What happens if the Trump Recovery loses steam? What happens to Populism in that case? Many Americans no longer believe the economy is fair. Therefore, the game is rigged against them. The people blame large corporations, greed and the top 1% for the current low economic growth. This seems, at first, to contradict the thesis that conservative economic policies have won and are the prevailing economic agreement.
A review of PEW’s ‘Trends in American Values 1987-2012’ poll finds that 88% of Americans “admire people who get rich by working hard.” 63% say hard work is the way to be successful. Americans admire entrepreneurs, small business owners, family owned businesses, inventors, and creators—but have little respect for the corporate/government professional class. It is not inequality in wealth and income people object to, but the source. The creator, who puts everything on the on the line to start a business, is admired. The manager of a large publicly traded corporation who rises through the ranks without ever having to put any skin in the game is not.
The US is still a country where wealth, income earned through hard work and personal risk is respected. Our national survey in 2014 found interesting dynamics. 71% of Blacks, 79% of Whites and 66% of Hispanics believe hard work is still rewarded. But, when asked if the economic system is rigged against the Middle Class, the results are reversed. 71% of Blacks, 65% of Whites and 61% of Hispanics believe the economic system is rigged.
In a survey among Michigan voters in August of 2016, two our of every three view the system as rigged against the Middle Class. Two/thirds of White and Black voters along with 55% of Hispanic voters view the system as rigged. Even with that cynicism, four out of five Michigan voters believe increasing economic opportunity and an opportunity to succeed, required growing the private sector. This is the position taken by Donald Trump, the first Republican to win Michigan since 1988.
There is still belief in the power of the free market even if the power is dormant. Many Americans see that over the past forty years the economy shifted. Michael Barone notes in a review of economist Tyler Cowen’s new book Average is Over: Powering America Beyond the Age of The Great Stagnation
“wages rose in postwar America because labor was scarce (the 1930s birth dearth) and foreign competition imperceptible. Those conditions ended around 1970. Inequality rose. Perhaps that’s the default mode.”
Barone, summarizing Cowen, articulates what the public experienced the last for forty years: The big winners in the economy will be those who work with and harness machine intelligence and those who manage and market such people. Such “hyperproductive” people, about 15 percent of the population, will be wealthier than ever before. Also doing well will be those providing them personal services. For jobs lower on the ladder, there will be a premium on conscientiousness. That’s good for women and bad for men, who are more likely to do things their own way.
Mid-level jobs, Cowen says, are on the way out. He argues many of those laid off after the financial crisis were “zero marginal product” workers. They weren’t producing anything of value. Employers won’t replace them. Middle Class and Family income has declined or not kept pace with inflation. They haven’t even reached the pre-recession numbers of 2007. Median incomes are lower now than the median incomes when the recession supposedly ended in 2009 and are lower than in 2007, during the Bush’s years. Incomes still lag far behind where they should be seven years into recovery.
In past recoveries including the bursting of the tech bubble in 2000, family income rose. In today’s economy, more people live on welfare and are below the poverty line. Many more need for food stamps. Obama reversed the success margin where income goes down and food stamp recipients go up. Members of the investor class declined since 2007 when 62% owned stocks in America companies. However, now that number is 54% with every group. Demographics shows declines except for those earning $100,000 plus.
So, what happens if the Trump agenda fails. Where do those Trump supporters go?
The present debate among Democrats is whether they will push more progressive identity politics. At least, trying to attract working class whites seems to be over. The hard left won. Accordingly, the White working class is abandoned. Presently, Democrats have rejected any compromise with the more traditionalist working class. Many of those voters left the Democratic Party for Trump. Any belief in traditional values or nationalism is rejected. The resistance movement among Democrats leads to a Party moving ever more leftward toward identity politics. They are united in vehement, occasionally militant, opposition to Trump and the GOP.
The GOP and movement conservatives are still defining themselves as they will be and what conservatism means. Throughout the 2016 primaries, the majority of Republicans supported the two anti-establishment candidates Ted Cruz and Donald Trump. Cruz campaigned on a more libertarian plank opposed to Trump’s populism. However, both men understand the problem of stagnant income and understand the unease of illegal immigration. Their solutions are different. Cruz concentrated on conservative voters and mobilizing that base. This showed in his vote distribution. His vote totals concentrated among extreme conservatives.
