Download a free PDF version

More debt and more crisis;
can democracy cope?
A re-examination of our 2012 book
Democracy caused the debt crisis.
Will it survive it?
by David Roche, Bob McKee and Nick Kennedy
An Independent Strategy publication
THE AUTHORS
David Roche is President and chief global strategist of Independent
Strategy, a global investment consultancy based in London, Hong Kong
and Zurich. He has worked in the investment business for over 40 years.
He predicted the Fall of the Wall and the end of the Soviet era in the 1980s;
the emergence of global disinflation in 1990s with purchasing power going
from corporations to the people; and for forecasting the Asian financial
crash of 1997-8. In 2006, he developed the theory of New Monetarism that
predicted the global credit crunch. Since 2012 David and his colleagues
have developed the Democrisis thesis about societal breakdown and its
consequences.
Bob McKee is chief economist at Independent Strategy. He is a regular
contributor to business broadcasting including TV with CNBC, BBC,
Bloomberg and others, as well as for various printed journals. He worked
with David in developing the theory of New Monetarism and its prediction
of the credit crunch.
Nick Kennedy is chief analyst at Independent Strategy. He has worked in
financial markets for over twenty years and with David and Bob since 2012.
His work focuses on the secular shifts underway in the global economy,
including those that manifest themselves in Democrisis, through to the
longer-term (and positive) effects of disruptive technologies.
Copyright ©
2016 Independent Strategy
DEMOCRISIS RE-EXAMINED
THE GLOBAL CRISIS OF DEMOCRACY
We are in a period of history when politics matters more than economics.
Nationalism and populism — expressions of the global ‘anger’ vote — are
gaining strength due to the tepid performance of most economies over the
last ten years and the failure of official institutions (central banks, governments
and politicians) to deliver improved living standards.
Four years ago, we wrote a short story arguing that there were new challenges
for democracy in the 21st century. Democracy had flourished in the post-war
period, spreading from a handful of nations to nearly half the member states
of the United Nations by the turn of the millennium (Figure 1).
But, in Democrisis, we argued that democracy was getting “tired” and
“trivialised”. The end of ideological competition accounted for the former
trend. And, more recently, the advent of social media substituted debate
for soundbites and (often) unsubstantiated opinion. Consequently, the
relevance of democratic institutions to people’s lives has waned.
Figure 1: Number of Democracies in the World*
120
100
Democracy
gets tired
*Rated => 6 by the Polity IV Database
The
Challenge of
21st century
80
Fall of the
Berlin Wall
Asian democracies
rise; military regimes in
southern Europe end
60
40
20
Post-war
reshuffle
2024
2020
2016
2012
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
0
Source: Polity IV Database
3
DEMOCRISIS RE-EXAMINED
According to Freedom House, 2016 was the tenth consecutive year of decline
in global freedom. And the number of countries showing a decline — 72 —
was the fastest pace yet.
The Journal of Democracy surveys show that “Citizens in a number of supposedly
consolidated democracies in North America and Western Europe have not only
grown more critical of their political leaders, they have also become more cynical
about the value of democracy as a political system, less hopeful that anything
they do might influence public policy and more willing to express support for
authoritarian alternatives.”*
Economic recovery since the Global Financial Crisis (GFC) has not only been
weak, but the distribution of this growth has been skewed. Real incomes have
in fact fallen for both the poorer sections of society and (critically) the middle
classes while buoyant asset prices have enriched the top 1%. This has produced
even more alienation.
Democratic institutions have failed to deal with rising debt, both private
and public, and the looming issue of inequality, which has been glossed
over by the combination of democratisation of credit and asset (principally
housing) bubbles. The ethic of thrift and economic probity has given way
to excess and moral hazard. The social contract between the haves and
have-nots through the ‘welfare state’ and social entitlements has frayed at
the edges.
The old democratic leadership is challenged and losing its grip. It has failed
to carry the people with it on: economic reform to heft living standards;
supra-national projects to deepen globalisation; geopolitical military
intervention; dealing with the diaspora from failed states; or even climate
change.
The last four years have confirmed these trends and, in many ways, they have
accelerated.
Take Turkey. Just four years ago, it was a nation that had ended its penchant for
military coups, had elected a political party that had previously been banned
4
DEMOCRISIS RE-EXAMINED
from partaking in government and was engaged in moving towards accession
to the European Union.
