Tobold's Blog
Sunday, October 29, 2023
The horseshoe theory of politics

I believe that capitalism is the best economic system for the overall creation of wealth. Unfortunately capitalism also completely sucks at distributing the created wealth, having a strong tendency to give a too large share to the already rich, and a too small share to people who worked hard to create that wealth. If we simply look at the numbers of what has happened since capitalism basically beat communism and both the former Soviet Union and China became mostly capitalist, we notice that there are winners and losers: The winners are the previously extremely poor people in previously communist countries, and the already rich in previously capitalist countries. The losers are the working people in previously capitalist countries. The number of people living in extreme poverty has fallen, which is obviously good news. But real wages in rich countries like the USA have stagnated for decades. And since the recent rise in inflation, those real wages have been falling. We have a cost of living crisis in many first world countries, and housing has become unaffordable in many places.

For all the reasons discussed above, there are a great many people with moderate incomes living in first world countries which are unhappy with the state of the world, and the state of politics as usual in their country. And so they are drifting away from centrist politics to more extremist political opinions, left or right. And, surprisingly, it turns out that it doesn't really matter whether it is left or right. That is the horseshoe theory of left-right politics: The extreme ends are actually closer to each other than they are to the center.

One interesting example of this is the closeness of Trump voters and Bernie Sanders voters. When asked at a MAGA rally who their second choice after Trump would be for president, a surprising number of people answer Bernie Sanders. Because the factor of being "anti-establishment" is much more important than classical left-right classifications.

This is currently causing some turmoil in Germany, where the extreme left party, whose name is "The Left", is splitting up. "The Left" was an alliance between West German leftists for whom the social democrats weren't radical enough, end East German ex-members of the SED, the party that ruled East Germany until reunification. The people who are splitting off  to a not yet named new party believe that "The Left" lost their way in being too preoccupied with identity politics, and not doing enough for the working class. And there is at least a kernel of truth in here, in that working class people tend to be economically left-wing, but socially conservative. And so the interesting news is that 30% of the people who previously voted for the extreme right party AFD (extreme right as in about as right-wing as a Trump voter) could imagine voting for the new extreme left party instead.

I am politically a centrist. The current trend of centrist parties losing more elections than they are winning against extremist and populist parties worries me. But I think that is to a large extent the fault of the centrist parties: In a democracy you need economic policies which satisfy the majority of the people, and that is the people who work for a living. Centrists over the last few decades have frequently failed these people, and are now reaping what they sowed. A person without a college degree who is working 40+ hours a week needs to have a roof over his head, food on the table, and be able to pay for both essentials like heating and at least a bit of non-essential disposable spending. And those who fall below this level of income will tend towards extremism.

In the US we no longer practice capitalism. The companies here practice "greed-alism". What I mean by this is that typically in capitalism a company is successful when they have met a level of profit. If it takes me $1M to run my company but I make $1.12M from those goods or services then I've made 12% profit. I should be happy right? Wrong.

In the US, and likely in other capitalist economies, now 12% is good "for that year". The next year stockholders, the board, the owner, whoever runs said company will want 15% profit. The year after that 18%. It never stops. People are not satisfied at merely being profitable they want to continue to become more and more profitable until morales and values are tossed out the window and they do whatever they can to achieve "the next level of profit".

It's not a healthy way for capitalism to work. Compromise and success are short term to non-existent. I believe something big is coming in the US with the economy. I don't know if it's a collapse, a revolt of the people, maybe an independent wins an election, or something else but the current trends are not sustainable. I'm trying to retire like Tobold, but with this economy it makes me nervous.
Infinite year over year growth is expected from shareholders. Obviously that is not possible every year which leads to mass layoffs and cost cutting during quarters when those numbers won't be reached.

Right now the tech sector in the US is experiencing this largely because tech companies exploded during the pandemic and now that usage is returning to normal levels they are seeing their year over year metrics decline and thus the cost cutting begins.

It's happening in the gaming space as well. It's not a coincidence we are seeing all these layoffs right as a fiscal quarter is ending.
"The people who are splitting off to a not yet named new party believe that "The Left" lost their way in being too preoccupied with identity politics, and not doing enough for the working class"

It would be in the best interest of large swaths of the country to drop the obsession with identity politics, whether from a liberal or conservative perspective, and unite on economic issues that affect all of us (better wages, less expensive education and healthcare, affordable housing and cost of living). However US news media on both sides of the divide seem to be going out of their way to make sure that will never happen.
It is indeed interesting that either extremist political side, left or right will do. But I suppose it can make sense. If one is unhappy with the current situation, they are more likely to support someone who is campaigning change. And surely the extremists are campaigning change more than a centralist. It can also be dangerous though. The German Nazi Party was a right-wing extremist political group.
We've gone through these cycles of concentrated wealth before and it led to major reform in Western countries whether through political or violent change. It amazes me that elected officials are willing to just follow the same trends as their forefathers instead of learning valuable lessons from them. This is why learning history is important in my opinion. Not data points about the specific year a certain person did a certain thing. What happened and why at micro and macro levels. Giving insight into the lessons of failed states of the past and hardships we had to endure. Instead we just get constant short-sighted pandering. I know governening is not easy, but it seems like we make it harder than it has to be.
Don't call them short-sighted... a week is a long time in politics!
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