These days, members of the Sweden Democrats are discouraged from wearing Swastikas and Nazi uniforms. Call it progress. In elections over the weekend the anti-immigrant, neo-fascist party threw the country into turmoil, finishing a close third and gumming up any potential ruling coalition. It is unclear whether either of the traditional top-two parties can form a government that blocks the Sweden Democrats from power.
Here in the US, a narrative began to take shape last year to explain Trump’s narrow win. Supposedly, voting for Trump was a cry for help by a neglected class of blue-collar workers left behind by the prosperity of coastal elites. Trump-whisperers like Salena Zito and Chris Arnade built a brand traveling around interviewing “forgotten” Americans about their plight and carefully editing out much of what they heard. According to this narrative, all we needed to right the ship was a populist pivot, a Sanderseque platform of social programs to shore up the weakening social welfare state.
The problem with that assessment was the facts, a problem which the Nordic experience lays painfully bare. We went to the polls in ’16 amid a historic economic boom. By every objective measure, economic conditions were rapidly improving, even in most places Trump won. His supporters were disproportionately white, aging, and largely affluent, already the beneficiaries of the best that our social welfare system has to offer from Medicare to Social Security and beyond. Most importantly, his supporters were disproportionately racist and scared, the most decisive factor in his support.
Nordic countries have the most generous and efficient welfare states in the world, emblems of what social democracy can accomplish. A party of anti-Muslim “populists” holds the largest number of seats in Denmark’s governing coalition. Norway is governed by a similar far right party. Now Sweden will struggle to keep their fascists out of government. There is no “economic strain” that explains the rise of fascism in Scandinavia. These countries have been bounding along on a wave of growth and prosperity for many years. Their pivot toward the far right is driven by only one factor – fear of immigrants and the perceived decline of a unitary national identity. Their failure to contain xenophobia under the best conditions imaginable casts doubt on some of the fundamental assumptions underpinning liberal democracy itself.
As we consider options for protecting liberal democracy in a time of crisis, two problems loom. First we face a growing delta between what works and what’s popular. Second, and more troubling for a large, diverse nation like the US, is the simple challenge of complexity. The software necessary to run our political system requires a degree of expertise difficult to deliver in a liberal democracy. The Nordic experience undercuts our hope that social democracy might ease racist fears, and offers us nothing to manage the complexity of implementing such a system. A pivot toward social democracy might form a bridge to a post-Trump world, a rhetorical rally point to organize short-term resistance to fascism, but it is unlikely to offer any long term solution to the weaknesses eroding liberal democracy.
For two decades US teams struggled at the international math Olympiad. However, under a new American coach, Po-Shen Lo, the team has finished first in three of the last four years. Take a look at your all-American math team.
That winning team would not exist, and certainly wouldn’t be ours, without a nation built on immigration. Diversity works. Diversity is also unpopular. Human beings chafe under the demands of multiple languages, cultures, and styles of thought. They chafe more the lower their intelligence or education level. However, institutions that master the challenge of incorporating diversity produce measurably stronger outcomes compared to culturally monolithic institutions. This is merely one example of the challenges facing a political system built on popular will.
What works in the emerging economic order is decentralized decision-making, diversity of thought, trade, fast cycles of innovation and failure, and choices based on scientifically-derived data rather than human intellect, emotion or instinct.
What’s popular is a monolithic dominant culture, stability, restraints on trade to protect favored cultural interests, economic policies premised on perceived fairness rather than profit or success, and authoritarian politics. This list of popular policies was not far removed from optimal strategies in an industrial society. In a data-driven economy, these priorities are more than just sub-optimal, they can turn catastrophic.
Corporations, like Nike, have a decision-making structure that lets them make unpopular choices that deliver economically superior outcomes. Governments under democratic leadership find this more difficult. Nike’s public popularity fell by nearly half after debuting their Kaepernick ad. It doesn’t matter, because online profits surged by more than 30% at the same time. If you bought Nike’s stock on the Monday after the announcement, you would have earned a fast 3% on your money in just a week as the stock absorbed the bigot bounce.
People who make decisions at Nike aren’t influenced by polling. Their bonuses aren’t based on elections. Hostility from millions of semi-literate racists in one particular country has no influence on their choices. Votes that matter are cast in stores and online globally. Nike won the election that matters and looks set to keep on winning. Businesses enjoy an insulation from public will not available to governments in a liberal democracy.