Now, after a failed military coup, there has been a massive purge of opposition
forces by an autocratic President Erdogan, determined to reduce Turkish
democracy and impose religious-led rule of a version friendly to him. Accession
into the EU is a dead letter and the implementation of the proposed deal with
the EU on Syrian refugees fleeing from the widespread Middle East nightmare
is in deep peril.
And Turkey’s coup comes just minutes after the momentous decision of the
British people in a referendum for the UK to leave the EU. Democracy ruled
here, but not through its representatives in parliament, but through just one
vote in a ballot on a single issue, the consequences of which were pretty
unclear to all who voted. Now the oldest modern democracy faces uncertain
negotiations with the EU and with various bilateral trade deals that could set
back living standards for years.
Brexit could also launch a thousand other ships with ‘copycat’ demands
for referenda in other countries, though for the moment the British vote
to leave the EU has shocked the populations of remaining EU states into
dramatically higher support for the EU itself to the detriment of their own
populist parties.**
In the longer term, Brexit, plus the democratic deficit of the European project,
have the potential to strike at the architecture of the European project far to a
greater extent than the sovereign debt crisis.
The story of the last four years since we wrote Democrisis can be summed up by:
• Increasing political fragmentation
• Widening demographic deficit and migration
• Slowing productivity and rising low-skill, low-pay employment
• Worsening inequality
• Growing nationalism globally
5
DEMOCRISIS RE-EXAMINED
Increasing political fragmentation
Back in 2012, we wrote that the failure to tackle Europe’s economic crisis was
a real and present danger for the political elite. Voter disillusionment was
growing well before the crisis broke (Figure 2). In the first ‘post-crisis’ phase,
incumbent governments were ousted as electorates reacted to the economic
suffering caused by the GFC, and were replaced by traditional opposition
groups (or unstable coalitions that sought to preserve centrism).
Normally, in a classical business cycle recession, that would be enough to tide
things over while the economic situation recovered. But in Democrisis, we thought
that the damage inflicted by the GFC through spiralling sovereign debt indicative
of government over-reach and poor uses of debt financed resources was more
substantial, requiring deep and sustained policy steps to correct. Mainstream
parties were ill-equipped to deliver these changes, being beneficiaries of their
own excesses, at least in a manner that was electorate-friendly.
While this phase took time to evolve due to the diktats of electoral cycles, our
forecast of increasingly dysfunctional democracies has been confirmed. This has
been most evident in Europe, but not just there. The same disillusionment with
Figure 2: European Voter Turnout, %
90.0
85.0
80.0
75.0
70.0
Source: DG EcoFin Ameco, IDEA
6
2010
2005
2001
1997
1992
1987
1983
1974
1974
1970
1966
1964
1960
1955
1951
1950
1945
65.0
DEMOCRISIS RE-EXAMINED
the mainstream solutions to the impact of the GFC has emerged in the US, Japan
and in many emerging economies. This is particularly the case among Europe’s
youth, where under-25s unemployment is close to 50% in several southern
European countries.
In Europe, populist fringe groups like Syriza in Greece, or Cinque Stelle in Italy or
Podemos in Spain, or the Front National in France, or UKIP in Britain have evolved
from sideshow status to mass appeal (and electable) parties.
At the heart of the divide between this growing populism and the current political
culture in Europe lie the objectives of the European Union itself. The liberal,
middle-class and better educated (middle aged) feel that the EU project is about
cementing civilisation and economic prosperity in a region with a disastrous
history of blowing itself up. For that, they are happy to see people like themselves
achieve stability in indirect ways.
The populist parties see such pursuits as vanity projects and view “Europe” as
the embodiment of globalisation, threatening the masses by imposing austerity
(which they wrongly believe is a frontal attack on their privileges). Austerity is seen
more as an elitist retribution, imposed by the core states, rather than reform that
will benefit the man-in-the-street in countries undergoing austerity.
This trust deficit reinforces intra-regional divisions and runs contra to the
political objectives that were the foundations of the European project. It also
consigns structurally-deficient states to an even more prolonged period of
indebtedness, which acts as a further retardant on growth potential. These
centrifugal forces drive voters towards the political fringes, sometimes to
the point where social morality blacks out, as in the more blatantly racist
articulation of the Brexit campaign.
