Nov 22nd 2016

Donald Trump and the Sense of Power


NEW HAVEN – US President-elect Donald Trump campaigned in part on a proposal to cut taxes dramatically for those with high incomes, a group whose members often have elite educations as well. And yet his most enthusiastic support tended to come from those with average and stagnating incomes and low levels of education. What gives?

Trump’s victory clearly appears to stem from a sense of economic powerlessness, or a fear of losing power, among his supporters. To them, his simple slogan, “Make America great again,” sounds like “Make YOU great again”: economic power will be given to the multitudes, without taking anything away from the already successful.

Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure. It feels unstable. It feels like being trapped in a relationship of dependency, one that might collapse at any moment.

The desperately poor may accept handouts, because they feel they have to. For those who consider themselves at least middle class, however, anything that smacks of a handout is not desired. Instead, they want their economic power back. They want to be in control of their economic lives.

In the twentieth century, communists politicized economic inequality, but they made sure that their agenda could in no way be interpreted as creating alms or charity for the less successful. It was fundamentally important that communists take power by a revolution, in which workers unite, take action, and feel empowered.

Trump supporters call his triumph a revolution, too, though the violence – at least by the campaign itself – was limited to name-calling and insults. It was still nasty enough, apparently, to inspire those of his supporters who interpret aggressiveness as evidence of power.

It is certainly not just in America that people desire a sense of vocational accomplishment, rather than simply money to live on. In no country does it feel generally right to respond to rising economic inequality by imposing heavy taxes on the rich and transferring the money to others. That feels like changing the rules of the game after it has been played.

In their recent book Taxing the Rich: A History of Fiscal Fairness in the United States and Europe, Kenneth Scheve of Stanford and David Stasavage of New York University use two centuries of data on tax rates and on income inequality to examine outcomes in 20 countries. They found that there was little or no tendency for governments to make taxes more progressive when pretax inequality increased.

Katherine Cramer, author of The Politics of Resentment, gained some insight into this outcome in Wisconsin, where, like Trump, the state’s governor, Scott Walker, has been popular among working-class voters. After he was elected in 2010, Walker cut taxes on higher incomes, refused to raise the state minimum wage above the federally-mandated minimum, and rejected the insurance exchanges created by President Barack Obama’s signature 2010 health-care reform, which would benefit lower-income people. Instead, Walker promised measures that would take power away from labor unions, actions that usually are perceived as likely to lower working class incomes.

Cramer interviewed rural working-class voters in Wisconsin, trying to understand why they supported Walker. Her interviewees stressed their rural values and commitment to hard work, which have been a source of personal pride and identity. But they also stressed their sense of powerlessness against those perceived as unfairly advantaged. She concluded that their support for Walker, amid evidence of economic decline, reflected their extreme anger and resentment toward privileged people in big cities, who, before Walker, had ignored them, except to tax them. And their taxes went, in part, to pay for government employees’ health insurance and pension plans, benefits that they themselves often could not afford. They wanted power and recognition, which Walker seemed to offer them.

Such voters are also almost certainly anxious about the effect of rapidly rising information technology on jobs and incomes. Economically successful people today tend to be those who are technologically savvy, not those living in rural Wisconsin (or rural anywhere). These working-class voters feel a loss of economic optimism; yet, admiring their own people and upholding their values, they want to stay where they are.

Trump speaks these voters’ language; but his proposals to date do not seem to address the underlying shift in power. He stresses cutting domestic taxes, which he asserts will unleash a new flurry of entrepreneurism, and renegotiating trade deals in a protectionist direction, to keep jobs in America. But such policies are unlikely to shift economic power to those who have been relatively less successful. On the contrary, entrepreneurs may develop even more clever ways to replace jobs with computers and robots, and protectionism may generate retaliation by trading partners, political instability and, ultimately, possibly even hot wars.

To satisfy his voters, Trump must find ways to redistribute power over income, not just income itself, and not just by taxing and spending. He has expressed only limited ideas here, like subsidizing school choice to improve education. But powerful economic forces such as technological innovation and lower global transportation costs have been the main drivers of increasing inequality in many countries. Trump can’t change this fact.

If those who lack the skills that today’s economy demands refuse redistribution, it is hard to see how Trump will make them better off. The Trump revolution, as it has been presented so far, seems highly unlikely to deliver what his supporters really want: an increase in workers’ economic power.


Robert J. Shiller, a 2013 Nobel laureate in economics and Professor of Economics at Yale University, is co-author, with George Akerlof, of Phishing for Phools: The Economics of Manipulation and Deception.

Copyright: Project Syndicate, 2016.
www.project-syndicate.org

 


This article is brought to you by Project Syndicate that is a not for profit organization.

