nationalism can be a very effective way to motivate voters without having to address any actual policy problems.

Just look around the globe for examples. Politicians like Narendra Modi in India, Viktor Orbán in Hungary, and Donald Trump in the United States have all used this type of anger to build political support. Specifically, Trump took the dissatisfaction felt by Americans in economically depressed regions of the country and transformed it into tribal anger against immigrants. It was effective in getting elected, but it didn’t solve any problems.

So, what are some legitimate sources of anger in today’s world? We’ll look at that question in the next blink.

"},{"id":"5f6905f36cee070006a72ce5","title":"Public anger is fueled by economic insecurity and unresponsive politicians.","text":"

Imagine it’s 2005. There’s a young couple happily living in Spain. They’ve both got stable public sector jobs and a modest financial cushion from years of careful saving. When it comes time to buy a house, the bank offers them a hefty loan to enter the booming property market.

Then, a few years later, disaster strikes.

The market crashes. First, the expensive house collapses in value. Then, the government cuts one partner’s salary and fires the other. Now, the bank is foreclosing the home. Politicians offer no help, but they do bail out some big corporations.

After all this, is the young couple angry? Probably. They did nothing wrong, and yet no one seems to care about their plight. This hypothetical couple is not alone in their outrage.

The key message here is: Public anger is fueled by economic insecurity and unresponsive politicians.

In the wake of the 2008 financial crisis – and the subsequent Eurozone crisis a few years later – this imaginary Spanish couple’s tragedy was a reality for millions of people in the United States and Europe. Worse still, these two financial shocks were just the latest bumps in a decades-long process that restructured the planet’s political and economic landscape. The outcome of this process is a world where many people feel justified anger at the system for failing to live up to its promise.

One cause of this outrage is mounting economic inequality. Since the 1970s, most major countries have adopted neoliberal economic policies that cut taxes, reduce social spending, and, in general, prop up markets as central forces in society. The outcome is the rich getting richer and the poor getting poorer. In fact, globally, the richest 1 percent have taken home 90 percent of income gains since 2012.

This upward distribution of wealth leaves many people working more and earning less. In the US, the real median income hasn’t grown for three decades. This slump means most people have seen very little improvement in their standard of living. And, of course, for those living in stagnating small towns, this real financial hardship is made worse by seeing the comparative success of richer people in big cities.

Compounding this problem are the inadequate responses from political institutions. Since the end of the Cold War, dominant political parties in most democracies have shifted to the right. Rather than offering real policy solutions, leaders resort to blaming these problems on vague forces like “globalization” or, worse, turn to nationalism.

As a result, many people with real grievances feel no one in government addresses their concerns. They’re left feeling angry.

"},{"id":"5f6905f36cee070006a72ce6","title":"To avoid outrage, contemporary capitalism needs to be redesigned.","text":"

Let’s start with a crude analogy: capitalism is like your computer. And, like your computer, it relies on hardware and software to work properly.

Capitalism’s hardware – the CPU, video card, and memory chips – are society's institutions, like the banks, stock market, or government. The software – the programming that tells everything how to interact – is a society’s ideology, like free market liberalism or social democracy.

Now, just like a computer, you can design a capitalist society with all different combinations of hardware and software. Some arrangements work well and are relatively stable. Others don’t work so well. Over time, the software will generate bugs, the hardware will overheat, and the whole system will crash.

And those crashes make people very, very angry.

The key message here is: To avoid outrage, contemporary capitalism needs to be redesigned.

Since the mid 1800s, there have been three major versions of the capitalism machine. Each has operated for a few decades before running into problems and requiring a reboot. The first iteration ran software that said markets were always right, and the hardware of a state should never interfere with them. This chugged along until it began producing widespread poverty and unemployment. This glitch caused a crash we call the Great Depression and helped ignite World War II.

So, after 1945, we rebooted a fresh, new capitalism machine. This version ran different software based on Keynesian economic models. It gave more power to hardware, like labor unions and the state, and less power to investors and markets. This configuration generated widespread economic growth and a strong middle class. But it also had a bug: it produced lots of inflation and disappointing low returns on investments.

In the 1970s and 1980s, things were once again redesigned and rebooted. This time, the software is called neoliberalism. Its hardware updates include weaker labor unions, unfettered free trade, and governments that once again defer to the market. The bugs in this version produce high inequality and banks that overlend and inevitably collapse. This latest version of capitalism crashed once already, in the financial crisis of 2008.

However, unlike with previous crashes, this time we didn’t update the machine. Instead, those in power simply made a few tweaks and pressed restart. Everything is operating again, but the same bugs are going to produce the same problems – only worse.

Based on what we’ve discussed already, the results will be predictable: more angry people. We’ll take a closer look at why in the next blink.

"},{"id":"5f6905f36cee070006a72ce7","title":"Economic forces drive anger by making our lives more stressful.","text":"

Wow, what a terrible day! First, your car breaks down and you don’t know how you’re going to afford repairs. Then, your boss demands you learn a new technical system to keep the company competitive. Finally, on the way home, you notice your regular grocery shop has closed. In its place is a market catering to the neighborhood’s new immigrant population.

