Imagen-Elite Corruption and Political Reform: Rory Stewart's Insights on Democracy's Future

Introduction

In a thought-provoking episode of "Impact Theory with Tom Bilyeu," host Tom Bilyeu engages in a penetrating conversation with former UK politician and international development expert Rory Stewart. Throughout this discussion, they explore the complex challenges facing Western democracies—from demographic shifts and immigration tensions to populism, social media regulation, and innovative approaches to poverty reduction.

Rory Stewart brings a unique perspective to these issues, drawing from his extensive experience as a former member of the UK Conservative Party who once ran for Prime Minister, his work overseeing a $2 billion international development program, and his current advocacy for direct cash transfers as a poverty-fighting tool. This conversation offers valuable insights into how societies might navigate the turbulent waters of technological change, economic uncertainty, and political polarization.

The Demographic Challenge and Immigration Dilemma

Stewart begins by identifying two fundamental problems facing Western economies: aging populations and the controversial role of immigration in addressing workforce shortages.

"Most of our countries' birth rates are falling and we're getting older, and as we get older, we become more expensive to look after, particularly in medical terms," Stewart explains. He illustrates this with striking statistics from Britain: "When we set up the welfare state before the First World War, there were 20 working people for every one retired person. Today we've got just under three working people for every one retired person."

This demographic shift creates a dependency on immigration to maintain workforce levels, particularly in care systems and service industries. However, as Stewart points out, "The problem there is that immigration is very unpopular with large swathes of the population in the US and in Europe, and it's driving a lot of votes for the populists."

When exploring potential solutions, Stewart cautions against relying solely on immigration: "If you did that, your population would keep growing indefinitely... Ideally, you want not to have a pyramid at all; you want to have something that's pretty static and sustainable." To achieve this, societies need to become more productive, including in care industries—potentially through machine learning and robotics like those being developed in Japan.

Bilyeu raises an interesting hypothesis about immigrants from countries with higher birth rates potentially creating a more sustainable demographic column over time, but notes this creates cultural friction. Stewart adds nuance to this perspective:

"Immigrant communities have often had much higher birth rates... but it's usually a function of poverty, not which part of the world you come from," he explains. "Poorer people tend to have larger families... As countries get wealthier, their birth rates fall very dramatically."

Understanding Populism and Its Rise

The conversation shifts to examining populism—a political force gaining momentum across many Western democracies. Stewart provides a clear definition of this phenomenon:

"Populism at its core is a very exclusionary worldview by which I mean the populist claims to speak for the people against the elite and usually claims that the elite is somehow foreign or alien to the country," Stewart explains. "When a populist says 'I'm speaking on behalf of the American people or the German people,' in actual fact, often their supporters are barely 50% of the population, but that's not how they present themselves."

What makes populism dangerous, according to Stewart, is its monopolistic structure: "They don't present themselves in a pluralist way; they present themselves as having a monopoly on truth and identity, and people who are against them are not perceived as fellow citizens... they're perceived as people who are somehow traitors to the cause."

Bilyeu proposes that populism works because "the average person feels lost and confused... and a strongman will intoxicate people with certainty." Stewart agrees but emphasizes that any successful insurgent movement must draw on "a deep sense of dissatisfaction with the status quo."

He points to concrete failures that have fueled this dissatisfaction: "Objectively, the 2008 financial crisis was a humiliation for the credibility of markets and exposed profound inequalities... The Iraq and Afghan wars were complete, humiliating catastrophes—three and a half trillion dollars spent by the United States and its allies, and they achieved nothing."

Stewart argues that while such failures exist in many periods of history, what's different today is social media's role in amplifying grievances and polarizing public discourse. "Donald Trump, for example, whatever you think of him, was an immense beneficiary of the world of social media... If he says something provocative, he gets a double benefit—from his supporters who say 'this guy speaks the truth'... but he also gets the benefit from the people who are outraged by him."

The Social Media Dilemma

The discussion turns to the complex role of social media in modern society. Initially, Stewart was optimistic about social media's democratic potential: "At the time [of the Arab Spring], it felt positive... social media and the internet more broadly was a wonderful, liberating phenomenon that would allow us to speak directly people-to-people."

However, his view has evolved: "The risks are exactly these examples I've tried to give from Donald Trump or Elon Musk—of being able to mobilize very rapid, very aggressive, very exclusionary movements often on the basis of very scant facts."

Stewart points to a recent example from the UK: "How did these riots start in Britain? The riots started in Britain because a post on social media claimed that a Syrian immigrant who just got off a boat in the last 12 months had killed three young girls with a knife. This was completely untrue... Immediately people are burning down mosques."

When asked whether social media is a net benefit or detriment, Stewart expresses concern about its political impact: "These algorithms are not sharing information on the basis of what they believe is true. They're sharing information on the basis of what gets attention, which they can then sell to a company that wants your attention."

Stewart shares his frustration with platform owners who fail to act responsibly: "Elon Musk is a very interesting example of this. You would have thought that as the owner of this company, he would bother sometimes to check what he puts out."