Project Syndicate brings original, engaging, and thought-provoking commentaries by esteemed leaders and thinkers from around the world to readers everywhere. By offering incisive perspectives on our changing world from those who are shaping its economics, politics, science, and culture, Project Syndicate has created an unrivalled venue for informed public debate. Please see: www.project-syndicate.org.

Should you want to support Project Syndicate you can do it by using the PayPal icon below. Your donation is paid to Project Syndicate in full after PayPal has deducted its transaction fee. Facts & Arts neither receives information about your donation nor a commission.

 

 

Browse articles by author

More Current Affairs

Nov 24th 2024
Extracts: "We all think, speak, and write within certain intellectual frameworks that we largely take for granted. But, eventually, the passage of time renders familiar categories and ideas obsolete. For example, who still talks about the “Soviet Union” today, apart from historians?" ------- "Trump won decisively despite his contempt for democratic institutions, his efforts to overturn the 2020 election, and his subsequent 34-count felony conviction. Though voters know about his chaotic approach to governance, his habitual mendacity, and his sinister immigration policies, he won every swing state. Even with full knowledge of who Trump is, more Americans voted for him than for Kamala Harris. We must not mince words: liberal democracy in the US has suffered a lethal blow. It will be under increasing pressure on both sides of the Atlantic, and there is no guarantee that it will survive. After all, can there be any future for the liberal West without the US as its leader? I believe the answer is no." ----- "If Europe fails to come together at this moment of tumultuous change, it will not get a second chance. Its only option is to become a military power capable of protecting its interests and securing peace and order on the world stage. The alternative is fragmentation, impotence, and irrelevance."
Nov 24th 2024
EXTRACTS: "When the US presidential election was called for Donald Trump, the yield on ten-year US government bonds increased from 4.3% to 4.4%, and the 30-year-bond yield rose from 4.5% to 4.6%, with both remaining at those levels ten days later." ----- " Clearly, investors expect the next Trump administration to produce higher government budget deficits and more debt. It is not difficult to see why. During Trump’s first term in office, he added $8 trillion to the national debt – all previous presidents combined had accumulated $20 trillion – despite having promised to run budget surpluses so large that they would eliminate the national debt within two terms." ----- "Supporters often say that a businessman like Trump or Musk will know how to put America’s fiscal house in order. But the smart money says they have no idea what they are doing."
Nov 13th 2024
EXTRACT: "For 2,300 years, at least since Plato’s Republic, philosophers have known how demagogues and aspiring tyrants win democratic elections. The process is straightforward, and we have now just watched it play out." ........ "As Jean-Jacques Rousseau argued, democracy is at its most vulnerable when inequality in a society has become entrenched and grown too glaring." ..... "From everything Trump has said and done during this campaign and in his first term, we can expect Plato to be vindicated once again. The Republican Party’s domination of all branches of government would render the US a one-party state. The future may offer occasional opportunities for others to vie for power, but whatever political contests lie ahead most likely will not qualify as free and fair elections."
Nov 3rd 2024
EXTRACT: "The likelihood of escalation in the coming weeks and months means that there will be economic and financial risks to manage. A large-enough Israeli strike on Iran could severely disrupt energy production and exports from the Gulf. If Iran gets desperate, it could try to mine the Gulf and block the Strait of Hormuz, while also striking Saudi oil facilities. In this scenario, the world would experience stagflationary shocks similar to those that followed the 1973 Yom Kippur War and the 1979 Iranian revolution."
Oct 9th 2024
EXTRACT: "The continuing cycles of violence can easily spiral out of control, precipitating a wider war involving nuclear powers. Moreover, Netanyahu’s goal of 'total victory' against an ideological movement cannot be achieved by military means alone." ..... "So long as both sides seek to inflict maximum damage on the other to right past wrongs, the violence will not end. Netanyahu may think that total victory is in sight, now that Hezbollah is badly damaged and Gaza reduced to rubble, but that is an illusion. All he has done is create more enemies who will want to restore their honor by killing in a war without end."
Oct 9th 2024
EXTRACTS: "Nasrallah was on a mission to destroy Israel. It was a mantle he had taken up from countless other Arab leaders, from Haj Amin al-Husseini, the grand mufti of Jerusalem who met with Adolf Hitler in 1941 to discuss the destruction of the Jews, to Azzam Pasha, the secretary-general of the Arab League who described the Arab invasion of the then-nascent Israel in 1948 as a 'war of annihilation'. Egyptian President Gamal Abdel Nasser – an icon of pan-Arabism in the 1950s and 1960s – pledged more than once to 'destroy Israel'. Iraqi dictator Saddam Hussein and the Palestinian leader Yasser Arafat, who founded Fatah, nurtured their own dreams of liquidating the Jewish state." ...... "Alas, Israelis have built their own dangerous dream palace of 'total victory', erected on a foundation of nationalist fervor, religious messianism, and political intransigence. There is a scenario in which Israel’s military exploits change the region for the better. Unfortunately, far from being the standard-bearer for some enlightened political vision, Israel’s current government is committed to fighting a war on all fronts, with no view toward any political future that Israel’s neighbors could possibly accept."
