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Will Sanders and Trump Voters Push America Away from Market Capitalism?
Donald Trump says Bernie Sanders is a probable “communist” and “total whack job.” Sanders calls Trump a “pathological liar,” his policy ideas “pathetic.” Trump would cut taxes by $12 trillion over the next decade, and Sanders would raise them by $14 trillion. Also big differences on issues such as climate change and immigration.
But over at Vox, John Judis sees some important similarities, suggesting there’s a big chunk of American voters that disagrees with the “market liberalism” or the “neo-liberal consensus” — free trade, immigration, deregulation, easy taxes — that dominates both parties. (To put it another way, if you got together a bunch of current and former Obama economic advisers and sat them down with some of their GOP counterparts from the McCain and Romney campaigns, there would probably be lots of agreement. One group might want a 50% top tax rate, the other 30%, neither 90%.) Both parties are “pro-business.”
But Sanders and Trump are saying something different. Judis: “Both men are foes of what they describe as their party’s establishment. And both campaigns are also fundamentally about rejecting the way economic policy has been talked about in American presidential politics for decades.” Sanders wants to break up the banks, install single-payer healthcare, and sharply raise taxes. Trump sees mass immigration and free trade as negatives. And he rejects entitlement reform, a pillar of modern GOP economic policy. Taken together, Sanders and Trump are “harbingers” of a “revolt” against the economic order driving both parties.
And where might this populist revolt lead? Judis:
What is happening to the United States and Western Europe now can be compared to what happened from the 1870s to the beginning of World War II. During this earlier period, capital and a laissez faire view of the economy initially reigned supreme, and, as Thomas Piketty has demonstrated, economic inequality grew apace, as it has over the past 40 years. There were initial outbursts similar to those that the United States and Western Europe are experiencing now — the populists and socialists in the United States, the socialist and Labour parties in Europe — but they didn’t cohere into a powerful challenge until the decades after World War I and the onset of the Great Depression.
When they did come together, however, the challenge took two very different forms. In the United States, the breakdown of the old order led to the triumph of the New Deal on the left. In Europe, it resulted in the rise of fascism.
So where will this “powerful challenge” lead? Maybe Democrats become more social democratic, though not full Denmark. For the GOP? It seems Judis is raising the specter of a Trumpian, neo-fascist GOP. But maybe save that scenario for an Amazon limited series.
More likely is a more populist, “closed” GOP — in the Tony Blairian sense — that is even more skeptical of trade and immigration and less likely to propose reforming the “earned benefit” systems of Social Security and Medicare. But here’s the thing: You cannot escape the demographic challenge that America’s aging poses to Medicare and Social Security. The China “trade shock” seems to be at an end. Illegal immigration continues to decline. Those manufacturing jobs aren’t coming back in large numbers. Trumpism, as currently construed, is really off-point policywise, though the trade and immigration issues help the billionaire businessman make an emotional connection with voters.
So how about a GOP that eschews pro-business cronyism (business bailouts and subsidies and special tax breaks) in favor of a dynamic, competitive, market capitalism while modernizing the safety net for an evolving economy being shaped by globalization and technology? That’s what I’m thinking.
Published in Economics
The default position is bigger more intrusive government, so anyone who wouldn’t cut to the bone, deregulate to oblivion, who supports Keynesian or Monetarist economics is on the side of the ultimate destruction of our market economy. We are way past business as usual, cuts here and there, and a little tax stimulus.
I agree that there is a relatively small portion of the GOP that does not much like free-market capitalism, and a larger but still minority portion of the Democratic Party in the same position. There are probably majorities in both parties opposing “crony capitalism,” though on the Dem side, this group does not perceive how their support of more government regulation of business inherently supports the “crony capitalist’ system.
I like your general ideas for a pro-free-market GOP with some modernization of the safety net, though I’m not much of a fan of increasing the Earned Income Credit for the childless. For demographic reasons, which you note, I think that it is important to use the EIC to promote child-bearing. I’d like to see it geared more toward rewarding two-parent married families with kids.
What is this Market Capitalism you speak of? We live in a country where children trying to run a lemonade stand are shutdown and threaten with arrest for not getting the proper permits and other government paper work. Our market is only free when compared to other banana republics around the globe.
Nice one! Girl Scout cookies are next.
Indeed, Fake JG. Just saw today that the U.S. remains out of the top ten in economic liberty.
Crony Capitalism is the reigning system in Washington. Trump is benefiting from the anger it generates, even as he is, in fact, promising to enshrine it further.
There are a few contrary trends, however. Uber represents a start at breaking up some of the cartel. And I just saw that high deductable plans are more common (not, I gather, true high deductable plans that cover nothing till they hit a number and then cover almost everything). But I wonder if the result of these plans will be more cash for service in health care. Again, contrary to the cartel.
P.S. Remember this one from National Affairs: http://www.nationalaffairs.com/publications/detail/capitalism-after-the-crisis
I like to fancy myself a Republican neoliberal, minus the open borders. I have to admit, I can see why people are upset with us; there are a lot of good GOP neoliberal politicians, but there’s also a fair number of ones that are either outright unethical (George W Bush), pathological losers (Bob Dole, Mitt Romney, John McCain), or elitist snits (McCain and, to a lesser extent, George HW Bush).
And that’s only a small list, on the GOP side (us Republican neoliberals take great comfort in the fact that Bill Clinton is a Democrat. At least he’s not our fault). After nearly half a century in power, the neoliberal elite has become quite corrupt.
Monetarist economics isn’t that bad. . .I mean, just look at what the quasi-gold-standard of the Euro has done to European countries. They aren’t exactly free market paradises.
It’s not perfect, but I think the monetarist approach to economics has done a lot of good for the world. It made the global economy self-regulating in a way that it hadn’t been before, which allowed for the wave of deregulation in the 80s and 90s.
That said, my preferred system is actually to have no state intervention in currency whatsoever; sadly though, I think that’s politically impossible. Monetarism is just my second choice.
Come on. The GOP hasn’t been in favor of free-market capitalism since Teddy Roosevelt.
Go read Woodrow Wilson’s first campaign platform: he was to the right of TR, not the other way around, and what WW advocated for is indistinguishable from the current GOP platform.
For instance:
“…Calling his program “New Freedom,” in contrast to Roosevelt’s “New Nationalism,” Wilson accepted Brandeis’s argument that regulation would never solve the problem of corporate power because corporations would use their power to control the regulator—the federal government. …Roosevelt believed the federal government should act as a “trustee” for the American people, controlling and supervising the economy in the public interest. Wilson argued that if big business was deprived of artificial advantages, such as the protective tariff, the government’s role could be minimal because natural forces of competition would assure everyone of an equal chance at success….”
No, but last Sunday’s 60 Minutes report showing 13 big-shot lawyers advising a faux ‘undercover’ African agent on how to launder ill-gotten millions surely will. Why don’t those law firms just pass ‘Go’ and erect statues of Lenin, Stalin and Mao in their lobbies…?