A look at the emotional side of the economy

Certain experts argue that the past few decades have been marked by economic success, citing rising GDP and record-high productivity. However, despite these indicators, global protests and widespread anger persist. This analysis explores how economic policies affect our emotional well-being, linking economic mismanagement, populist movements, and daily feelings of stress, anger, and uncertainty.

The discussion highlights how elite institutions have failed in their responsibilities, leading to various forms of anger and emotional fallout. Yet, it suggests hope through potential policy reforms aimed at addressing the current crisis.

Anger, while often perceived negatively, can benefit societies when justified. Historical examples illustrate different outcomes of collective anger: the deadly conflict in Northern Ireland during the 1980s, the collapse of Iceland’s government following the Panama Papers leak in 2017, and the riots in Philadelphia after the Eagles' Super Bowl win in 2018. These events, driven by anger, show that while moral outrage can rectify injustices, tribalism can lead to discrimination and division.

Moral outrage is a societal norm-enforcer, punishing behaviors like cheating or stealing to maintain the collective good. This form of anger can correct injustices, as seen in Iceland when citizens' outrage toppled a corrupt administration. In contrast, tribal anger fosters identity-based division, exemplified by nationalist leaders like Narendra Modi, Viktor Orbán, and Donald Trump, who channel economic dissatisfaction into hostility against outsiders without solving underlying issues.

Economic insecurity and unresponsive politicians fuel public anger. For instance, a hypothetical Spanish couple faces foreclosure and job loss after the 2008 financial crisis, mirroring the real experiences of millions. Neoliberal policies since the 1970s have exacerbated economic inequality, with the richest 1 percent capturing 90 percent of income gains since 2012. This widening wealth gap and political shifts to the right leave many feeling neglected and angry.

To mitigate outrage, capitalism must be restructured. Drawing an analogy to a computer, the current version of capitalism, akin to outdated software and hardware, requires a reboot. Historically, capitalism has undergone major changes to address its failures, such as the shift to Keynesian economics post-World War II. However, the latest iteration, neoliberalism, has only seen minor tweaks post-2008 crisis, leaving the system prone to recurring issues.

Economic forces contribute to daily stress and anger. Rapid market evolution, job automation fears, an economy skewed toward older generations, and the imagined threat of immigration create an atmosphere of insecurity. These stressors collectively undermine people's sense of stability and future prospects.

Rearranging economies for more equality and less anger involves learning from successful models like Canada and Australia, which have achieved wage growth and financial stability. Proposals include establishing National Wealth Funds to redistribute wealth and empower regions to experiment with policies tailored to local needs. Other ideas include taxing big tech firms for public data use and incentivizing green investments.

In summary, while the current economic system benefits some, it leaves many financially insecure and angry. To prevent the rise of dangerous tribalism, we must create equitable economies through innovative tools like national wealth funds and regional autonomy.

Actionable advice: During recessions, instead of corporate bailouts, directly support consumer spending to maintain economic stability and prevent perceived injustices.