Hillary, Apple, and us

Hillary, Apple, and us

By: Thomas Piketty

Taken From: Le Monde

In less than two months, the United States will have a new president. If Donald Trump wins it would be a catastrophe for his country but also for the rest of the world. Racist, vulgar, full of himself and of his fortune, he epitomizes the worst of America. And the fact that Hillary Clinton has had so much difficulty in outdistancing him in the opinion polls should give us all food for thought.

Trump’s strategy is classical: he explains to the poorer whites who have been the losers in globalisation that their enemy is the poor black, the immigrant, the Mexican or the Muslim and that things will get better if the big white millionaire gets rid of all of them. He exacerbates the racial and identity conflict in order to avoid the class conflict which might well not be to his advantage. This predominance of ethnic cleavages have played a central role throughout the history of the United States and explains to a large extent the lack of solidarity and the weakness of the social state in America. Trump is happy to push this strategy to extremes with however several major innovations. In the first instance, he relies on an ideology of the well-deserved fortune and of the sacrosanct mantra of the market and private property which has reached unprecedented heights over the past few decades in the United States. This structuring of the political conflict is now tending to spread throughout the world today, in particular in Europe. In many places, we witness the rise in working-class constituencies of a mixture of attraction for xenophobia and resigned acceptance of the laws of globalised capitalism. Since it is unrealistic to expect anything much from the regulation of finance and multinationals, let’s focus on immigrants and foreigners, it won’t do us any harm even if we don’t get much out of it. Many of those who vote for Trump or Le Pen have a fundamental conviction which is very simple: it is easier to attack immigrants than financial capitalism or to imagine another economic system.

Confronted with this fatal threat, the response of the left and the centre is somewhat hesitant. At times it consists in siding with the dominant rhetoric in identity mode (as witness the miserable French polemic this summer over the burkini, supported by a Prime Minister who considers himself progressive). Or else, in most instances, in abandoning the working classes to their fate, guilty of voting against their party, or of low electoral turnout, and also of contributing less to the cost of their political campaigns (there is nothing like a few rich donors to get things going!). Thus left-wing and centre parties find themselves also promoting the cult of the all-powerful market, differentiating themselves from the populist right mainly by their defence – at least formally, which is better than nothing – of racial and cultural equality. This enables them to keep the vote of the minorities and immigrants, while losing a considerable proportion of the local working classes, whence an increasingly marked retreat into the defence of the most privileged and best equipped groups in the global market place.

The challenge is immense and nobody has the miracle solution. It’s a question of keeping solidarity alive within very large scale political communities, riddled with multiple divides which is not simple. In the United States, in 2008 Hillary Clinton was the instigator of a social project which in many ways was more ambitious than that of Barack Obama, for example the project of universal health insurance coverage. Today, people are weary with the Clinton dynasty, the fees received from Goldman Sachs, the time spent with her husband’s donors, Hillary increasingly appears as the candidate of the establishment. Now she has to learn from the Sanders vote and show the working-class electorate that she is the best placed to improve their situation. This will involve proposals for the minimum wage, public education and fiscal justice. Several democrat leaders are urging her to finally announce strong measures on taxation of multinationals and the largest fortunes. In particular; she could build on the recent European decision to make Apple pay tax on its Irish profits, which would also enable her to oppose the conservative position of the American Treasury and financial circles (whose dream is a fiscal amnesty for the profits repatriated from multinationals). The best solution would be to offer Europe the introduction of a significant minimum tax rate – at least 25% or 30% – on the profits of European and American multinationals. This would force the European authorities to at long last apply a joint minimal tax rate on firms (whereas the recent decision merely requested the application of the Irish rate of 12.5%, which is much too low, and once again puts Europe in the hands of the Competition Law judges). A speech of this sort would be proof of a genuine desire for a change in approach to globalisation. For if firms like Apple and its consorts have obviously given the world huge innovations, the truth is that these giants could not have come into existence without decades of public research and community infrastructures, while benefitting from lower rates of taxation than small and medium businesses in America, as in Europe (and if the manager of Apple and his colleagues claim the contrary, they should finally publish detailed accounts). This complexity must be explained, which demands transparency and political courage. The time has come for Hillary Clinton to demonstrate this.