The Swedes Tried to Warn Us
Sweden’s leaders were sending us a message.
The members of the Royal Swedish Academy of Sciences who confer the Nobel Prize in Economics often use the award to focus global attention on something they think neglected. Earlier this autumn, the Committee awarded Daron Acemoglu, Simon Johnson, and James A. Robinson the Nobel Prize in Economics for their work, underscoring that countries and democracies with severe economic inequities undermine citizen confidence. When the economies of democratic nations stop working for the public, they often turn to leaders willing to overthrow the institutions that undergird the system.
In their seminal work, Why Nations Fail, Acemoglu and Robinson demonstrate that well-functioning political institutions that deliver shared economic growth were the prime determinants of national economic prosperity. Such “inclusive institutions” include “representative legislatures, good public schools, open markets, and strong patent systems—inclusive institutions (that function to) educate their populations. Invest in infrastructure. Fight poverty and disease. Encourage innovation,“ notes NPR’s Greg Rosalsky of Planet Money.
A decade ago, when they wrote Why Nations Fail, the authors celebrated America—despite our misdeeds—as a success: “a place with free and fair elections and world-renowned universities; a haven for immigrants, new ideas and new business models; and a country responsive to social movements for greater equality. Lucky for America—and its economy—its inclusive institutions have had a helluva run.”
But the message sent by voters on Election Day is that our institutions aren’t working. When citizens feel the “system” isn’t working, they welcome someone who will throw over it.
These economists (and the Swedes trying to get our attention with their Nobel Prize award) saw this coming.
NPR’s Rosalky reported they told him as much months ago:
Acemoglu and Robinson see the rising tide against liberal democracy in America as a reaction to our political failure to deal with festering economic problems. In their view, our institutions have become less inclusive, and our economic growth now benefits a smaller fraction of the population. Some of the best economic research over the last few decades confirms this. Wage growth for most has stagnated. Social mobility has plummeted. Our labor market has been split into two: the college-educated thrive, and those without a degree watch their opportunities shrivel. Automation and trade with China destroyed millions of jobs that once gave them good wages and dignity.
These conditions have been building. When asked years ago to explain anti-democratic act-outs like the January 6th, Acemoglu said: “I don’t think January 6th was a singular day of failure. What surprises me is why it took until January 6th.”
Similar conditions and working-class voter frustrations are boiling over in democracies worldwide. As I wrote earlier this year—2024 is the so-called “Year of the Elections,” with democracy on the ballot in over 70 countries–we have seen a variety of outcomes. However, the results have one thing in common: they are essentially a response to untreated economic inequalities—fundamental gaps in opportunity within countries that are often still growing. Economic unease and anger at a system that doesn’t deliver cause voters to push back against those in power—even being willing to support anti-democratic extremists. The support for right-wing ethnonationalist leaders and their policies is robust in regions within democracies that once boasted a solid middle class and vibrant communities but now see relative decay and decline—like much of Michigan, Wisconsin, and Pennsylvania.
Trump’s victory points to this working-class backlash as anxious voters sent a message that cuts across ethnic and racial lines. Even before Election Day, Jack Herrera noted for Politico:
Trump made gains with Latinos for the same reason he performed so well with white voters in factory towns across Pennsylvania in 2016: economic anxiety. The real estate billionaire can galvanize working-class resentment in a way few other politicians can. Almost 80 percent of Latinos are working class, and many of them are proving amenable to Trump’s core populist messages: that they’ve been cut in line by undocumented immigrants and that Democrats are out-of-touch elites who send jobs overseas
The irony (and tragedy) of the election is that the Biden-Harris administration was doing the things that, over time, might change the dynamics. Anxious working-class voters blamed Biden-Harris for high inflation, which is political Kryptonite for incumbents. (Higher prices were not caused by the Biden-Harris policies but by the pandemic, which led to a worldwide price surge.)
The Biden-Harris administration’s policies have been part of a remarkable convergence of work across our democracies to close yawning economic inequities within countries—including through their largest in U.S. history investments in heartland region infrastructure, science, and innovation, education (the very ingredients the Nobel winners say are essential for shared prosperity and faith in democracy!).
Trump may try to walk it all back. Let’s hope not.
His victory underscores that bringing opportunities to people and places that aren’t lacking them remains urgent work. Populations whipsawed by change will continue to support populists and nationalists who offer protection from disorienting dynamics.
We may have finally heard what the Swedes were trying to tell us.
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