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Readings

Understanding the Underpinnings of Populism

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Anyone searching for a better understanding of the raging populist movement would be well served to consider reading at least one of the following three books. While each author’s point of view varies on what is stoking the fires of the current populism, a common idea is woven through each: that the quiet rustlings of populism began decades ago and gained momentum after the 2008 global financial crisis.

Inequities at the Forefront

When NACD Chair Karen Horn addressed members at the 2016 Global Board Leaders’ Summit, she challenged them to place income inequality at the forefront of their concerns, as she believes it “affects not only our immediate stakeholders, but everyone downstream who will be affected in the long term as well as the short term.” To understand how income inequality has increased so drastically in the United States, as well as macroeconomic plans for how to mitigate it, directors can turn to two-time Nobel Prize-winning economist Joseph E. Stiglitz’s The Price of Inequality: How Today’s Divided Society Endangers Our Future (Norton, 2012).

The thesis of The Price of Inequality is that the top 1 percent of American earners engage in a variety of rent-seeking activities to the detriment of society. Rent-seeking, a term used by economists, describes activities that lead to “getting income not as a reward to creating wealth but by grabbing a larger share of the wealth that would otherwise have been produced without their effort.” Stiglitz’s most-cited forms of rent-seeking include influencing politics through outsized campaign contributions to decrease corporate taxes and generate policies that favor profit creation for businesses. As a result, much of his critique is directed at those companies, people, and industries that have thrived since the financial crisis and that have the funds to influence politics in their favor.

Stiglitz is keenly aware of the impact of good corporate governance on company performance and of a company’s impact on its broader base of stakeholders, including consumers. This carefully researched volume, updated in 2013 with a new preface, frequently reminds the reader that stronger or improved corporate governance could help assuage income inequality and repair a hallmark of populists: broad social distrust of business, government, and political institutions.

The Price of Inequality excels at tying broad macroeconomic threads together into digestible reading that integrates economic theory, social science, and national narrative. According to Stiglitz, the point of his book is to provide “an important set of warnings and lessons even for less unequal countries such as Japan: its past successes in creating a more equal and fair society and economy should not be taken for granted. It should worry about increasing inequality and its social, political, and economic consequences.” Stiglitz’s thread of evidence is a clarion call to directors and leaders worldwide that our institutions simply cannot afford to allow inequality to grow.

A Fading Dream?

George Packer received the National Book Award for Nonfiction in 2013 for The Unwinding: An Inner History of the New America (Farrar, Straus and Giroux, 2013). The book, which reads like a novel, surveys the lives of individual Americans as they navigate a changing America between 1978 and 2012.

Packer points a lens on the decades-long unraveling of trust in American institutions and the alternate solutions that individuals and families cobbled together to make it through. A portion of the prologue amplifies diverse American voices: “In the unwinding, everything changes and nothing lasts, except for the voices, American voices, open, sentimental, angry, matter-of-fact; inflected with borrowed ideas, God, TV, and the dimly remembered past—telling a joke above the noise of the assembly line, complaining behind window shades drawn against the world, thundering justice to a crowded park or an empty chamber, closing a deal on the phone, dreaming aloud late at night on a front porch as trucks rush by in the darkness.” In so many words, Packer has written an epic of modern populism with command and elegance.

Packer does not rush through his account of economic, social, and political change (ideas which Stiglitz was contemporaneously writing about). The Unwinding is anchored on the stories of three distinct American lives: that of Dean Price, a religious young man and alternative fuel entrepreneur living in the Carolina piedmont; Jeff Connaughton, a longtime operative for then Senator Joseph Biden who eventually advocates for post-recession financial reform and becomes disillusioned with public service; and Tammy Thomas, an African-American woman living in Youngstown, Ohio, who struggles to rise above the circumstances in which she was raised in the hopes of being able to thrive rather than merely survive. Their stories are interspersed with essays about the impacts of media, business, and institutional figures that were part of everyday American life through the period. Mentions of Colin Powell, Oprah Winfrey, Sam Walton, Jay-Z, Andrew Breitbart, and Elizabeth Warren color what Packer argues is the circular unwinding, rebuilding, and redestruction of institutions that grow ever-more fragile.

What can directors take away from this vision of an America in distress? The Unwinding tackles the day-to-day trauma that fading institutions and growing income inequality has had on the American dream. The voices that Packer, a staff writer for The New Yorker, brings to life complement the hard facts outlined in Stiglitz’s work—fleshing out exactly what it takes for most people to get by, and why they are so angry at their lot in life. It is, after all, far more difficult to engender empathy with abstract ideas such as economic theory. Narratives like those in The Unwinding help readers better understand the collective, current reality of so many disenfranchised Americans.

Memoir of the Year

Chances are, you or someone you know has already read Hillbilly Elegy: A Memoir of a Family and Culture in Crisis (Harper, 2016). Hillbilly Elegy was written by J.D. Vance, a young attorney cum Silicon Valley investment principal fortunate enough to live a modern-day Horatio Alger story—and to question why.

Vance fortuitously released his book in the thick of one of the most divisive presidential campaign seasons in modern American history. It describes the challenges he faced in his early turbulent life in raw, and, at turns, eloquently written detail. His story is like many others of his generation, of people who grew up in a climate of declining job opportunities and profound cultural change. He shares what it was like to be raised in poverty by a single mother struggling with addiction (an all-too-common specter across the Rust Belt and elsewhere) in a once-thriving manufacturing town, describes his hunger for a stable role model, and reflects throughout on other prevalent cultural forces at play in rural Ohio and Kentucky.

Vance finds his way out via the rough-trodden American path of hard work and good luck. At the behest of his beloved grandmother and the support of his sister, Vance joins the Marine Corps and upon return earns a degree at Ohio State University. Then, defying all odds, he lands a seat at Yale Law School. One of the more memorable chapters presents his fish-out-of-water experiences interviewing with top law firms. Vance’s lack of understanding of the mores and nuances of that world accentuate his personal circumstances where such privilege was never accessible to him, and that he frankly never quite admits to getting used to.

Vance advocates earnestly for the goodness of the people where he came from while in the same breath calling out his home community for its unwillingness to work hard to get ahead. His story reads less like that of a firebrand populist and more like the voice of a compassionate conservative. He simultaneously paints a tenderhearted picture of American middle- and lower-class struggles while criticizing the same people for a growing preferance amid persistent economic hardship to subsist on government welfare. Vance never mentions populism or the recent presidential election in this memoir, yet his now bestselling story has been cited by many political pundits as an honest reflection of the often-ignored swath of America that has embraced modern populism as a means out of their current situation.

If The Price of Inequality is the science behind the causes of populism and The Unwinding is a sweeping epic of modern American perspectives, then Hillbilly Elegy is a deeply personal—and, in the end, hopeful—tale of how the erosion in trust of 20th-century institutions and the collapse of U.S.- based manufacturing that once supported a healthy middle class have affected a broad subset of the American population. Vance’s story, arriving seemingly serendipitously at a historic inflection point in American politics, deftly illustrates the troubles stoking the strongest fires of populism.

Each of these three books offers distinctly different viewpoints on the economic inequality spurring the current rise of populism. Its effects on our culture are reshaping America that for some of us is unrecognizable and for others, all too real.

 

This article appeared in the March/April 2017 issue of NACD Directorship magazine.