The real debate Americans are having — including those on the far left trying to gain greater control of the Democratic Party — is about how regulated markets should be and how to make the rules fairer. No one in the 2020 race, not even relative outlier and self-proclaimed democratic socialist Sen. Bernie Sanders (I-Vt.), is proposing that we recreate the Great Leap Forward. Despite what you may have heard from Team Trump — and despite the many TV interviewers asking Democratic politicians whether they’re “capitalist” or “socialist,” as if that’s a meaningful binary — all modern countries have elements of capitalism and socialism. That includes the United States. We have public schools, public roads, subsidized health care for the elderly and other forms of social insurance. Yet we also have private property, and the government does not control the means of production — which is, you know, actually how socialism is defined. Trump and his advisers pretend otherwise, in the hopes of confusing and freaking out the public. After all, most people know they’re supposed to be afraid of “socialism,” even if they have no idea what the term means. In fact, in a Gallup poll last year that asked Americans to explain their understanding of the term “socialism,” responses were all over the map.
A majority of Americans in a new poll said they believe the country is headed for a dark future in which the middle class shrinks, the economy suffers and life becomes more difficult for children, families and the elderly. The survey from the Pew Research Center shows that, on the surface, hope springs eternal for the American public, 56 percent of whom say they are very or somewhat optimistic about the future of the country. But below the surface, the study, released Wednesday, paints a picture of a deeply pessimistic country, one that sees partisanship and the gap between rich and poor on the rise, and morality and quality of life on the decline.
More than half of Americans, 54 percent, say the country’s economy will be weaker in 30 years than it is today. Almost three-quarters say the gap between the rich and the poor will grow, and nearly half of Americans say the middle class is likely to decrease. Half say American children and older Americans will have a lower standard of living in the future than they do today. Forty-four percent say the average family’s standard of living will be worse in 2050 than it is today, twice the number — 20 percent — who say it will be better. “Majorities predict that the economy will be weaker, health care will be less affordable, the condition of the environment will be worse and older Americans will have a harder time making ends meet than they do now,” the authors wrote.
Three in five voters say the United States will be less important in world affairs than the nation is today, twice the number who say the country will be more important to the world order. Whites, Democrats and those with higher levels of education are most likely to foresee American influence waning, while Republicans and minorities are most likely to say the country’s influence will grow. And more than three-quarters say they are very or fairly worried about the nation’s moral health. Nearly half of Republicans and more than a third of Democrats say they are very worried about the degradation of American moral values.
Perhaps most troubling, Americans are deeply pessimistic about the country’s political future, and whether the country’s political leaders can overcome the challenges ahead. Majorities in both parties said they believe the country is likely to be more divided in the future than it is today, a moment of historic division and rank partisanship. Nearly half, 49 percent, say they are very worried about the way government works in Washington, and 48 percent say they are very worried about the ability of political leaders to solve the country’s biggest problems.
In fact, partisans on the left and the right do not even agree what those biggest problems are. Asked what issues should be top federal government priorities to improve the lives of future generations, Republicans are most likely to point to threats posed by undocumented immigrants, the national debt and rising taxes. Democrats are most likely to cite climate change, the gaps between the rich and the poor and the prospects of entitlement spending. Partisans on both sides agree that providing high-quality and affordable health care and increasing spending on education should be top priorities for the federal government.
But even amid the surge in lending, especially to less credit-worthy borrowers, shouldn’t the 10-year bull market and sterling economic conditions provide a buffer? Shouldn’t there be less financial pressure on households that would cause them to stop paying their loans? Focusing on the rosy economic data in aggregate hides the highly uneven nature of the economic recovery and the fact that many Americans remain cash-strapped. There’s been a two-tiered recovery, UBS analyst Matt Mish said, where on one hand, those who hold assets have done very well. “Those who do not own assets, whether a house or equities, have not benefited as much,” Mish told Business Insider. “You’ve seen a pretty decent increase in debt in the latter cohort,” he added. Mish and his colleague Stephen Caprio focused on how the divergent consumer recovery influences credit risk in a report last year, finding an elevated number of consumers burdened by debts that dwarf their incomes, along with small amounts of liquid assets saved to deal with those financial obligations. This phenomenon has been masked by a reliance by investors on the Fed’s aggregate data — which skews toward the wealthy. The median data UBS presents show more significant consumer financial struggles.
“This highlights how consumer inequality is a blind spot to the aggregate metrics that investors rely upon. As income inequality grows, aggregate data becomes less representative of the population at large,” UBS analysts wrote in the report. A major driver of the diverging consumer fates: spiking apartment rents. Many American households deleveraged after the financial crisis, primarily by trading homes in favor rentals. But rents have surged, UBS said, amid growing demand and lack of affordable home-buying options. “Renter financial obligation burdens are near record highs, homeowner burdens are near record lows,” the analysts said in the report. Strong employment and an uptick in wage growth may ease this burden, but if the recession everyone is on edge about materializes, it could mean significant losses for investors in lower-tiered consumer debt.
Only now, observing the world as it is, have I begun to think that America really is exceptional after all—only in all the wrong ways. Humor me, please, while I run through a brief laundry list of the ways the US of A is wildly and disconcertingly different from all the other “big-boy countries” in the developed world. Let’s start with domestic policy:
*The U.S. has been the site of exponentially more mass shootings than any other nation. And unlike in New Zealand—where officials took immediate steps to tighten gun control in the wake of its recent tragedy—American politicians won’t do a thing about it. We also own more guns per capita than any other country in the world. In second place is Yemen.