Back in Scandinavia, the decision to accept a surge of migrants from the Middle East and Africa is often cast in humanitarian terms. That’s a dodge. Like all wealthy nations, the Nordic democracies face plummeting native-born population growth. In time, looming declines in overall human population are likely to have overall positive effects, but in the short term much of the infrastructure of social democracy is built on an assumption of population growth. Those Swedes wringing their hands over the shiftless immigrants “straining” the welfare state desperately need those immigrants to fund that welfare state. Kick them out, and the prosperity on which Swedes’ lifestyles depend goes with them. What’s popular, and what works, are often not the same thing.
As it becomes more difficult to persuade the bulk of the voting public to back policies that work, non-democratic institutions will grow more powerful. Rewards, in terms of money and power, will flow toward organizations with greater and greater insulation from public opinion. Those non-democratic institutions will also enjoy another advantage, access to computational platforms on which they offload decisions, free from the weight of democratic oversight.
Public institutions, outclassed on all sides, escape the constraints of their programming by shifting public power to a new kind of extra-governmental organization. Halliburton builds military bases. Aetna creates a health care system. A Google subsidiary, Sidewalk Labs, is designing data-centric urban spaces. Awkward new entities like Southwest Key Programs, neither a charity nor a business, emerge to deliver a modicum of public services where our public institutions fail. These private entities offer parallel processing refined by competition at a speed, agility, and cost that law-bound public institutions cannot match. What they don’t offer, is an interest in the public interest. These private entities will compete to supplement failing government services, but only where they can make a profit.
For those in the US who want to replace an already too-big, too-slow, centralized system with an even bigger, slower one, a rude shock awaits. Social democracy is a great idea for 1950. It is a humane, just, and reasonable response to the demands of an industrial economy. We don’t live in an industrial economy.
The quality of representation and bureaucracy required to make democratic socialism work in a nation of our size and complexity simply isn’t going to materialize. No matter what choices we make in the voting booth, our system does not produce the incentives necessary to deliver the outcomes voters demand. It is no accident that the current poster child for democratic socialism is a 28 year-old bartender.
The Affordable Care Act was 2300 pages of legislative software. To work its way into something remotely resembling effectiveness, it needed another 20,000 pages of enabling regulations. There is a fine art to writing the code that runs our government. It is extremely difficult, specialized work, beyond the skills of our elected representatives and beyond the mental universe of the average voter. Congressmen seldom even attempt to write a law anymore. That function is largely outsourced to internal Congressional specialists or to well-funded think tanks or lobbyists. Hardly more than a handful of our elected representatives had read the ACA before voting on it. Fewer still understood it. We no longer even concern ourselves with this erosion of democratic oversight because it’s so clearly unavoidable, but that’s not how a liberal democracy functions.
Big corporations regularly write code far more complex than the code that runs our government. However, if Oracle’s management was elected by the voting public, all that skill and dexterity would soon be reduced to a muddle. Our democracy was not designed for elite parallel processing, especially at its distant center. No matter how many votes you muster or how many rallies you attend, you’re not going to get Congressmen or staffers capable of writing the next generation of government code. Those people are wisely investing their energies elsewhere, and reaping the attendant rewards. None of the necessary incentives exist to produce in government the evolutionary outcomes we take for granted in other fields. Solutions to our next round of “big problems” are unlikely to emerge from public life as currently organized.
Nordic countries are able to build comprehensive welfare states in part because of the relative simplicity of their structure. Sweden is a sovereign country with its own king, currency, army, language, and a landmass larger than California. It also has a population roughly the same as the Chicago metro area. Denmark and Norway have populations about equal to Houston. Small size and cultural continuity greatly simplifies the challenge of writing legislative software. There are simply fewer variables to account for. To scale up, you need something smarter, faster and more efficient than the cumbersome processes of a liberal democracy.
A move toward social democracy might perhaps, in the short run, have thwarted Trump and bought us some time. It will likely also be enough to propel Democrats back into political leadership for a brief period. It will not even begin to address the forces undermining liberal democracy at its foundations, and may even nudge it toward comprehensive failure.
Just as Hayek warned, public frustration may hit the boiling point as officials elected to accomplish specific, complex, and fundamentally unachievable aims continue to fail. Social democracy as a bridge to a post-Trump era might work. However, social democracy as a longer-term cure for the ills of liberal democracy has a dubious future. If it won’t save the Swedes, it’s hard to see what it can offer us.
This post is part of a series exploring what’s next after liberal democracy and what we should do to prepare. Much of this material was covered in The Politics of Crazy, though from the perspective of a more optimistic era. The work fits better as a whole, but reading through a 6000+ word piece on a computer seems impractical. When these are complete I’ll gather them into a series of links on a single page.