Trump had a very even distribution across Republicans from the very conservatives to moderates. He built upon a broader base. Part of the reason is that Trump did not always campaign on the traditional Republic issue of tax cuts and budget restraint. He supported more moderate positions when it suited him.
Marco Rubio was part of the gang of eight’s efforts for immigration reform. Eventually, he abandoned the effort. Throughout the 2016 primaries, Rubio was persecuted for being part of that group. Additionally, he did a rather poor job of separating himself from it. Trump was to the left of them before he ran for President. Rubio made it clear just like Trump and Cruz. There are no reforms before borders are secured.
The biggest difference between Cruz and Rubio is that Cruz will not support any path to citizenship for those here illegally. Whereas, Rubio appears ready to accept a path to citizenship if certain condition are met after a period of years. (The reality under Trump is that the number of illegals staying in the United States after his reforms will be similar to those living here now. His proposal is similar to Texas Senator Kay Baily Hutchison, who proposed a similar idea in which the illegal goes back to Mexico and comes back to stay). American Enterprise Institute’s Mark Thiessen explained this:
“This is a policy called “touchback” and it was first proposed in 2007 by moderate Republican Sen. Kay Bailey Hutchison (TX). She offered a “touchback” amendment on the Senate floor that would have required illegal immigrants to return to their home countries to apply for a special “Z visa” that would allow them to reenter the United States in an expedited fashion and work here indefinitely….Her amendment lost by a relatively close margin, 53-45. It was supported by most Republicans and even got five Democratic votes — Sens. Claire McCaskill, Max Baucus, Jon Tester, Byron Dorgan and John Rockefeller all voted for it.”
The idea was so reasonable that on April 22, 2007, the New York Times noted, “It’s not ideal, but if a touch back provision is manageable and reassures people that illegal immigrants are indeed going to the back of the line, then it will be defensible.” Therefore, Donald Trump agrees with an idea from the leftist New York Times.
And as Mark Thiessen added:
“In 2007, the Los Angeles Times did the first telephone poll of illegal immigrants and asked whether they would go home under a “touchback” law that allowed them to return with legal status. Sixty-three percent said yes, 27% said no and 10% were undecided. If they were promised a path to citizenship when they returned, the number who said they would leave and return legally grew to 85%.”
Trump’s son, Eric, told Megyn Kelly, “The point isn’t just deporting them, it’s deporting them and letting them back in legally. He’s been so clear about that and I know the liberal media wants to misconstrue it, but its deporting them and letting them back legally.”
Donald Trump added to this when he told CNN, “I would get people out and then have an expedited way of getting them back into the country so they can be legal…. A lot of these people are helping us … and sometimes it’s jobs a citizen of the United States do not want. I want to move ’em out. And, we will move ’em back in and let them be legal.” Trump’s own position as articulated during the election may prove the beginning of a Republican compromise beginning with border security. Both Rubio and Cruz would agree.
National Review’s Fred Bauer noted about the immigration debate:
“Plenty of people who are much more serious about enforcing immigration law than Chuck Schumer also support legalization — but only after enforcement has been put in place. I don’t know anyone who would call Mark Krikorian an open-borders fanatic, but he has supported legalization (and even a path to citizenship) for illegal immigrants. However, he has argued that enforcement should precede legalization. It would be bizarre in the extreme to say that Krikorian and Schumer basically have the same position on immigration because they both are open to a path to citizenship. When and under what conditions legalization happens is perhaps as important as whether it should happen at all.”
Cato Institute’s Alex Nowrasteh noted about Cruz”
“Senator Cruz’s amendments support increasing skilled immigration, restricting welfare access to legalized immigrants who used to be unlawful, allowing for the legalization of unlawful immigrants but blocking their path to citizenship, guaranteeing that states can still check for proof of citizenship before allowing people to vote, and creating border security benchmarks that trigger the legalization program once they are met. His record on immigration is mixed, but he is far from a restrictionist.”