With all this change, it’s hard to say what life will be like in a year – or even a week. The truth is, our daily lives have become less stable and the future more uncertain. Some drivers of this change, like job insecurity, are very real. Others, like the threat posed by immigration, are exaggerated.

However, in either case, all the uncertainty is stressful, tiring, and aggravating.

The key message here is: Economic forces drive anger by making our lives more stressful.

So, which economic processes are causing stress for everyday people? Well, the reasons are innumerable and interconnected, but we can narrow down the drivers of modern anxiety to four main trends.

First is the rapidly evolving market. Industrial deregulation and technological change make the economy very competitive. Companies must constantly innovate to stay afloat. As a result, workers are always asked to adapt and accommodate. If you’ve ever had to put in extra hours at work or cultivate new skills for your résumé, you know how stressful the extra pressure can be.

The second stressor is the specter of having your job automated away. While there’s little conclusive evidence that impending innovations in Artificial Intelligence will eliminate a significant swath of jobs, the perceived possibility is still stressful. With companies eager to adopt any cost-saving measure, it’s difficult for workers in many industries to feel secure in the long run.

The third stressor is the economy’s orientation toward the older generation. Boomers – the generation that grew up in the post-war economy – enjoyed many social programs, like cheap college and a strong labor market. Thus, they accumulated loads of wealth and its accompanying political clout. Today’s younger cohort lacks these opportunities and faces a steeper slope to attaining that security.

The fourth stressor is the imagined competition posed by immigration. Upper-class urban elites enjoy the cosmopolitanism of diverse communities. However, people living in places in relative decline see newcomers as the cause of their problems. While evidence shows that immigrants actually strengthen economies, opportunistic politicians nonetheless stigmatize these populations as drains on already-stressed social programs.

All these trends collude to create an atmosphere where no one feels secure about their economic future.

"},{"id":"5f6905f36cee070006a72ce8","title":"We can rearrange our economies to produce more equality and less anger.","text":"

Turn on the news, and what do you see? Footage of protests in Europe. Sad stories about bankrupted grandparents in the US. Maybe a few stories about the ceaseless acceleration of global warming. It seems like this version of capitalism is leading the whole world toward an angry end.

Clearly, it’s time for a reboot. But what does a new system look like?

It might be a bit hasty to scrap the whole thing. After all, there are some recent success stories out there. Canada and Australia have managed to rein in their banks and create positive outcomes like real wage growth. Maybe, when it comes to designing our updated economy, it's easier to keep the parts that work and fix the faults that don’t.

The key message here is: We can rearrange our economies to produce more equality and less anger.

So, what are the upsides of our current version of capitalism? To start, in most countries, it’s delivered a long period of high employment rates. Moreover, it’s done this without generating any inflation. When updating our society’s hardware and software, we want to keep these outcomes while eliminating the major downsides – specifically, inequality and instability.

To tackle inequality, we need to provide the bottom 80 percent with more wealth and assets. And to do this, countries can take advantage of historically low interest rates to set up a National Wealth Fund. Essentially, a government can borrow money by selling bonds, then invest that capital in a diverse mutual fund. Every few years, the 4 to 6 percent returns will be distributed to citizens to spend on housing, education, and healthcare.

Similar systems are already set up in places like Norway, Singapore, and the Gulf States, which leads us to another possible avenue for reform.

While supranational entities like the EU are valuable for international coordination, they can be less responsive to regional needs and leave people feeling voiceless. Instead, countries and regions should be free to experiment more with novel policies. This would allow them to tailor solutions directly to their population’s needs while testing out new ideas.

There are many other concepts worth trying out, too. Countries could redistribute wealth by making big tech firms pay licenses to use public data. Or, central banks could give preferential interest rates to businesses investing in decarbonization.

The overall goal is to find solutions that curb the economic trends which feed public outrage and private stress. If those in charge work on implementing policies that serve a greater number of people, we can calm anger before it leads us all down a dangerous path.

"},{"id":"5f6905f36cee070006a72ce9","title":"Final summary","text":"

The key message in these blinks is:

In many countries, the economy is booming. However, the benefits of our contemporary version of capitalism are not evenly distributed. Huge swaths of people are financially insecure and face an uncertain future. Worse still, those at the top seem uninterested in addressing the majority’s legitimate outrage. In order to avoid the anger that feeds dangerous tribalism – such as racism and nationalism – we need to build more equitable economies using new tools, like national wealth funds and regional autonomy.

Actionable advice:

Fix recessions with direct support for consumption.

During the last recession, central banks propped up the market with giant bailouts for corporations. This felt like an outrageous injustice to lots of people. A better strategy would be to directly transfer wealth to citizens. This would be more effective in keeping the economy going – and, crucially, it would accomplish this without appearing unfair.

Got feedback?

We’d love to hear what you think about our content! Just drop an email to remember@blinkist.com with Angrynomics as the subject line and share your thoughts!

What to read next: The Future of Capitalism, by Paul Collier

You just got a quick crash course in how capitalism generates outrage and anger – and what we can do to stop it. Next, continue learning about our economic system with The Future of Capitalism.

These blinks present an astute and pragmatic look at possible ways to rearrange our economy. Part memoir, part manifest, this treatise attempts to find a way forward that’s more equitable, fair, and sustainable.

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