Berlin Summit Declaration to Win Back People's Trust
Why don't they name our enemies? We need to call them out by name.
The most vital debate in America today is between those who believe there is something fundamentally broken in America, and that it’s an emergency, and those who do not.
| Alana Newhouse
A community of leading economists -- like Dani Rodrik, Branko Milanovic, Mariana Mazzucato, Adam Tooze, Laura Tyson, Thomas Piketty -- produced a manifesto for institutions in the West to counter the institutional disaffection that typifies many ordinary people, and sets the stage for nationalist populism and other social ills. This is the Berlin Summit Declaration.
They typify this as 'winning back the people's trust', and the authors list ways that policies must change to effect that, and to deal with the polycrisis: economic inequality, climate change, uncontrolled immigration, and the growing expectation of apocalypse. The fear that Western societies are breaking down — Alana Newhouse’s brokenism at a global level — seems to be an animating force for the Berlin Summiters.
However, they fail to name the enemies of the new consensus they seek to engender. That needs to be the next step. As Rebecca Solnit wrote in Call Them By Their True Names,
In the deep past, people knew names had power. Some still do. Calling things by their true names cuts through the lies that excuse, buffer, muddle, disguise, avoid, or encourage inaction, indifference, obliviousness. It’s not all there is to changing the world, but it’s a key step.
We need to call them out, those that are actively working to stop the changes we must make to win back people’s trust.
Again, Solnit:
To name something truly is to lay bare what may be brutal or corrupt — or important or possible — and key to the work of changing the world is changing the story.
Here is the Berlin Declaration, with a few notes.
Berlin Summit Declaration May 2024 • Forum for a New Economy
Liberal democracies are today confronted with a wave of popular distrust in their ability to serve the majority of their citizens and solve the multiple crises that threaten our future. This threatens to lead us into a world of dangerous populist policies exploiting the anger without addressing the real risks, ranging from climate change to unbearable inequalities, or major global conflicts. To avert major damages to humanity and the planet, we must urgently get to the root causes of people’s resentment.
There is ample evidence today that this distrust is not only, but to a large extent, driven by the widely shared experience of a real or perceived loss of control over one’s own livelihood and the trajectory of societal changes. This sense of powerlessness has been triggered by shocks stemming from globalization and technological shifts, now amplified by climate change, AI and the inflation shock. And, decades of poorly managed globalization, overconfidence in the self-regulation of markets and austerity have hollowed out the ability of governments to respond to such crises effectively.
Putting the blame on corporatism and neoliberalism, and warn of populism and the growing sense of social disintegration. But they don't name the enemies of this nascent consensus, it’s all implicit, between-the-lines.
Winning back the people’s trust means rebuilding these capacities. We do not pretend to have definitive answers. However, it seems crucial to re-design or strengthen policies based on some of the fundamental lessons we can draw from what has caused such levels of distrust. These suggest that we need to:
reorient our policies and institutions from targeting economic efficiency above all to focusing on the creation of shared prosperity and secure quality jobs;
This point reaches deeply into the domain of work: people need work that is both secure and quality. This — by extension — means that those who make work insecure and low-quality are standing in the way of the consensus, which could define a great many corporations.
develop industrial policies to proactively address imminent regional disruptions by supporting new industries and direct innovation toward wealth-creation for the many;
For example, by strengthening trade unionism, which historically been the best path to secure, quality work.
make sure industrial strategy is less about giving out subsidies and loans to sectors to stay in place and more about helping those invest and innovate towards achieving goals like net zero;
Fewer handouts to failing banks, unregulated airlines, and union-opposed industries, for example?
design a healthier form of globalization that balances the advantages of free trade against the need to protect the vulnerable and coordinate climate policies while allowing for national control over crucial strategic interests;
A tricky balancing act. The deindustrialization of the West is a legacy of terrible unregulated labor policies, and the adoption of the ‘flat world’ zeitgeist. Unmaking that will take more than tariffs.
address income and wealth inequalities that are reinforced via inheritance and financial market automatism, be it by strengthening the power of poorly paid, appropriately taxing high incomes and wealth, or securing less unequal initial conditions through instruments like a social inheritance;
redesign climate policies combining reasonable carbon pricing with strong positive incentives to reduce carbon emissions and ambitious infrastructure investment;
ensure developing nations have the financial and technological resources they need to embark on the climate transition and the mitigation and adaptation measures without compromising their prospects;
generally establish a new balance between markets and collective action, avoiding self-defeating austerity while investing in an effective innovative state;
More balancing, but only implicitly calling out those that are seeking to block this rebalancing.
reduce market power in highly concentrated markets.
