Are we in a “race to the bottom” world?? Is the Global Economy structured so that only the Top 1% succeed and the rest are expected to be their serfs? Is the pandemic the first of the many crises in the coming years where the “useless eaters,” i.e. the vast majority and the “teeming millions” are expected to atrophy and wither away into the sunset? In contrast, the Uber Rich can enjoy their evenings and daybreak in relatively undisturbed peace and tranquillity? Has technology become the latest weapon of choice for the Super Rich to enslave us all while Big Tech and Big Everything make hay. At the same time, the sun shines, and for the rest of us, it is an endless sequence of “false dawns” which keep us yoked to drudgery and the 21st Century equivalent of bonded labour?
I believe the answers to all the above questions can be found if we analyze how the present Global Economy works. The “system” is built so that wealth flows to the top, and the bottom is expected to survive and subsist on meagre returns. Look at the failure of Trickle Down Economics or the so-called Supply Side Economics that was very popular since the 1970s when Neoliberalism started to make its presence felt. According to this theory, if Taxes are cut and government “gets out of the way” of business, then by increasing the supply of goods and incentivizing profits, everyone benefits as the wealth “trickles down” to the rest, thereby promoting economic growth and across-the-board prosperity. Indeed, this paradigm is the main reason why the West under Ronald Reagan and Margaret Thatcher began a process of “wealth transfer” that dwarfs anything that was imagined to be pro-poor.
If Trickle Down economics was so effective, why would gross inequality increase to the point where only the Top 1% have a real chance of making it? Moreover, the cutbacks to welfare and social spending meant that the poor became poorer, and at the same time, the tax cuts and the subsidies to the rich meant that they became richer. Or, consider the supreme faith in the “invisible hand” of the market. When left to themselves, economics teaches that markets attain equilibrium and are efficient at weeding out the non-performers and picking winners in such a way that society gains and all of us benefit. However, this presumes that the invisible hand is left to itself and not tinkered with. As anyone watching how markets have behaved over the last few decades would attest, the reverse has happened as the rent-seeking behaviour predominated, crowding out investments in productive capacity building. In short, the markets have been “gamed” to reward the Top 1% while the rest suffer.
Let us examine how the Race to the Bottom world has been functioning in the 21st Century. 9/11 was the first crisis of the Millennium, where the United States was under direct attack for the first time since Pearl Harbor. While terrorism and loss of lives demand harsh responses, there is also a case for not subjecting your citizenry to a surveillance state. Moreover, the response should be on those deemed responsible and not arbitrary invasions of nations that had nothing to do with it in the first place. 9/11 and its response was the first indication of how “race to the bottom” works. Then came the Great Recession of 2008, where instead of bailing out the poor, bankers were the ones who were rewarded for their greed, thereby ensuring that socialism works for the rich, whereas capitalism was only for the poor. This also ties into the point made in the last paragraph, where I pointed out how markets and neoliberal societies were accentuating inequities. As both 9/11 and the Great Recession showed, race to the bottom works very well when the poor are the targets and the victims.
Sticking with economic theory, the pandemic was the other big crisis of the 21st Century where the Law of Diminishing Returns began to make its presence felt. This principle pertains to how returns on capital diminish over time. So, money flows to speculation and rent-seeking activities instead of investing in creating jobs and other productive activities. This is again the race to the bottom economy at work where the gamed markets are influenced further to work to the benefit of the Top 1%. With massive amounts of money pumped into the global economy, the result was that anyone and everyone with a business idea or smart and savvy enough to be connected to the people who matter found themselves very rich. In contrast, those without social capital, generational privilege, education, or right social identity (religious and class) were left holding the can. So, in effect, this is a race to the bottom again where the whole idea is to enrich the Top 1% while those at the bottom languish and melt away.
Last, race to the bottom works in other ways as well. Consider the Millions of aspirants for admissions into the IITs or the IIMs (premier educational institutes in India) or, for that matter, into governmental jobs. When only a few thousand can get into such institutes or jobs, what happens to the rest as the brutal race to the bottom, means that one has to be superhuman to succeed. No wonder more than 60% of all Indians of eligible working age have simply stopped looking for jobs. In other words, the classic race to the bottom at play is where the chosen ones succeed; for the rest, it is TikTok and Tikka. So, here we are with the Global Economy at an Inflection Point again, and I am eager to see how the present crisis plays out as recessionary fears return. The prospect of more race-to-the-bottom strategies making their presence felt is a real possibility. Enjoy your day, and hopefully, you do not have to begin the day with a race to the bottom battle in traffic!
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