In a similar way, in the US, trust in the democratic mainstream has evaporated
as middle-class incomes stagnate and the richest 1% of the population reaps
the lion’s share of the recovery (a similar pattern to the UK), Figure 3. Meanwhile
politicians continue to agree to yet more ‘globalisation’ in the form of new trade
treaties for outsourcing jobs in the north and allowing inward cheap labour from
the south.
7
DEMOCRISIS RE-EXAMINED
Figure 3: Top income shares in the US 1945-2015, %
50.0
48.0
46.0
Top 10% income share
Top 1% share - RHS
20.0
18.0
16.0
44.0
42.0
14.0
40.0
12.0
38.0
36.0
10.0
34.0
8.0
32.0
6.0
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
30.0
Source: The World Wealth & Income Database
The Trump phenomenon of opposition to immigration, Muslims, free trade and
the US’s engaged geopolitical role mirrors the populists of Europe — even more
crudely. Trump is dangerous because he has the power to reverse globalisation
and remove the US as the security umbrella under which, deservedly or not,
the rest of the world currently prospers.
In Asia, Japan may not have brought to prominence a populist party or leader,
but the Abe premiership exhibits a much more nationalist and xenophobic
agenda aimed at expanding Japan’s old militarist approach than at any time in
the post-war period. And in the rest of Asia, there are new militarist (Thailand) or
populist leaders (Philippines, Indonesia) in charge.
In China, President Xi seeks to prolong Communist party rule by invigorating
the economy through reforms and eliminating corruption, while reinforcing the
party’s control at the expense of the development of civic society. Xi’s tools are
the re-imposition of Marxist ideology, a personality cult, xenophobic nationalism
and geopolitical confrontation. The fact that China’s ability to project power is
8
DEMOCRISIS RE-EXAMINED
ultimately dependent on its success in continued integration into the global
economy is the fault-line in his thinking. But that is hardly a recipe for smooth
transition to the new domestically-driven economic development model. The
most benign outcome is that China remains stuck in the middle-income cohort
of developing economies and fails to converge with rich economies. That, as we
discuss below, is critical.
The demographic deficit
One of the new aspects of the global crisis of democracy since 2012 is the
demographic deficit. One of the great achievements of the 20th century was a
dramatic rise in life expectancy. In the US, it increased from 45 years in 1902 to
75 in 2004.
However, increased life expectancy combined with declining birth rates has
created ‘a demographic time bomb’ where future generations will struggle to
meet the funding of an ever-increasing number of retired workers and their
pensions (Figure 4). In Democrisis, we highlighted this risk to the social contract
80.0
Figure 4: Advanced Economy Age Dependency Ratios
2005
70.0
2050
60.0
50.0
40.0
30.0
20.0
10.0
Japan
Spain
Italy
Germany
France
UK
Ireland
Australia
NZ
USA
0.0
Source: OECD
9
DEMOCRISIS RE-EXAMINED
Figure 5: World Population Distribution, by MEIA Region (% of Total)
100%
90%
RoW
80%
70%
60%
46.5
72.2
60.8
2.7
50%
40%
30%
20%
10%
0%
2.2
1.3
1965
Ind, Pak,
Afgh
20.9
16.8
9.7
20.8
Iran, Iraq,
Saudi,
Yemen
16.1
2015
30
Africa
2065
Source: UN
between the electorate and the democratic state. That risk has increased in the
four years since.
Politicians talk about austerity, economic reform and institutional changes
as the key to achieving growth and thus maintaining the democratic
model. In Democrisis, we argued that it was reform of an unsustainable
social model that otherwise demotivates and overburdens the private
sector, which is the key to growth. Without growth, the whole democratic
edifice collapses.
Ageing is both highly deflationary and costly for the state. The combination is
quasi-fatal for the fiscal and sovereign debt sustainability of most rich countries,
unless growth can be boosted.
The real expansion in population will not be in Europe, Asia or America. On
the contrary, by 2065, 30% of the world’s population will be in Africa (Figure
5), where democracy is a rare, fragile flower — and where there is little sign of
a leap forward in prosperity for most. That will increase the likelihood of mass
10
DEMOCRISIS RE-EXAMINED
emigration towards the rich nations of the North, accentuating the very faultlines already there.
The world is already running the historically highest global levels of
displaced persons (both within and outside national borders). And, linked to
this, democracies are dealing with a rising tide of terrorism (both domestic
and international).