In fairness, Cruz voted against the final bill.
Both Cruz and Rubio are social conservatives and supporters of gun rights. But, that is the norm for Republicans. Cruz actually argued gun rights cases in front of the Supreme Court. He made it clear he opposes crony capitalism including the ethanol and Sugar cartel. Rubio supports the latter. As the Carrier case in Indiana demonstrates, Trump is not above supporting his own version of crony capitalism if it benefit his voters. (Sugar is one of those things that Florida politicians support just as Iowan politicians support ethanol). Cruz proved more puritan when it comes to supporting free market ideas. Whereas both Rubio and Trump are willing to forsake purity to ensure policies which enhance their base.
There are differences between Cruz, Rubio and Trump that reflect the differences within the Republican Party. Rubio’s tax plan depends on tax credits for the Middle Class. It promotes family values through the tax system. He left the top rate at 35%. This is only a slight drop from the present system. Ted Cruz proposes a flat 10 percent tax plus a 16 percent rate on business. It is similar to a value added tax.
In foreign affairs, Rubio campaigned more as an interventionist. Cruz’s foreign policy is a return to the pre-9/11 less interventionist wasy. In the Trump era modesty in foreign policy is the new norm for Republicans. This follows through on Cruz’s vision. Cruz talked of a Gold Standard; adopting aspects of the Rand Paul agenda. Even Trump may even lean toward a dollar based on Gold. This debate reflects a divide among Republicans between those who view tax reform as the Holy Grail and those who view increasing Middle Class income as primary. Trump’s individual tax plan is similar to Rubio. His business plan is similar to what Cruz proposed.
The appeal of National Populism and Democrat Socialism is that they acknowledge the fears and anxieties of large swaths of the electorate and provide fresh sounding solutions to the problems voters are facing. The key words being fresh sounding, because the solutions are actually old. They were tried. And, accordingly, did not work. But, compared to the stale 40-year-old rhetoric of main-line Republican and Democrat politicians, National Populism and Democrat Socialism seem like new solutions to the voter’s problems.
Democratic Socialism and National Populism grow from the same roots — a low growth economy, stagnant wages, flat productivity brought about the Industrial Revolution maturing, and competing against every other country in the world.
The main difference between Democrat Socialism and National Populism is narrative and brand positioning. How do they reflect the anxieties and aspirations of their supporters? And, who do they blame for life’s challenges and disappointments. Humans need a narrative to understand the world. There must be a victim, a villain and a hero. National Populism and Democratic Socialism have almost the same plot lines. But, different characters fill the roles.
National Populism appeals to people with traditional values — Patriotism, hard work, respect of Christian faith and the value of traditional family roles. These values are described by University of Illinois Professor Andrew Hartman as, “values middle-class whites recognize as their own.” In the National Populism narrative, victims work hard. They follow traditional middle class values. Villains are vague establishment and various “losers” who rigged or screwed up the system so much that following the rules no longer works. The heroes are Trump and his supporters. They stand up to the establishment by Making America Great Again.
Trump voters come from every corner of the Big Republican Party Tent. They vary from the very conservative to the more moderate and liberal Republicans. They were ready for a message that took their concerns seriously and did not mock their values. If translated into policy, National Populism benefits workers in industries the government favors for protected status; businesses who cannot sustain foreign competition; companies holding government backed debt; and companies willing to collude with the government for business advantages.
Democratic Socialism appeals to people who hold Progressive values. These are Multi-Culturalism, Social Justice, equality of outcomes, a belief that smarter technocrats create a more just world and spiritualism in place of religion. In their narrative, the victims are nearly everyone but white men. The villains are white men, especially those who work at investment banks or are leaders of large, un-sexy old economy companies who rigged the system so that only they benefit. The heroes are campus protestors, activists, technocrats and anyone who understands the negative effects of white privilege.
In practice Democratic Socialism benefits government employees and pension plans, Green Tech companies, people receiving direct government benefits, individuals with government guaranteed mortgages or student loans, workers in competitive global industries and companies whose businesses models can succeed through near monopoly status by making the concessions needed to come under the government umbrella.
