Faust and Mephistofle by Eugène Siberdt, 1851-1931 (Source: here)
“Faustian bargain, a pact whereby a person trades something of supreme moral or spiritual importance, such as personal values or the soul, for some worldly or material benefit, such as knowledge, power, or riches.” (Source: here)
The recent riots in Britain pitted the country’s two most vulnerable groups against one another. Low-income, poorly educated, and mainly white Far-Right supporters congregated across multiple cities in Britain and proceeded to attack mainly brown and black asylum seekers, Muslims, Jews, and other minority immigrant groups.
British thug (Source: here)
The riots triggered large counter-demonstrations. The success of the counter-demonstrations enabled the British middle class to label the riots as spontaneous outbreaks of anger by an extremist fringe within British society and to assign blame for the riots to Far-Right politicians, such as Nigel Farage and Tommy Robinson.
“This is how we really are!” exclaimed middle-class counter-demonstrators as they celebrated their impressive turnout. They believed, and continue to believe that the overwhelming majority of British people are caring, tolerant people.
Very well-behaved and somewhat naive (Source: here)
So the crisis is over, right? It was nothing other than a flash in the pan, right?
Well, not so fast. The violence in Britain sprung from deeply-felt anger among the poorest section of white British people. The rioters targeted immigrants, but their real aim ought to have been the British political establishment and the British middle class.
A quarter of a century ago, the political establishment and the middle class in Britain struck a Faustian Bargain the crux of which was acceptance by middle-class voters of major cutbacks in basic public services in exchange for a lower taxes than would otherwise have been the case. In essence, the middle class became more selfish leading to a collapse in solidarity with the most vulnerable people in British society.
Incidentally, this polarisation of society did not just happen in Britain. Similar Faustian Bargains were struck in most other Western economies. Hence, while the discontent may have reached boiling sooner in Britain than elsewhere - perhaps due to the adverse economic consequences of Brexit - the political dynamics are equally latent in other Western nations.
Reluctance of politicians to raise sufficient taxes from politically important middle-class voters had two polarising effects. First, middle-class voters were able to replace public services with private services, a transition which even made some members of the middle class feel they were moving up in the world. The observed growth in private healthcare insurance, private schooling, and private housing over the past couple of decades is due to this phenomenon.
Second, lower than required tax revenues necessitated cuts in essential public services, which particularly hurt the poorest, who do not have the means to go private. In cutting away their essential services, a crucial social safety net was torn away, setting in motion a downwards spiral impoverishment among the most vulnerable people in Western economies.
To make matters worse, the plight of the lowest-income white working class was further exacerbated by rising productivity in emerging market economies, which means that many of that jobs that used to be held by the working poor whites in Western economies went to Asia and other regions of the world. The result: a significant rise in inequality within Western economies as shown in the chart below.
It is Faust what done it! Inequality in Western economies (Source: here)
Finally, adding insult to injury, Western governments also displayed great reluctance to tax the very richest for fear that they would take their business elsewhere. Today, about 70% of all wealth in the United States is owned by just 1% of the population (chart below). The figure for the UK is practically identical (see here).
Obscene distribution of US wealth (Source: here)
In fact, the argument higher taxes make the rich flee is vacuous, because it fails to distinguish between the rich on one hand and their businesses on the other. Sure, a section of the very richest are sensitive to changes in tax rates and may move elsewhere, but the rich will continue to locate their businesses in the largest markets. Where you locate a business is more a function of stability and rule of law than taxes. And to the extent taxes matter, businesses tend to be more sensitive to corporate tax rates than the personal tax rates of their owners. Indeed, many corporations even get around the problem of high corporate tax rates by incorporating in tax shelters, such as the Republic of Ireland.
The combined impact of low taxation of the very rich as well as growing monopoly power in the new digital industries has created a super upper class of people with extraordinary wealth. So obscene is their wealth that these super rich have had a meaningful effect in terms of worsening the income distribution in Western economies (for more on the monopoly power that leads to this crazy accumulation of wealth, especially in the new digital industries, see here).
The four richest people in the world (Source: here)
As the vulnerable at the other end of the wealth scale slid deeper into desperation and poverty, they became highly receptive to political narratives that 'explained' the erosion in their living standards. They turned out in particularly large numbers to support populist explanations from the Far Right, which offered a clear and easily understood narrative: the plight of the white poor in Britain is due to uncontrolled immigration.