Oct 8th 2024
EXTRACT: "But in the real world, slain leaders are replaced. Those who bury their dead do not forget or forgive, and those who have felt the punishment of arms do not forego weapons but embrace them. So it seems unlikely that’s how the story will end. Sadly, it’s far more likely it will never end."
Oct 3rd 2024
EXTRACT: ".....,Russia will probably spend about $190 billion, or 10% of GDP, on the war this year, and that figure presumably represents the peak, given the constraints imposed by Western financial sanctions. Whenever Russia can no longer finance a budget deficit, it will have to cut public expenditures, and its non-military outlays have already been pared to the bone."
Sep 12th 2024
EXTRACT: "Throughout recorded history, crises and tragedies have inevitably spurred apocalyptic interpretations that seek to imbue temporal catastrophes with some divine or redemptive meaning. One can see this in the doctrines of the major monotheistic religions, and even in modern totalitarian ideologies, such as communism and Nazism. One way or another, humans appear inclined to believe that, without Satan, there is no redeemer. To understand just how dangerous this logic can be, look no further than Gaza, where a tragedy of Biblical proportions is fueling the messianic hallucinations of Israel, Hamas, and American Christian evangelicals alike."
Aug 7th 2024
EXTRACT: "China knows that the war has had catastrophic consequences for both Russia and Ukraine. Estimates indicate that Putin’s conflict in Ukraine could cost Russia US$1.3 trillion (£1.0 trillion) and at least 315,000 in troop casualties. So, win or lose, the post-war damage to Russia would be immense. This is bad news for China. Not only will it have a weakened ally, but the west could then have a free hand to consolidate its resources in dealing with the 'Chinese threat'."
Jul 27th 2024
EXTRACT: "......, regardless of the folly of political violence, the attempt on Trump’s life was futile inasmuch as ridding America, and the world, of Trump, would by no means rid us of Trumpism, which was and remains a symptom, and not the root cause, of this country’s moral and epistemic decline. How else could so many millions of Americans support this man? No one can claim that they do not know what he stands for (insofar as he stands for anything other than himself) or what his intentions are: he has made it very clear that his second administration will be not only authoritarian, but fascist in rhetoric and deed.
Jul 17th 2024
EXTRACTS: "Iran unveiled a digital clock counting down the days to the destruction of Israel in 2040. The display, located in Tehran’s Palestine Square, embodies the Islamic Republic’s long-held commitment to annihilating the Jewish state. Some view this promise as a mere rhetorical exercise...." ----- "From Adolf Hitler to Vladimir Putin and even Osama bin Laden, history has taught us to take threats of ideologically inspired attacks at face value. " ---- "......., the key enabler of Iran’s war of attrition is, in fact, Israel’s own government. Netanyahu’s unrealistic goal of achieving 'a complete victory' in Gaza serves Iran’s strategy of miring Israel in an inconclusive conflict while orchestrating a long-term plan to destroy the Jewish state." ----- "It turns out that the only truly irrational, trigger-happy fanatics in this lethal equation are Netanyahu and his theo-fascist allies, who are determined to engage in an apocalyptic war in Gaza and Lebanon." ---- "These messianic hallucinators have a willing collaborator in Netanyahu. Together, they are doing more to annihilate the Jewish national project than Iran could ever hope to achieve on its own."
Jul 16th 2024
EXTRACTS: "In her dissenting opinion in Trump v. United States, Supreme Court Justice Sonia Sotomayor declared that with the majority’s ruling, 'the President is now a king above the law'. In this, she is wrong: the majority opinion has given the US president far more power than English kings had at the time of the American Revolution." ---- "In June 1686, 11 of the 12 hand-picked justices ruled in favor of the king. Echoing the king’s own solicitor, Sir Thomas Powys, the Lord Chief Justice George Jeffreys contended that if the king did not have leeway above the law, 'the preservation of the government' might be in jeopardy." ---- "In 1689, the English people roundly rejected such reasoning and asserted that their kings would thereafter be subject to the law. They set a precedent by removing James II from office. The Supreme Court’s decision goes beyond threatening more than two centuries of American jurisprudence; it overturns four centuries of Anglo-American jurisprudence. The Roberts majority did not give the president the power of an English king; it gave the president power that an English king could only covet."
Jul 4th 2024
