What we have just witnessed is really a landslide of a
victory of populism that started with Bernie and ended with Trump. Let me define populism as a political stance
that rides into power on a wave if promises that only wishful thinking can
bring rational people to accept as believable and not leading to disaster down
the road. It manipulates people,
energizing them with fear, and offering enticing promises that awaken their
greed. I might smile tolerantly and say
let’s let the experiment go on, if it weren’t that the populist fanfare cloaks
a radical revolution that is unprecedented in US history. In the back halls of power, there are those
that are champing at the bit to institute a vision of an America that hearkens
back to the debates between Jefferson and Hamilton/Washington at the beginning
of this country on what should be the role of the federal government. That debate was not present during the
election which was fought on the issues that seemed more important to
voters: whether Hillary mishandled her
emails and whether Donald groped women.
The important issue of how we should be governed, and what is the role
of government, which is about to undergo a radical transformation, was not
mentioned. The transformation is of such a magnitude that if it had been a
leftist agenda, there would be calls for a crackdown on subversive activities.
The will result in a massive dissolution of federal government programs other
than defense. Some of those may be taken
up by the states, but that will take time. And not all states with have the
wherewithal to leap into the breach.
Under the battlecry of “drain the swamp,” the powers of
agencies involved in social welfare—Medicare and other healthcare, Social
Security, education and the EPA—will be curtailed and the benefits they afford will
be sharply decreased. Privatization and
voucher schemes sound efficient, but the amounts proposed for vouchers would
not begin to pay for private programs equivalent to the government
programs. Civil liberties will also
increasingly be thrown back to the states to determine. Why not, you might say. But empirically, the impetus for advancing
civil rights and social reform has not come from the states, let alone the free
market; they have had to be dragged forward by federal mandates on such things
as the right of all citizens to vote, to receive an adequate education, to have
employment protection, to be free of discrimination, to have a safety net in
times of misfortune, to be secure in retirement—and the list goes on. All these are the hallmarks of a civilized,
advanced economy.
The radicals in the Republican party are romantics,
hankering for a simpler time when society did well (they don’t read Dickens)
without a “nanny state”. We need to have
a dialogue on just how much individual responsibility we can expect in a world
that is too complex for too many people, and headed to even greater complexity
when robots will do all the work. It
will not be sufficient to say that those left behind are just lazy; structural
unemployment is expanding and will need to be recognized as something neither markets
nor incentives can solve.
Already the perception of inequality of opportunity is
expressing itself in anger, and demands for radical change. Social unrest can become serious if Trump’s
proposed changes do not address the causes of that anger. However, his changes are not designed to help
the structurally unemployed or underemployed (rather the reverse), so the
prognosis is not good. Mercantilist
policies will not bring jobs back to the US—certainly they will hurt the
high-skilled jobs market that exports services like finance, and do not
recognize that low skilled jobs fell prey to automation and breakup of unions
rather than globalization. Other policies will attack the very social and
educational programs that that could help provide a safety net or a path to
social mobility. The tax cuts will
disproportionally help the wealthy and corporations. The best one could say is that the cuts might
unleash a wave of investment that will benefit all. But investment does not take place until an
increase in demand is identified. While the market is obviously focusing on the
fiscal stimulus that may come, it is discounting the potential for a severe
impact from a high dollar and potential trade wars. If the positive forces do not outweigh the
negative, the economic revolution may well produce a social revolution. Austria of the late 30’s comes to mind.
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