There is significant overlap between Sanders’ Democrat Socialism and Trump’s National Populism. As Charles Murray opined in the Wall Street Journal, “If Bernie Sanders were passionate about immigration, the rest of his ideology would have a lot more in common with Trumpism than conservatism does.”
The risks and dangers of National Populism and Democratis Socialism are not what Trump or even a Sanders-like progressive would do if elected. For the next few election cycles the Conservative Republican House and Democrats in the Senate will ensure gridlock when it comes to statutes and appropriations.
The threat is how Trump and Sanders supporters react over several more years if their complaints are not dealt with. For Conservatives, the fear is a loss of 35% of engaged Republicans. The Trump takeover of the Republican Party is a dream for Liberals. It creates a political landscape in which conservatives and libertarians move to the sideline as two Populist Parties fight it out. But, the resistance within the Democratic Party is designed to remove Trump from office and overturn the 2016 election.
France is where the future of populism may lie. Especially, if Trump fails to move his agenda and improve the lot of American workers. Marine Le Pen is not a traditional American conservative or even a believer in the free market. Many of Le Pen’s views mirror the hard left, embodied by Jean-Luc Melenchon. This includes her promise to maintain the 35 hour work week and lowering the retirement age to 60. (The two combined actually collected 42% of the vote in first round voting. This shows political strength.)
Marco Respin noted, “The phenomenon of allegedly “far-Right” organizations trying to is not unknown in the United States. Conversely Lyndon LaRouche, a onetime Marxist (of French heritage, no less), “breached into the Right” by aligning his movement with Liberty Lobby and anti-Semitic organizations in the 1970s and ‘80s. Plus ça change, plus c’est la même chose….Perhaps the undertaking is less an example of political opportunism than a recognition of ideological kinship.”
Le Pen’s Nationalist economic plan begins with a 35% tax for any French companies that produces their goods elsewhere. Ms. Le Pen’s goal is “reconquest” of French markets with policies moving toward autarky. French goods produced by French worker. Marine Le Pen would add a 10% tax to a foreign worker’s salary. This includes citizens of EU countries. The goal is to encourage hiring of French workers. As Forbes writer Tim Worstall said, “That’s slightly less absurd. It’s still not something that aids the economy but it just introduces a mild price difference between hiring a foreigner or an indigene”.
Le Pen’s complaints about the EU and Euro has merit. The EU has become a bureaucratic nightmare, attempting to run the economy of European nations including, recently, immigration policy by forcing nations to accept refugees from the Middle East. The EU has shown that if individual nations oppose its agenda, it is perfectly willing to dispense with Democratic nicety. In June of 2017, the EU threatened to take action against the Czech Republic, Poland and Hungry for refusing to take their share of refugees from the Middle East. The ability of a country to determine its immigration policy is prohibited if it interferes with the EU’s vision. Tim Worstall noted:
“Those two ideas obviously I agree with. But for me the idea of being out of the European Union, as with Brexit, is so as to be able to declare unilateral free trade. For that’s what makes us richer. We produce what we can and then we’ve the pick of the best of the world that we can have as imports. And why would we want to tax ourselves on the very purchases we want to make?”
Le Pen v. Trump Populism
Le Pen is not Trump. While both are protectionists, there are differences between them beginning with the crucial fact that Trump actually likes capitalism. Le Pen is suspicious of it. Trump is fighting the administrative state and looking to reduce taxes on both individual and businesses. Le Pen seeks to increase taxes on individuals and businesses as part of her economic nationalism. Trump for all his bravado is not a racist. As I mentioned before, the number of illegals allowed to stay after his reforms will be similar to what we presently see. Le Pen is anti-immigration, anti-capitalist and anti-free trade – the trifecta of bad economic policy. She is a big government nationalist who uses government largess to benefit her supporters.
Le Pen is the warning of what could happen if Trump’s policies are strangled in the womb by Democratic resistance. A developed populist movement could drag 35% of Republicans and a high percentage of Sanders’ supporters into national populism big government. Then, liberty dies a slow death.