Sex, violence and the rise of populism

The Kavanaugh hearing in the US has shown that men fear a loss of power and status

Gideon Rachman


Where the male backlash finds its expression: Jair Bolsonaro of Brazil, Rodrigo Duterte of the Philippines and Matteo Salvini of Italy © AFP / EPA



The most popular explanations for the rise of populism have focused on inequality and race.

But the storm surrounding the nomination of Brett Kavanaugh to the US Supreme Court points to a third factor: male rage.

Traditional gender roles are under challenge, leading many men to fear a loss of power and status. That fear is visible in the misogynistic tone of populist movements in the US, Brazil, the Philippines, Italy and elsewhere.

The male backlash finds expression not just in relatively civilised debates about women in the workplace or gender roles at home. As the Kavanaugh hearings highlighted, it quickly moves on to the rawest and most emotive topic of all — sexual violence.

Rodrigo Duterte, the president of the Philippines, and Jair Bolsonaro, the frontrunner in this month’s Brazilian presidential election, have incorporated gibes about rape into their political rhetoric. Matteo Salvini, the dominant figure in the Italian government, has used sexual slurs to demean female politicians.

Mr Bolsonaro once claimed that Maria do Rosário, a Brazilian politician, was “not worth raping; she is very ugly”. More than 3m women have joined an online group to oppose his surging candidacy, with the hashtag #nothim. With the first round of voting taking place on October 7, hundreds of thousands of women have just demonstrated against Mr Bolsonaro on the streets of Rio de Janeiro and São Paulo.

Mr Duterte once joked about the gang rape and murder of an Australian missionary, suggesting that, because he was mayor of the town it took place in, he should have been allowed to go first. (US president Donald Trump has since said that he has a “great relationship” with the Filipino leader.)

Mr Salvini, Italy’s deputy prime minister and a Trump admirer, has also taunted female politicians. In 2016, at a political rally, he pointed to a sex doll on the stage and claimed that it was a “double” of Laura Boldrini, who was then president of Italy’s Chamber of Deputies. In a recent interview with Politico, Ms Boldrini said that she has received numerous rape and death threats in recent years, adding that Italy’s populists had targeted her because “I was a woman and I was advocating for refugees, for human rights, for women’s rights”.

As Ms Boldrini suggests, the use of demeaning misogynistic rhetoric looks like a direct response to the rise of powerful female politicians. It is suggestive that Mr Bolsonaro has come to prominence in the immediate aftermath of the presidency of Dilma Rousseff, the first woman to lead Brazil. And Mr Trump, of course, was running against Hillary Clinton, who would have been the first female US president.

By the debased standards of Messrs Duterte, Salvini and Bolsonaro, Mr Trump’s misogynistic language was relatively restrained. But it may have served a similar political purpose — sending a message to angry male voters that he was on their side.

Mainstream commentators, including prominent Republicans, assumed that Mr Trump’s remark about grabbing women “by the pussy” would hurt him in the presidential race. But some men probably quietly relished his taboo-busting macho talk. In the event 53 per cent of American men (and 62 per cent of white men) voted for Mr Trump.

Mr Trump’s period in office has coincided with the #MeToo movement against sexual harassment — which has ended the careers of some prominent men in Hollywood, the media, business and politics.

But the rise of #MeToo may also have stoked the male reaction that feeds populism. Senator Lindsey Graham, one of Mr Kavanaugh’s most vociferous supporters, certainly embraced the language of victimhood when he said during the judge’s confirmation hearing: “I’m a single white man from South Carolina and I’m told I should shut up. But I will not shut up, if that’s OK.”

Many Democrats are now taking some comfort from the thought that even if Mr Kavanaugh is confirmed, the controversy will backfire on the Republicans in the midterm elections. A recent poll suggested that white women now tilt towards the Democrats by a margin of 12 points.

But some Republicans believe that the Kavanaugh hearings could work for them, by mobilising male voters. James Robbins, a former official in the George W Bush administration, warned men that if the “Democrats win on Kavanaugh . . . any man could find himself facing unprovable accusations automatically taken as fact.”

Disquiet about the implications of #MeToo has also surfaced in bastions of liberal America. In recent weeks, both Harper’s and the New York Review of Books have published anguished articles by men who lost their careers after multiple accusations of maltreatment of women. Ian Buruma, the editor of the New York Review, lost his job in the subsequent furore.