Migration is not a zero-sum game. Countries that fail to grasp the nettle of
reform risk losing their brightest talent. Immigration is a fine thing for ageing
rich countries if it can replace their dwindling workforces. But that is not a
given. Inflows of poor-quality labour into either non-reforming or reforming
economies become self-reinforcing. They could compound the impact of
rising entitlement costs, adding to education and healthcare expenditure
and further undermining productivity growth.
Also, democracy will only survive in emerging economies if these nations can
reform sufficiently to break out from the middle-income trap. Those that fail
to provide opportunities for their increasingly well-educated middle classes
will suffer from an exodus of skilled labour. As a rule of thumb less than 10%
of emerging economies successfully manage the transition.
Sluggish productivity
The other side of the coin of the demographic deficit is the productivity
slowdown in the major democracies. Low productivity growth has been
a persistent feature of the years since the GFC and started as a trend well
before that (Figure 6).
In the last four years, jobs created in the major economies have been mainly low
skill and low wage. Low end/contingent jobs represented 36% of the total US
labour force in 1990 and today it is 42% (or around 52m jobs vs. 33m in similar
occupations in 1990). High end jobs used to be 45-46% of total employment
in the US. Today the number is closer to 43%. Declining productivity growth
reflects an increasing proportion of the labour force essentially “warehoused”
in lower productivity occupations. These have not been worth automating and
low income work has only contributed to the inequality divide.
11
DEMOCRISIS RE-EXAMINED
US
Other DM
EM & Developing
World
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Figure 6: Growth of Labour Productivity
(Output Per Person), 1971-2016
Source: Conference Board
The legacy of the elevated debt — both private and public — highlighted
in Democrisis, has been sluggish growth. Credit booms tend to undermine
productivity growth by misallocating labour into lower productivity sectors
and the effects of this are long drawn out, particularly if the credit boom
has ended in a bust. This is hysteresis: the loss of potential growth capacity
after the financial crash is over. Of course, low productivity seems locked
in for some time in the future too. Poor demographics also limit capital
investment and thus productivity.
Since 2012, central bank policies, designed to avoid a financial meltdown
and restore liquidity, have become the main weapon for economic recovery.
They result in ultra-low or negative yields. This has created the problem of
a surplus of savings as oldies save more and yields on their savings fall.
Excess savings have contributed to a chronic lack of demand, which in turn
erodes the desire to make capital investments in new technology.
But in all likelihood, this only postpones a dramatic technology revolution
that is under way. Disruptive Technologies (DTs) will eventually kick in
12
DEMOCRISIS RE-EXAMINED
and heft productivity and growth. But DTs will attack middle income jobs
and could add to populist reaction. However, on balance, DTs will prove
complementary — rather than substitutive — to labour. Or so we hope!
Worsening inequality
Another of the themes of Democrisis was the growing failure of the democratic
social contract towards the end of the 20th century as wage shares in the rich
democracies were compressed by globalisation in the emerging economies.
In other words, 500m of the world’s workers exited the gulag to join the
free(ish) market system.
The fruits of economic growth were shifted from labour to capital because
labour supply became copious and capital more profitable. A simple
equation: as labour supply expanded, output could be boosted without
incurring increased wage costs (per unit of production). Increased output
earned more profits because the increase in labour supply limited labour
costs and boosted capital returns.
Figure 7: Global Income Growth by Decile ($bn 2005 PPP)
8,000
Top 1%
7,000
Increase 1988/2011
6,000
5,000
4,000
3,000
2,000
1,000
0
1
2
3
4
5
6
7
8
9
10
Source: Branco Milanovic
13
DEMOCRISIS RE-EXAMINED
Since 2012, there has been growing evidence of rising inequality or income
and wealth in the rich democracies — and amid already wide disparities in
global incomes and wealth (Figure 7).
And the recovery since the GFC has not lifted most boats. In the last ten
years two-thirds of households in the top 25 rich countries of the world
suffered falls in their real income levels — that’s 540m people. This compares
with less than 2%, or fewer than ten million people, who experienced this
phenomenon between 1993 and 2005. Today’s younger generation is at risk
of ending up poorer than their parents.***
In the UK, half of all households have seen no material recovery in their real
disposable incomes since 2005 — a “lost decade” of income, the longest period
of flat or falling real wages since at least the middle of the 19th century.****
A big reason for Brexit majorities in the UK referendum outside London now
becomes clear. The largest gains in household income have come in regions
where income was already high — London (incomes more than 30% above
the UK average); while some of the largest losses have been in regions where
income was already low — Northern Ireland (18% lower) and Yorkshire and
Humberside (14% lower). And it was the lower-income areas that voted
for Brexit.