Numerous studies prove immigrants make large positive net contributions to the economy and public services (see for example here). However, the anti-immigration rhetoric of the Far Right has been so emotionally appealing that it has drowned out the truth. It is particularly ironic that the Far Right has been especially successful in selling the myth that worsening of public services is due to immigration, because this is perhaps the area where immigration has been most beneficial, crucial even.
Mainstream politicians soon latched onto the argument. By now, anti-immigrant rhetoric has become entirely normalised across the political spectrum. Mainstream Left and Right political parties in Britain, Europe, and the United States all see benefits from scapegoating asylum seekers and immigrants, not least because scapegoating diverts attention away from unpleasant discussions about tax rises to pay for better services.
Literally every single major political party in the Western world today is trying to evade the discussion of taxes by pursuing hard-line immigration policies. However, it is unclear how much longer this policy of distraction will work. When you have open battles on the streets of multiple cities pitting the two most vulnerable groups – poor whites and immigrants – against each other in some nightmare of middle-class divide and rule with the sole purpose of preserving low taxes for the middle class and the rich then, maybe, the Faustian Bargain has run its course.
For one, when you observe violence on the scale seen in Britain it indicates that riots were organised and financed, undoubtedly by rich and influential people. The rioters themselves may have lived up to every preconception about what poor and badly educated racist thugs like and behave like, but that is all the more reason to suspect that their actions were highly orchestrated.
In fact, I believe the most sensible way to think about the rioting thugs in Britain is as a modern-day version of Hitler’s disgruntled young men, who were paid to create the impression that the democratically elected government was unable to maintain peace and stability. Hitler’s thugs, of course, went on to become Sturmabteilung, or the SA, the original paramilitary wing of the Nazi party.
Once a thug, always a thug; SAs marching (Source: here)
There is good reason to believe that big money will continue to fund the Far Right. The likes of Mark Zuckerberg and Elon Musk openly applaud anti-democratic leaders, such as Russian President Vladimir Putin, coup-instigators like Donald Trump, and UK Far Right leaders like Robinson and Farage. They do so because they are convinced that once the Faustian Bargain of the past three decades comes crashing down, so will their privileges of ultra-low taxation.
Musk fuelled the fascist narrative in Britain by saying the UK was losing control (Source: here)
Fortunately for the likes of Zuckerberg and Musk, albeit not for the rest of us, the Faustian Bargain in Western economies still remains firmly entrenched. Mainstream politicians still engage in anti-immigration rhetoric, which means that immigrants - especially Muslims - continue to carry blame – in the minds of voters – for the plight of the white working poor. And Far Right populists continue to feed on the deepening dehumanisation of immigrants that naturally follows.
Similarly, so far there is no sign that mainstream politicians are doing anything to undermine the economic foundations of the Faustian Bargain. For one, there is still no sign public services will be financed properly. Also, there is no sign the burden of taxation is shifting back towards the rich. And, so far, nothing is being done to halt the decline in the living standards of the lowest-income groups in Western economies.
Until these things change, we should expect more division, more riots, and worse riots. We should also expect the riots to spread from Britain to other Western economies. The longer this continues, the more fuel will be added to the Far Right narrative that democratic governments are ineffective stewards of state power, potentially posing a threat to democracy itself.
If the likes of Trump, Tommy Robinson, and Nigel Farage are allowed to take control just imagine how they would use the full powers of the state! They would eradicate ethnic minorities, dismantle the balance of powers, censure the press, end democracy, and make a mockery of the rule of law. They would enrich themselves and eventually go to war, when they run out of domestic scapegoats. It is a downwards spiral we have seen before.
It is therefore essential that politicians do not dismiss the British riots as a one-off, or a problem confined to the British Isles. The Faustian Bargain is a Western-wide problem and it must be reversed everywhere before it is too late. There is no more room to cut public services. Inequality must be reduced. The most vulnerable must receive investment, not be left to fight one another over scraps. Public services must be funded properly to make sure that Western societies do not tear themselves apart through their soft underbellies. Businesses, the rich, and, yes, middle classes will have to pay.
The End
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