These controversies inside literary America are insignificant compared with the drama of the Kavanaugh hearings — or the macho brutality of politics in Italy or the Philippines. But they demonstrate the polarising power of gender debates in politics and society. And if there is anything that populism thrives on, it is anger and polarisation.

Buttonwood

American startups have less need to list on the stockmarket

Elon Musk revives a familiar critique of public markets



WHATEVER your view of the recent antics of Elon Musk, one thing seems clear. He rather regrets that Tesla, the electric-car maker of which he is boss, ever became a public company.
To recap: in August Mr Musk announced that he had secured the funding to take Tesla private. The gyrating stock price is a distraction to staff, he explained. The obligation to report earnings each quarter fosters short-term fixes that may hurt the firm’s long-term health. And being listed makes Tesla prey to short-sellers.

Tesla’s share price rallied. The shorts lost money. It then emerged that the money to buy out shareholders was not quite as secure as Mr Musk may have suggested. Before long, the board confirmed that the firm would not be taken private. Its shares sank back. The company is now under investigation for possible securities fraud.

Whatever these larger consequences, Mr Musk achieved a minor feat. He has drawn fresh attention to some familiar grumbles about public markets. The number of listed firms in America is in long-term decline (see chart). Mr Musk’s beefs seem specific, but they are part of a general explanation for this trend. The red tape, the endless disclosures, the ceaseless spotlight—all have made the cost of being a public company too high. Yet that is not the real cause. The main reason why startups do not become public firms is that many of them no longer need to.

In part, this reflects changes to the supply side of capital markets. In the 1990s specialist venture-capital firms were almost the only option for startups seeking money to finance their expansion. Nowadays there are large pools of private money that can be tapped. “There is a level of pre-IPO capital that did not exist before,” says Philip Drury, head of capital markets in Europe at Citigroup. Private-equity firms are sitting on piles of cash. Sovereign-wealth funds are willing to tie up capital in new, unlisted ventures. So are hedge funds, family offices and even pension funds.




This shift can be traced back to a piece of deregulation. The National Securities Markets Improvement Act of 1996 made it easier to set up large pools of private investors. A study by Michael Ewens and Joan Farre-Mensa, two academics, finds that the supply of “late-stage” capital (ie, to startups four or more years past their first funding round) accelerated soon after. In the 1990s most young firms seeking $150m or more had to raise it by an initial public offering. Now such sums are raised privately.

Capital-light capitalism

The demand side of capital markets has also changed. In the heyday of public markets, the typical listed firm would be capital-intensive—a railway, say, or a large manufacturer or a chain store. Such enterprises needed pots of capital to pay for land, buildings, plant and equipment. Even the very rich could not fund enterprises on this scale. The ventures were either too large or too risky.

These days the value of new firms is in ideas more than fixed assets. New ventures, notably technology firms, need far less capital to start and to grow than they once did. The building blocks for websites or smartphone apps are available free as open-source code. Computing power and digital storage can be leased. And a mini service industry has emerged to help startups refine and market their business ideas. It is also far cheaper to expand a business based on an idea than one that is based on physical capacity. Software can be copied at almost zero cost. That is not true of factories or warehouses.

Startups need less capital and have more options for raising it as they mature. Increasingly they choose private money. That is not only because it is more readily available. It is also because private capital is more suited to ideas-rich firms, say Craig Doidge, Kathleen Kahle, Andrew Karolyi and René Stulz in another recent paper. Listed firms are obliged to make public how they are using their capital. That is fine for a firm with lots of fixed assets. Spending on, say, a new plant may lift the firm’s value. But when an ideas-led firm reveals plans for its spending, it gives away details of its business plan to rivals. It would be better off seeking funds from a select group of private investors.

There is still a place for IPOs. Lots of asset-heavy firms still need pots of capital. More of those firms are found outside America, where the number of listed firms is still rising. But for most technology firms, an IPO is a way for founders to cash in their chips or to create shares to use as a currency for acquiring other firms. Bargaining-power is shifting. Suppliers of capital once had the whip hand. Now it is users of capital. Mr Musk, a finance whizz, looks on with envy.

The Restructuring of the World

Michael Spence




MILAN – The global economy is undergoing a far-reaching transformation. Change is being driven by shifts in countries’ populations, productivity, wealth, power, and ambitions, and accelerated by US President Donald Trump’s moves to reshape supply-chain structures, alter cross-border investment incentives, and limit the movement of people and technology across borders.

