We are not Chinese. Maybe even the Chinese will not remain content to hand responsibility for public affairs to a self-selecting elite. In the west, however, the idea of citizenship — that the public realm is the property of all — is not only of ancient standing; it has also been the object of an ultimately successful struggle in recent centuries. An essential attribute of the good life is that people enjoy not just a range of personal freedoms, but a voice in public affairs.
The outcome of individual economic freedom can be great inequality, which hollows out realistic notions of democracy. The governance of complex modern societies requires technical knowledge — and we already face the danger that the gulf between economic and technocratic elites on the one hand, and the mass of the people on the other, becomes too vast to be bridged. At the limit, trust might break down altogether. Thereupon, the electorate will turn to outsiders to clean up the system. We are seeing such a shift towards trust in outsiders not only in the US but also in many European countries.
A complacent view is that the disaffected may let off steam but the centre will hold. This is quite possible. But it is a risky strategy. If the disaffection grew worse, the centre might not hold. Even if it did, a democratic society in which a large minority is disaffected while a majority is full of distrust would not be a happy one. Yet such a gap has emerged between the attitudes of informed elites towards established institutions and those of the wider public.
As the US has developed a Latin American-style income distribution, its politics have grown infested with Latin American-style populists, of both the left and the right.
The financial sector needs to be curbed. It is ever clearer that the vast expansion of financial activity has not brought commensurate improvements in economic performance. But it has facilitated an immense transfer of wealth.
Taxation must be made fairer. Owners of capital, the most successful managers of capital and some dominant companies enjoy remarkably lightly taxed gains. It is not good enough for business leaders to insist that they are sticking to the law. This is not an adequate definition of ethical behaviour. This view is particularly disingenuous when commercial interests play such a powerful role in shaping those laws.
In addition, the doctrine of shareholder primacy needs to be challenged. Shareholders enjoy the great privilege of limited liability. With their risks capped, their control rights should be practically curbed in favour of those more exposed to the risks in the company, such as long-serving employees. And, finally, the role of money in politics needs to be securely contained.
Western polities are subject to increasing stresses. Large numbers of the people feel disrespected and dispossessed. This can no longer be ignored.
http://www.ft.com/cms/s/0/94176826-c8fc-11e5-be0b-b7ece4e953a0.html