EXTRACT: "Most American voters who believe that Trump is the best defender of democracy are not fascists, much less communists. The very thought would horrify them. But they almost surely have a strong opinion on who constitutes the true American people: God-fearing, hard-working, and most probably white. And they worry that these ordinary Americans are being displaced by illegal immigrants, and that their way of life is being threatened by new ideas about gender, race, and sexuality emerging from elite universities. Trump is stoking these fears and exaggerating these threats. His line that the US courts are attacking not only him, but every right-thinking American is horribly effective. Since he is heard as the true voice of the people, he is the purest democrat. As a result, liberal democracy might not withstand another four years of his rule."
Jul 3rd 2024
EXTRACT: "....the debate showed all too clearly that he is suffering cognitive decline and cannot possibly serve as a competent president for another four years. If Biden is true to his word, and stopping Trump from regaining the presidency is his overriding goal, he needs to announce that at the Democratic Convention in August, he will release his delegates from their obligation to vote for him, and instead ask them to vote for the candidate with the best chance of defeating Trump."
Jul 3rd 2024
EXTRACTS: "Both Chief Justice John Roberts and Justice Sonia Sotomayor of the United States Supreme Court have just announced grand opinions trying to resolve the fundamental constitutional issues raised by former President Donald Trump’s claim to absolute immunity" ---- "According to Sotomayor, who wrote for the three dissenting justices, Roberts’ sweeping grant of immunity has 'no firm grounding in constitutional text, history, or precedent.' ” ----- "For what it’s worth, I think that Sotomayor is right and Roberts is wrong." ----"But for now, it is much more important to consider the objection raised by Justice Amy Coney Barrett to both Roberts’ constitutional glorification of the presidency and Sotomayor’s devastating critique of Roberts’ majority opinion." ---- "Barrett is right to ask why Roberts and Sotomayor did not join her in adopting the problem-solving approach that they have repeatedly endorsed in many other contexts." ---- "Roberts took the path that not only betrayed Founding principles, as Sotomayor argued, but also betrayed the very principles to which he has dedicated his entire career. "
Jul 1st 2024
EXTRACTS: "Netanyahu’s disdainful criticism of Biden. Netanyahu knows how indispensable the US is to Israel, as no country has provided Israel with more financial, military, and political support than the US. And no American president has ever been more supportive and committed to Israel's security than President Biden. But then, leave it to the most loathsome Netanyahu, who dares to criticize the president for suspending the shipment specifically of 2,000-pound bombs to continue with his devastating bombardment of Rafah that could indiscriminately kill thousands of innocent civilians." ---- "All Israelis who care about their country’s future must rise and demand the immediate resignation of this corrupt and brazen creature who inflicted untold damage on the only Jewish state, making it a pariah state."
Jun 12th 2024
EXTRACTS: "One of the more amusing exercises on the economic calendar is the International Monetary Fund’s annual review of the United States. Yet while everyone knows that the US government pays absolutely no heed to what the IMF has to say about its affairs, the Fund’s most recent Article IV review of the US economy is striking for one unexpected finding. Readers will be startled to learn that, in the IMF’s estimation, US government debt is on a sustainable path." ---- "What then could go wrong? Well, US institutions could turn out not to be so strong. Donald Trump has a personal history of defaulting on his debts. As William Silber has observed, Trump in a second presidential term could instruct his Treasury secretary to suspend payments on the debt, and neither Congress nor the courts might be willing to do anything about it. The gambit would be appealing to Trump insofar as a third of US government debt is held by foreigners. The damage to the dollar’s safe-asset status would be severe, even if Congress, the courts, or a subsequent president reversed Trump’s suspension of debt payments. Investors in US Treasuries would demand a hefty risk premium, potentially causing the government’s interest payments to explode."
Jun 9th 2024
EXTRACT: "An all-too-familiar specter is haunting Europe, one that reliably appears every five years. As citizens head to the polls to elect a new European Parliament, observers are once again asking whether far-right anti-European parties will gain ground and unite to destroy the European Union from within. To be sure, skeptics of this doomsday scenario have always argued that the far right will remain divided, because nationalist internationalism is a contradiction in terms. But it is more likely that specific policy disagreements – mainly over the Ukraine war – and drastically diverging political strategies will prevent Europe’s various far-right parties from forming a 'supergroup.' ”
Jun 9th 2024
EXTRACT: "While the dreadful legacy of his Conservative predecessors – the morally vacuous Johnson and the reckless Liz Truss – would make it extremely difficult for Sunak to offer a credible vision of a better future, many of his current problems are self-inflicted. For example, he supported Johnson’s bid for the Conservative leadership, a decision that reflects poorly on his judgment. Sunak has also been a Euroskeptic since he was a schoolboy and was an early supporter of Brexit."