The tensions that these changes are producing are most apparent in escalating disputes over trade. Notwithstanding some dislocations in emerging economies, markets’ reaction to the tit-for-tat tariffs so far has been only muted. Investors probably assume that it is all just part of a renegotiation process that will ultimately produce new rules of engagement for global business – rules that are even more favorable to the powerful.

But such assumptions may underestimate the complexity of the issues at play, beginning with the politically salient matter of where investment and employment are created. On their own, tariff and trade barriers, if viewed as transitory negotiating tactics, will not significantly change global investment patterns or the structure of global supply chains and employment.

Protectionists like Trump argue that the power of tariffs and other trade barriers lies in their ability to curb cheating and free-riding. The implication is that such measures can help to eliminate the tensions, imbalances, and polarization associated with globalization.

“Cheating,” of course, is in the eye of the beholder. State subsidies for specific sectors, including preferential treatment of state-owned enterprises, may be regarded as cheating. So may requiring technology transfer in exchange for market access, public procurement favoring domestic entities, acceptance of unsafe work environments and exploitative labor practices, and exchange-rate manipulation.

The test of free-riding is whether a country contributes too little, relative to its capacity, to the provision of global public goods, such as defense and security, scientific and technical knowledge, mitigation of climate change, and absorption of refugees. The culprits depend on the topic in question.

But whatever the downsides to cheating or free-riding, tackling these behaviors is unlikely to eliminate the conditions that have contributed to economic, social, and political polarization.

After all, labor arbitrage has been the core driver of the organization of global supply chains for at least three decades – accelerating, of course, with China’s rise – with significant distributional and employment effects. It seems unlikely that, had China and other emerging economies adhered to the letter of World Trade Organization rules, the distributional effects of their integration into the global economy would have disappeared.

What, then, is the real purpose of the tariffs? Trump could be interested only in leveling the playing field, at which point he will accept global market outcomes. But it is more plausible that this is all part of his strategy – echoed by leaders in a growing number of countries worldwide – to win support by asserting national priorities and sovereignty.

Such efforts are pushing the world toward a more balkanized system. Moreover, the challenges and fears raised by advances in technology, especially digital technology, with regard to both national security and economic performance are also propelling the world toward greater fragmentation.

Fifteen years ago, few would have predicted that mega-platforms like Google or Facebook would become key players in areas like image recognition, artificial intelligence, and the development of autonomous vehicles (including military vehicles). Yet that is exactly what has happened. In fact, Google is now a defense contractor (though it may not renew its contract).

Given the security implications of these developments, as well as a host of issues like data privacy and security, social fragmentation, and foreign interventions in elections, countries are unwilling to leave the Internet unregulated. But they are also unwilling to delegate regulation to a supra-national body. As a result, many are taking matters into their own hands, leading to a growing divergence among countries regarding Internet regulation.

Reflecting the national-security tilt of these initiatives, the scope and authority of the Committee on Foreign Investment in the United States – responsible for reviewing the national-security implications of foreign ownership of US companies or operations – has recently been expanded.

Despite these efforts, however, the fact remains that innovation cannot easily be blocked by national borders. On the contrary, the diffusion of ideas may well become the most consequential dimension of globalization in the future.

While this may complicate national-security planning, it represents powerful new opportunities for business, even as trade faces headwinds. Already, there has been an explosion of innovative, digitally-based business models, many of which could become powerful engines of inclusive growth, especially in emerging economies. Digitally-enabled ecosystems, with open architecture and low barriers to entry, are one example of an emerging model with considerable economic potential.

There is one more crucial dynamic that will shape how the global economy will develop in the coming decades: the strategic rivalry between China and the US. At this point, it is impossible to say precisely what form this rivalry will take. What is clear is that every part of the global economy will be affected by the mix of cooperation and competition that emerges.

In the face of a powerful rival, one might expect the US to pursue a strategy focused on building, expanding, and consolidating alliances with natural allies – that is, countries with similar governance structures and shared views about the benefits of international cooperation and open markets. Instead, Trump has alienated longtime allies and attacked multilateral structures and institutions, all while antagonizing China in what is quickly becoming a two-player game.

This is a bizarre strategy. Whatever advantage Trump thinks he will gain by positioning the US in opposition to its natural allies will be dwarfed by the losses. A split between the US and its traditional allies, if it becomes a permanent feature of the new global order, would lead to deeper fragmentation among the world’s market-oriented democracies. That will surely shift the long-term balance of power in China’s favor, as it moves steadily toward becoming the world’s largest economy.


Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

Japan:A Trade War That's Easy to Avoid

Tokyo just wants to get this fight over with.

By Phillip Orchard        

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