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Davos: The Elite in search of a Middle-Class

The loss of middle-class trust in elites and in their political leadership is being identified everywhere as the cause for the success of populists.
Davos

At the World Economic Forum in Davos, power wielders from the fields of high Finance, economics, and politics broached the subject of the neglect of the people, and wrestled with formulas against the economic crisis and the rise of populists.

“There remains a shortage of hope, maintained IMF Chief, Christine Lagarde at the discussion yesterday”.

Managers and politicians in Davos concerned themselves with the political developments of the past year. They rubbed their eyes, above all else because of the election of Donald Trump as US president and Brexit in Great Britain.

The fear of further increase in the power of populists and the rejection of elites assembled at Davos remained a major concern of those assembled at Davos.

Ray Dalio, founder of the world’s largest Hedgefund, Bridgewater, brought the growing general feeling of the population so on the point. “It is about being at the end of one’s tether with elites and the manner in which things are governed. It is an attitude against everything which Davos stands for”.

Dalio said this at the event entitled “Under pressure and enraged: how do we gain a grip over this crisis of the middle-class”.

The loss of middle-class trust in elites and in their political leadership is being identified everywhere as the cause for the success of populists.

Christine Largarde, Chairperson of the International Monetary Fund (IMF) stated that the global share of the middle-class had, in fact, doubled in the past 40 years.

This was, primarily, the result economic development in emerging nations. In rich nations and above all in the USA, the proportion of the population classified as middle-class had shrunk significantly over the same period.

“Where globalisation ends”

According to Christine Lagarde, however, the roots of middle-class anxiety and frustration lay in relative economic decline. There is, above all, a “shortage of hope, a shortage of trust, and unease over the principals and visions that people had maintained for their future”.

On that point Ray Dalio indicated a pessimism with regard to further global political developments, “We are going to see more protectionism and regressive measures against free movement which existed since the 1980s. We are at the point where globalisation ends.”

A great part of middle-class frustration is also something that Italy’s Finance Minister Pier Carlo Padoan has observed. “The people are disappointed and disillusioned about their future and the futures of their children.

They worry themselves regarding the sustainability of their social welfare systems and remain fearful of no longer having the ability to say ‘no’ to that which the political elite wants”, said the economist.

He finds [Pier Carlo Padoan] scarcely any wonder that populist parties are increasing, as they register themselves committed to that ‘no’ [to powerful elites].

The problem with this ‘no’ brand of politics, however, is that one cannot achieve political outcomes which ensure the greater good for the people.

In actual fact, populist parties hurt, above all, those groups whom they purport to supposedly want to represent, said Larry Summers, once Finance Minister under Bill Clinton and an Economic Advisory to Barack Obama.

For instance, Larry Summers highlighted Trump’s pressure on firms to maintain production in the USA and not establish plants in Mexico, in order to save US jobs.

Due to Trump’s pressure on Mexico, the country’s currency the Peso collapsed. This makes Mexican products even more competitive, and many more jobs in the USA were endangered as a consequence.

Perceived Disinterest

Larry Summers also linked the rise of populists on the one hand with the relative economic disadvantage of the middle-classes.

On the other hand, there remains a sense that established political leaders and elites remain indifferent to the problems of the middle-class. “The middle-class always had the impression that the government looks out for everyone just not for them: for poor nations, for immigrants, for the weak and the minorities. Even when these are legitimate issues, the middle-class feels passed over.”

Many participants in the discussion rounds perceived the populists would address points that politics and the elites had until now paid too little attention to.

This perspective was represented at another event entitled Strengthening Democracy by Doris Leuthard [Christian Democratic Party], the President of Switzerland.[1]

Her points were supported in this discussion by Princeton professor and political scientist, Jan-Werner Mueller.

The Swiss political system is founded on permanent participation, which integrates the people into democratic political discourse. This enables a self-correcting mechanism built into the process of political decision-making.

[1] The Swiss President is merely a figurehead who holds office for one year before passing the post onto another cabinet colleague. The Swiss cabinet (Bundesrat or Federal Council) is directly elected by parliament [Emphasis added by translator].

Disclaimer: The views expressed here are the author's personal views, and do not necessarily represent the views of Newsclick.

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