So rising inequality in wealth between generations and regions and between
labour and capital, have left their mark on the trust that the have-nots have
with democratic institutions and their leaders. The ‘anger vote’ has gained
across the board. Not only in the UK, but globally; in the US, the same
arithmetic applies.
Japan: the slowburn to crisis
Outside Europe and the US, in Asia and in the emerging economies of
the South, the same disparities and growing disillusionment appear. In
Democrisis, we made the point that Japan exemplified the crisis of democracy
everywhere: an unsustainable level of public sector debt and budget deficits;
a very low growth rate; a fast-ageing society; a lack of involvement in the
workforce of women and negligible levels of immigration.
14
DEMOCRISIS RE-EXAMINED
Since then, under the promotion of PM Abe, Japan’s democracy has
been riding on three arrows to solve the crisis: monetary easing; fiscal
expansion; and structural reform. There is nothing new about the first
two arrows; for one and a half decades the Japanese have been trying
to boost growth by the state (and central bank) boosting fiscal spending
(and printing money). It didn’t work then. And it is not working now.
The key to Abenomics was “making Japan a good place to do business”;
in other words, economic reform that empowered the private sector. But
the third arrow has turned out to be more of a rhetorical idea than an
actionable plan, though there have been meaningful reforms in corporate
governance and agriculture.
Nearly three years into this great experiment, the Abe government is no
closer to reaching its goal. And the public sector balance sheet continues
to bloat (Figure 8). Instead, Abe has opted to focus his reform efforts
on the constitution, seeking to allow Japan to exercise “collective selfFigure 8: Bank of Japan Balance Sheet, JPY trn
500
450
BoJ Assets
of which Government Bonds
400
350
300
250
200
150
100
0
Jan 07
&'
Jul 07
&'
Jan 08
*'
Jul 08
*'
Jan 09
+'
Jul 09
+'
Jan 10
%'
Jul 10
%'
Jan 11
,'
Jul 11
,'
Jan 12
-'
Jul 12
-'
Jan 13
.'
Jul 13
.'
Jan 14
/'
Jul 14
/'
Jan 15
0'
Jul 15
0'
Jan 16
1'
Jul 16
1'
50
Source: BoJ
15
DEMOCRISIS RE-EXAMINED
defence”, to act ‘pre-emptively’ if either Japan or its allies are threatened.
This is music to nationalist ears but does nothing to stop Japan’s slowmotion to crisis and sovereign debt unsustainability.
China: the end of state autocracy?
A major section of Democrisis was devoted to China. We argued that China
could not sustain the growth rates of the past with a largely unproductive state
sector, party control over resource allocation and a failure to convert from a
heavy investment industrial economy into a consumer-led services economy.
The experience of the last four years has only served to confirm that thesis, as
China’s overall debt levels reach unprecedented proportions to prop up the
state capitalist model; economic growth has slowed sharply (Figure 9) and
productivity growth has slumped.
In China, debt is currently rising at more than twice the rate of GDP. Because
the stock of debt is currently 240% of GDP (Figure 10), this means that debt is
Figure 9: China Real GDP Growth, % chg y/y
15.0
14.0
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
Source: China National Bureau of Statistics
16
Mar-16
Sep-15
Mar-15
Sep-14
Mar-14
Mar-13
Sep-13
Sep-12
Sep-11
Mar-12
Mar-11
Mar-10
Sep-10
Mar-09
Sep-09
Sep-08
Mar-08
Mar-07
Sep-07
Mar-06
Sep-06
5.0
DEMOCRISIS RE-EXAMINED
Figure 10: China Debt by Sector, % of GDP
250.0
Gen Govt
225.0
NFCs
HH
Total
200.0
175.0
150.0
125.0
100.0
75.0
50.0
25.0
Jun-16
Dec-15
Jun-15
Dec-14
Jun-14
Dec-13
Jun-13
Jun-12
Dec-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
0.0
Source: IMF, Independent Strategy
rising by 30% points of GDP per year. No economy with this sort of unbridled
credit expansion has escaped meltdown.
China may be different for three reasons. The debt is owed to itself. There is a
massive stock of savings which cannot flee the country easily. And the state
owns or controls the lenders and the borrowers. That may prevent ruin.
