The most important thing Democrats need to understand is that Trumpism will not end with Trump. Here is a simple chart that explains why.
Liberal democracies cannot survive without prosperity. The chart above shows the decline in worker prosperity in the US relative to capital. Over the span of 70 years, productivity increased 4.5 times, but real wages grew only 3 times. Even more damning is the declining share of GDP that goes to labor incomes, falling from 51% in the 1950s and 60s down to 42% today. This chart offers stark evidence that the balance of power has shifted decidedly in favor of capital since at least the 1970s.
In my view, economics and politics are best understood as a struggle among competing claims to power. The government is the crucial power broker that can either even the playing field or skew the balance of power toward one or more interest groups. Conservatives use government to perpetuate existing power structures. Communists and fascists use government to create new ones. Liberals and progressives use government to even the playing field.
It takes an even playing field for the “Invisible Hand” of markets to work. That hasn’t been the case in the US for quite some time as perfectly illustrated by the chart above. The inflation of the 1970s and Ronald Reagan decimated labor’s claim to power. Conservatives blamed the inflation of the 1970s on labor wage demands and government spending. Demonstrably, neither claim is true. Fiscal deficits back then were puny, and labor share declined precipitously in the 1970s, meaning that wages didn’t drive inflation but struggled to keep up. However, when it comes to ideological battles, there is little concern for the truth. Conservatives went on to frame government and labor unions as the “bad guys”.
This was a huge win for business conservatives, who form a key constituency within the Republican Party. Under the guise of “free markets”, the conservative agenda since Reagan has been to dismantle regulation and stack the odds in favor of capital. This ideological victory has been so complete that even Democrats have accepted “free-market” mantra, limited government and public-debt fearmongering. In other words, all economic debates since Reagan, even within the Democratic Party, have been framed in conservative terms. This is the sad truth about the political and economic debate: for the last 50 years, we all have been playing in the conservatives’ playing field.
The irony here is that it is precisely these conservative policies that have prevented free markets from working, hence the declining fortunes of workers in the US. Again, I cannot emphasize this enough: markets work only when each player has equal access to power. That’s when capitalism delivers a win-win for everyone. Instead, when the game is rigged (a.k.a., crony capitalism), you have a few winners and many losers. Over time, resentment by the losing side undermines the belief that each person is free to pursue happiness and succeed or fail based on his or her own merit, a belief that is the cornerstone of liberal democracy. Without this shared commitment to liberalism, you end up with a rigged system that pits people against each other, greasing the skids toward some form of autocratic or even totalitarian rule.
This is exactly what the GOP did to maintain its political appeal despite the continued failure of tax cuts and de-regulation to deliver shared prosperity. The GOP became the party of wedge issues and divisions. During the Clinton and Bush administrations, the GOP sought to sharpen cultural divides in order to consolidate the support of religious and 2nd-amendment conservatives. When this wasn’t enough in the aftermath of the Great Recession and the Obama Presidency, the GOP began to exploit racial, ethnic and national divisions.
In the face of rising inequality, the GOP continually pushed the country to the right, away from the values of liberal democracy, ultimately bringing upon us the Trump Presidency. If history is any guide, this push will continue even without Trump. There will be many mini-Trumps sprouting from the Republican midst. With economic policies that favor the few, the GOP must look for scapegoats: government, public debt, minorities, immigrants, muslims, gays, China, you name it.
Trump is a symptom of a party that has sought blame and division as its main avenues to power, inexorably pushing the country toward non-democratic rule. Unfortunately, such bigotry can and does find fertile ground with people who have uncertain economic prospects, especially given US racial history. It’s a vicious cycle. The more you fear the American Dream slipping away, the easier it is to point a finger and cling to demagogues like Trump.
To break this vicious cycle, Democrats must restore the American Dream. First, I want to make it clear that I will support any of the Democratic candidates running for President. Each one of them will be infinitely better than Trump. But in my view, only one candidate can bring lasting change, and her name is Elizabeth Warren. That is because Warren is the one candidate who can reframe the role of government and change the playing field. What Reagan did for conservatives 40 years ago, Warren can do today for liberals and progressives.
Her message is that the economy has been rigged, and she has a plan to fix it, making sure the economy works for everyone. And boy, does she have a plan — it is this specificity that scares the bejesus out of entrenched capital interests (here great MSNBC interview on why Wall Street fears Elizabeth Warren). She knows the pressure points, the things in our current system that skew the playing field and prevent free markets from working.
There is another candidate that has the potential to change the playing field, Bernie Sanders. However, there is a fundamental difference between him and Warren. Elizabeth Warren believes that free markets can work as long as there is cop, and she wants the government to be the cop. Nor is she against wealth. You can be successful and become a billionaire as long as you play by the rules and pay your fair share. On the other hand, I do not know what Bernie thinks about markets. He lacks Warren’s specificity and clarity. Just saying that the system is rigged without affirming belief in free markets opens the door to demagogues on the left, who can be just as dangerous to liberal democracy as ideologues from the right.
Capitalism faced similar challenges in the aftermath of World War I and the Great Depression. That brought communism in Russia and fascism in Germany. However, the United States got Roosevelt and the New Deal. Roosevelt reframed the role of government with respect to the economy as the guardian of prosperity. It is this commitment to shared prosperity that has powered the rise of liberal democracy around the world ever since. However, this commitment has weakened as evidenced by the dramatic rise in inequality over the last 40 years. We need another Roosevelt, and I believe Elizabeth Warren is that candidate.