Free Speech vs. Misinformation

The conversation navigates the tension between free speech and the dangers of misinformation. Bilyeu argues that restricting speech, even with good intentions, leads to authoritarianism: "When authoritarian rule comes in to say misinformation, disinformation, malinformation—those are all completely off limits—you get a totalitarian state."

Stewart offers a more nuanced perspective: "I don't think that what we're describing with COVID or Iraq and Afghanistan... are examples of authoritarian rule. It can feel like it because if you disagree with the conventional wisdom, it can feel pretty authoritarian, but... these are much more about optimism bias, groupthink, risk aversion."

He argues that the solution lies in traditional democratic structures: "The way to deal with it is through checks and balances... through an independent judiciary, through independent universities, through electoral cycles where people can get rid of their government every four years... I'm much more confident that the answer is the structures of liberal democracy."

Stewart expresses concern that social media might actually threaten democracy rather than protect it: "The power of social media is much more likely to lead to the collapse of liberal democracies and the development of authoritarian states. It's much more likely to embolden populism."

Decentralization and Local Governance

As the conversation shifts toward solutions, Stewart advocates for decentralization of governance:

"Decentralization is about understanding that often local people know more, care more, can do more than distant officials," he explains. "You're much more likely to come up with a good solution for your neighborhood than somebody in Washington."

This approach offers multiple benefits: it enables more innovation as different regions "learn from each other rather than having a single centralized structure"; it rebuilds faith in democracy by bringing government closer to people; and it allows for tailored policy solutions at the local level.

Stewart argues: "I think our societies are basically too big, our governments are too far away, and a lot of our problems come from that. The same would be true with industrial strategies—an industrial strategy for California is much better developed in California than in Washington."

Direct Cash Transfers: A Revolutionary Approach to Foreign Aid

Perhaps most fascinatingly, Stewart shares his revolutionary perspective on poverty reduction through direct cash transfers, drawing from his experience running a major international development program:

"I used to run a $2 billion a year international development program... and we achieved so little. One of the reasons we achieved so little is that we were obsessed with the idea that we knew best," he reflects. "We were coming into an African village, and we were going to teach them something."

Stewart contrasts this with the approach of GiveDirectly, an organization that simply provides cash to people in extreme poverty: "Turning up in a village, surveying people, and then transferring to their phones about $900 in cash. You go back a few weeks later, the entire community is transformed—people have new roofs, their kids are in school, they're eating better, there's electricity."

This approach works, Stewart argues, because "cash falls like water on a mountain landscape—it fills every crevice and cranny and it adjusts flexibly to different people's lives... whereas the traditional program comes in and says the one thing that matters in this village is water, or education, or a road."

The results have been remarkable: "In a study in Kenya, for each dollar going into these villages, there's $250 of benefit for the surrounding area... Even 12 years into these programs, [we're seeing] the sustained impact of a few hundred [dollars] given 12 years earlier in terms of people's savings, their investments, and above all, their incomes."

Most importantly, Stewart emphasizes that direct cash transfers preserve dignity: "It's saying that the poorest people in the world know more than you or I do about their village in Malawi... The idea that you or I have any idea what their lives are like, what their needs are, what their priorities are—it's just madness."

Conclusion: Navigating an Uncertain Future

As the conversation draws to a close, Bilyeu asks Stewart whether he believes in the inevitability of imperial decline, noting that the American Empire seems to be in its "mid to late stage five, and stage six is total collapse."

Stewart offers a nuanced view: "When you talk about the collapse of empires, what you mean and what you're worried about [matters]. The United Kingdom no longer rules an empire... but the average person in Britain is much better off than their grandparents were."

He suggests that while America's global influence might decline, this doesn't necessarily mean a decline in living standards: "Perfectly plausible that within 20-30 years' time, nobody in the Congo is going to be interested in what the United States has to say about the world... but that doesn't mean that the next generation might not live lives which are longer, happier, more fulfilled, and richer than those of us that are alive today."

Throughout this wide-ranging conversation, Stewart and Bilyeu explore the complex challenges facing modern democracies while offering thoughtful perspectives on potential paths forward. Their discussion highlights the importance of institutional resilience, local empowerment, and innovative approaches to longstanding problems—all essential elements for navigating an increasingly complex global landscape.

Key Points:

1. Western democracies face a demographic crisis with aging populations and fewer workers to support retirees, creating economic pressure and driving immigration debates.
2. Populism thrives by claiming to represent "the people" against "the elites," challenging democratic institutions and presenting an exclusionary worldview that rejects pluralism.
3. Social media has fundamentally altered political discourse by amplifying extremist voices and spreading misinformation at unprecedented speed and scale.
4. The solution to these challenges lies not in abandoning democratic structures but in strengthening them through checks and balances, while potentially regulating social media platforms.
5. Decentralization of governance can improve democratic function by bringing decision-making closer to citizens and allowing for more tailored, innovative solutions.
6. Direct cash transfers represent a revolutionary approach to international aid, empowering recipients to address their own needs rather than imposing external priorities.
7. While empires rise and fall, the material conditions of ordinary citizens can continue to improve even as a nation's global influence wanes—suggesting a more hopeful outlook for societies in transition.

For the full conversation, watch the video here