Break up the monopolies, reimpose regulatory controls of deregulated markets, and in some cases de-market sectors of the economy like healthcare, transportation, energy? If we embrace industrial policy, how far will our new consensus lead us?
We are living through a critical period. Markets on their own will neither stop climate change nor lead to a less unequal distribution of wealth. Trickle-down has failed. We now face a choice between a conflictual protectionist backlash and a new suite of policies that are responsive to people’s concerns. There is a whole body of groundbreaking research on how to design new industrial policies, good jobs, better global governance and modern climate policies for all. It is now critical to develop them further and put them into practice. What is needed is a new political consensus addressing the deep drivers of people’s distrust instead of merely focusing on the symptoms, or falling into the trap of populists who pretend to have simple answers.
The myth of self-correcting markets is dead. Trickle-down failed, and led only to concentration of wealth in the rich and the degradation of the weak. We need a better definition, though, of the ‘new political consensus addressing the deep drivers of people’s distrust’ and the resulting disaffection. And we need it soon.
Ultimately, doesn’t this need to be a global political platform, a worldwide political movement? How can these theories be put into practice?
As the danger of armed conflicts around the world has risen due to diverging geo-political interests, liberal democracies will, as a prerequisite, need to demonstrate their ability to both defend their values and defuse direct hostilities, ultimately open the path to sustainable peace, as well as diminish the tensions between the US and China.
Those aren’t the only tensions that threaten sustainable peace, either.
Any attempt to durably get citizens and their governments back into the driver’s seat has the potential to not only promote wellbeing for the many. It will help to once again foster trust in the ability of our societies to solve crises and secure a better future. We need an agenda for the people to win back the people. There is no time to waste.
I look forward to seeing that agenda, a much more detailed agenda, and the rise of a movement to enact it.
May 2024
Signatories
Dani Rodrik, Harvard University
Branko Milanovic, City University New York
Mariana Mazzucato, University College London
Adam Tooze, Columbia University
Laura Tyson, UC Berkeley
Thomas Piketty, EHESS
Gabriel Zucman, UC Berkeley
Jens Südekum, Heinrich Heine University of Düsseldorf
Isabella Weber, University of Massachusetts Amherst
Olivier Blanchard, PIIE
Mark Blyth, Brown University
Catherine Fieschi, European University Institute
Xavier Ragot, OFCE
Jean Pisani-Ferry, Sciences Po/Bruegel/PIIE
Barry Eichengreen, UC Berkeley
Laurence Tubiana, European Climate Foundation
Pascal Lamy, Institut Jacques Delors
Ann Pettifor, Prime Economics
Maja Göpel, Mission Wertvoll
Stormy-Annika Mildner, Aspen Institute Berlin
Achim Truger, German Council of Economic Experts
Anatole Kaletsky, Gavekal Research
Anke Hassel, Hertie School
Anne-Laure Delatte, Université Paris-Dauphine
Antonella Stirati, University of Roma Tre
Bettina Kohlrausch, Institute of Economic and Social Research
Bill Janeway, Cambridge University
Christian Breuer, German Council of Economic Experts
Christian Kastrop, Global Solutions Initiative
Dalia Marin, Technical University Munich
Dorothea Schäfer, DIW Berlin
Eric Lonergan, Author/Economist
Eric Monnet, EHESS
Helene Schuberth, Austrian Trade Unions Confederation
Henning Vöpel, Centrum für Europäische Politik
Jay Pocklington, INET
Jérôme Creel, OFCE
Jonas Meckling, University of California, Berkeley
Martyna Linartas, Ungleichheit.info
Michael Jacobs, University of Sheffield
Peter Bofinger, University of Würzburg
Prakash Loungani, John Hopkins University
Richard McGahey, Schwartz Center for Economic Policy Analysis
Robert Gold, IfW Kiel
Robert Johnson, INET
Rohan Sandhu, Harvard University
Sander Tordoir, CER
Sebastian Dullien, IMK
Shahin Vallée, DGAP
Teresa Ghilarducci, The New School
Thomas Fricke, Forum New Economy
Trevor Sutton, Center for American Progress
William Hynes, UCL
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