Why Now?

I visited with an old friend of mine last week-- a rare individual, a skilled and knowledgeable economist that also has Democratic leanings.  We spent a great deal of time discussing the economy, America's place in the world and the absolute circus that are the primary races.  He asked the question, "Why now?"  We are facing trends that have been headed in the same direction for decades (slow or no income growth, contraction in manufacturing employment, income disparity).  Why is the political explosion happening at this particular time?  While the fissures are less pronounced on the Democratic side, the strong showing of Bernie Sanders and the anger expressed in Democratic exit poles show frustration and anger on both sides of the aisle.  With Republicans, it has caused a complete rupture of the existing order.

Why now?  I believe that the answer is almost entirely economic, with national pride mixed in.

Like an earthquake, the political melee, I believe, is the result of tectonic forces that have been gradually building over a long period of time.  Real wages have been stagnant for 35 years.  That is not a new development.  Wage stagnation was patched over with the dotcom bubble and the real estate bubble, but we now have been in a period of sub-3% growth for 10 years.   People don't feel that they are getting ahead.   Worse, their kids can't get ahead. Prior to the collapse of real estate, many parents financed their childrens' college education through home equity loans.  With that vehicle no longer available, we are seeing the explosion of student debt over the past eight years. Couple the student loan hangover with the worst post-WWII expansion ever, you can almost feel the frustration build.  With the worst labor participation rate in 35 years, the real unemployment rate is probably in the 10-12% range.  Many college graduates are still residing in their parents' basements, several years into the expansion.  The '81-'82 recession was nasty (I graduated into that), but it was over quickly and followed by rapid growth under Reagan.  It is one thing to see your own opportunity flatten-- it is another to see that happen to your children.  

The Democrats have a simple answer and that is to promise more free things to people.  Bernie Sanders was able to garner enthusiastic support from young people because they have been steeped in the progressive bubble of college, and the prospect of free things has an irresistible.  Argentinians fell for it and they are just now able to return to the capital markets after being banished for 15 years. Hillary is selling a more muted version of that, but it is basically the same elixir: higher taxes (we just have to hunt down more wealthy people) and more regulation (going after Wall Street--never mind that we already did that with Dodd-Frank) with special attention toward pandering to special interest groups (both Sanders and Clinton almost tripped over themselves chasing after Al Sharpton).

Republicans have a much different problem, and are a more fractious, unruly group.  Someone once joked that there were actually two Republican parties:  the Libertarians and the Nazis.  Actually, there are three broad segments-- Libertarians (me), Democrat lite (Boehner), and Evangelical.  All are suspicious of one another, and they don't get along very well.  The problem is that each time the party has run a Democrat lite (or some version of it), the Republicans have lost.  Dole, Bush '92, McCain, and Romney.  

The long grind of this virtually zero growth expansion has created enormous pressures that exposed the fissures in the Republican party.  But the real spark has been the Obama administration.  He articulated his disdain for working class middle America when he wrote them off as bitterly clinging to their guns and religion and then accused them of bigotry.  This is also a very patriotic segment of America.  And an Obama that began with an apology tour, forfeited hard earned victories in places like Fallujah, shows deference to CAIR, released terrorists from Gitmo only to return to battle and permitted our sailors to be held at gunpoint by the Iranians while thanking the mullahs angered this group.  It is mostly their sons and daughters that sacrificed in Iraq and would be sailing in those vessels.  They see economic stagnation and America in retreat or humiliated in every corner of the world.

Why now?  The wooden, patrician Democrat-lite Republican Establishment watered down message lost its force. Its demise was foreshadowed by Eric Cantor's loss and John Boehner's ouster.  It could only promise tax cuts (which Democrats disabled quickly as being for "the wealthy").  Jeb Bush and John Kasich never got very much traction at all.  Marco Rubio made too many tactical errors and, beginning with the Gang of 8, showed a penchant for walking into ambushes, as he did with Christie, then fell into a name calling contest with Trump (which he was sure to lose).  

Trump's message is simple, "Make America Great Again" and "I will bring back jobs."  For a lot of middle America, a lot of sins will be forgiven if you can deliver on those two things.  Trump is scary, ham fisted, and has said things that are reminiscent of strongmen of an earlier era ("I'll bring back waterboarding and worse," "Bush lied," "Mrs. Ricketts should be careful").   His stance on trade smacks of Smoot-Hawley (and we know how that ended).  His stated admiration of Putin is scary.  

The comparisons with 30's fascists will continue unless he is able to tone things down and present himself as more presidential.  We would do well to remember that Germany turned ultra nationalistic through a democratic process under economic stresses and international humiliations in an earlier era.

Why now?  Trump is a result of the perfect storm.  He is the stepchild of an Obama administration that has presided over economic stagnation, and that has turned its back on American exceptionalism and global leadership.  Rather than advance liberty, democracy and human rights, the administration has made large concessions to Communists, Islamists, and Oligarchs that are antithetical to American values.  But Trump is also consequence of an inept, overly patrician, stagnant Republican party that lost the ability to connect and message with working class middle America, and has completely ignored black America.  

Why now?  Bill Clinton had it right over 20 years ago--It's the economy, stupid.There is anger and frustration across the political spectrum and it is being personified in different ways.  Black Lives Matter expresses its frustration differently than the ardent Trump supporters, but in essence, they are both raging at a political system that has failed them.   Voters on the right believe that the 47% getting government benefits that we can no longer afford are weighing down the economy.  Voters on the left believe that the "system is rigged," and have valid gripes about a government that bailed out Wall Street.  With an economy that can't seem to get its legs, the anger is starting to manifest itself in unusual, ugly ways.   The stagnation has gone on too long.

Robert Kagan is correct to be concerned about the rise of Trumpism.   But the insidious authoritarianism of Big Government that Sanders and Clinton are peddling may be just as dangerous and damaging to the country.