But it cannot avoid the stark truths that the marginal GDP gain from every
extra unit of debt is plummeting (Figure 11) and that the stock of bad assets,
financed by excessive leverage, will burden growth (which we estimate at 4%,
declared as 6%) for the next decade.
Ultimately, this is unlikely to fulfil the terms of the Chinese social contract:
the party delivers permanently higher living standards and you, the people,
remain quiescent politically. Put simply, the legitimacy of the regime relies
on rising living standards as the price of dictatorship. It will fail to deliver. But
realisation of this is probably five to seven years away.
17
DEMOCRISIS RE-EXAMINED
Figure 11: China Efficiency of Capital Investment and Debt*
16.0
40.0
* Productivity of investment
(Incremental Capital Output Ratio)
and capital (Incremental Debt Output
Ratio) is falling, meaning increasing
volumes of both are needed to
generate each unit of GDP growth
14.0
12.0
35.0
30.0
10.0
25.0
8.0
20.0
6.0
IDOR
15.0
ICOR - rhs
Q2 2016
Q4 2015
Q2 2015
Q4 2014
Q2 2014
Q4 2013
Q2 2013
Q4 2012
Q4 2011
Q2 2012
Q2 2011
Q4 2010
Q2 2010
Q4 2009
Q2 2009
Q4 2008
Q2 2008
Q4 2007
Q2 2007
Q4 2006
Q2 2006
10.0
Q4 2005
4.0
Source: Independent Strategy
The current Communist administration under President Xi has reacted by
re-asserting the influence of the Chinese Communist Party, clamping down
on corruption and trying to promote nationalism. And China is following an
aggressive expansion of China’s regional influence, e.g. with the battle over
disputed waters in the South China Sea.
All of this speaks long of Xi’s rule: less social freedom with absolutely no
tolerance for questioning the supremacy of the Party and more economic
focus. China lacks a civic society based on rule of law and with the subjugation
of the growing middle class to the diktat of the Party.
The kernel issue remains: how “reformable” is an economic system that will
continue to be dominated by a one-party state that has little faith in markets
and a high conviction in its own ability to direct them, for the greater good
of the masses? The upshot will be enough reform to keep the party in the
driver’s seat for a while but not enough to allow China to exit the middle
income trap, which it needs to do in order to satisfy social expectations.
18
DEMOCRISIS RE-EXAMINED
The need for democracy
Since we wrote Democrisis, the themes in it have intensified. Democracy
is on the back foot everywhere. But all is not lost. The key to a revival in
democracy is economic growth. And that depends on higher productivity
through productive investment.
The new disruptive technologies of robots and artificial intelligence offer
opportunities to make a step-leap in productivity growth to overcome
the burden of funding ageing societies. In turn, that depends on political
leadership that can deliver structural reforms freeing up the forces of
technological change; reducing the social disparities and inequalities in the
process.
If that does not happen, it is quite possible that the major advanced economies
will enter a ‘post-growth’ state with shrinking working age populations, which
has a chronically damaging impact on financial systems and debt burdens.
If the major democracies of the world are unable to meet these challenges,
then the decline of democracy globally that we have seen in the last decade
or so will accelerate. But, as we argued in Democrisis, democracy remains the
most flexible and responsive system of governance to produce the necessary
leadership. The saviour of democracy may well be democracy itself. l
19
DEMOCRISIS RE-EXAMINED
REFERENCES:
*Journal of Democracy, July 2016, The danger of deconsolidation: the
democratic disconnect
http://www.journalofdemocracy.org/article/danger-deconsolidation-democraticdisconnect
**EU support surges in big European countries after Brexit vote
http://uk.reuters.com/article/uk-britain-eu-poll-idUKKCN1002A0
***McKinsey Global Institute, Poorer their parents? Flat or falling incomes in
advanced economies, July 2016
http://www.mckinsey.com/global-themes/employment-and-growth/poorerthan-their-parents-a-new-perspective-on-income-inequality
****Whose Recovery? Speech by Andrew Haldane, Chief Economist, Bank of
England, 30 June 2016
https://www.dropbox.com/home/Reading?preview=Speech+BoE+Haldane+
on+Recovery+and+Easing+Post-Brexit+150716.pdf
Click on the book to
download our original
Democrisis publication
in pdf format
Democracy caused the debt crisis.
Will it survive it?
by David Roche and Bob McKee
An Independent Strategy publication
20
MORE DEBT AND MORE CRISIS
21