*The U.S. is essentially alone in the Western world in not guaranteeing health care as a basic human right. It spends much more cash, yet achieves worse health outcomes than its near-peer countries.
*America is home to some of the starkest income inequality on the globe—right up there with Turkey and South Africa.
*The U.S. keeps migrant kids in cages at the border, or did until recently. Even more exceptional is that Washington is largely responsible for the very unrest in Central America that generates the refugees, all while American conservatives proudly wear their “Christianity” as badge of honor—but wasn’t Jesus a refugee child? Maybe I read the wrong Bible.
*America is alone among 41 Western nations in not guaranteeing paid family leave. How’s that for “family values?”
Former Democratic House candidate Randy Bryce told Hill.TV’s “Rising” on Thursday that there is “buyer’s remorse” for President Trump in the Midwest, adding that states like Wisconsin will go blue in 2020. “We’re finding out in the Midwest that he made a lot of promises and he really hasn’t kept them,” Bryce, who is an ironworker and ran for former Speaker Paul Ryan‘s (R-Wis.) seat in 2018, told hosts Krystal Ball and Buck Sexton on “Rising.” “Whether it’s we’re not going to have to pay for a wall, to we’re not going to lose any jobs and these plants aren’t going to close down, they’re going to stay here.” “Then he turns around and blames the unions for the plants shutting down. Nothing could be more ridiculous,” he continued. “There’s a lot of buyer’s remorse in the Midwest, and I can guarantee [that] in addition to the [Democratic National Committee] DNC bringing the convention to Wisconsin, Wisconsin is going to go blue in 2020,” he said. Bryce was responding to comments from Trump in Ohio on Wednesday in which he suggested General Motors should sell an idled plant in Lordstown, Ohio, or reopen it. “What’s going on with General Motors?” the president said. “Sell it to somebody. Get it open now. Don’t wait.” Trump in 2016 was able to flip blue states in the Midwest, most notably Wisconsin and Michigan, in part by promising to improve conditions for the region’s manufacturers and farmers. Bryce slammed Trump for originally promising to bring jobs back to the Midwest.
It’s time we have a serious conversation on the challenges facing credit-constrained Americans. Downward pressure on wages and economic mobility means that more than half of all Americans now face a reality that puts financial success out of reach. Millions of families are now struggling to afford a home, pay for their kids to go to college, and create a financial safety net. They are the New Middle Class. Forty percent of Americans cannot cover an unexpected expense of $400 or more, and more than half of Americans have credit scores below 700 – meaning they are considered non-prime. At Elevate’s Center for the New Middle Class, our research shows that this group is less likely to rely on banks, believing their financial institution does not have products designed for them. And, unlike their counterparts with prime credit scores, they do not believe they would be approved for a loan. These challenges are still not fully understood by the public and policymakers alike. Many Americans are shocked to discover that more than 8 million households lack access to any form of banking, which is almost 9 percent of the population. Meanwhile, more than 18 percent are “underbanked” – meaning they have a checking account but turn to a non-traditional financial institution. On Capitol Hill, productive conversations are beginning to happen to raise awareness about the realities non-prime Americans face. Recently, I was fortunate to participate alongside a panel of experts to highlight their research and start the discussion on how policymakers can make a difference in the lives of credit-constrained Americans.
When Steve Bannon explains the “populist revolt” he helped launch in the United States (in this debate with David Frum, for instance, or in this address to the Oxford Union), he points to what he regards as the most egregious elite failures in the 21st century. From a “financial crisis brought about by a financial elite that’s never been held accountable” to “wars that we didn’t win” in Afghanistan and Iraq, Bannon thinks the political establishment in the United States has a lot to answer for, and Donald Trump is its reckoning. That leaves him in interesting company. Noam Chomsky was interviewed by The Nation in the summer of 2017, and he argued that Trump, Brexit, and the rise of nationalist movements around the world were all symptoms of much larger problems: “When you impose socioeconomic policies that lead to stagnation or decline for the majority of the population, undermine democracy, remove decision-making out of popular hands, you’re going to get anger, discontent, fear…” Even though Chomsky says this phenomenon is “misleadingly called ‘populism,’” those observations could have been lifted straight out of one of Bannon’s speeches. While Bannon and Chomsky have radically different ideologies, their diagnoses of the anger, discontent, and fear that have crept into Western politics are remarkably similar. They both talk constantly about working and middle class wage stagnation. They both condemn an economic system increasingly dominated by finance—what Bannon describes as the maximization of shareholder value instead of citizenship value. They both accuse a small ruling class of disregarding the interests of the majority of the population in pursuit of ever-increasing concentrations of wealth and power. And most of all, they despise what they regard as the guiding ideology of the postwar political establishment.
For Chomsky, that ideology is “neoliberalism,” which he describes as “an array of market oriented principles designed by the government of the United States and the international financial institutions that it largely dominates”—principles that “undermine education and health, increase inequality, and reduce labor’s share in income.” According to Chomsky, neoliberalism even threatens the survival of our species. In his conversation with The Nation, he points to the “two existential threats that we’ve created” (nuclear weapons and climate change) and blames neoliberalism for “eliminating, or at least weakening, the main barrier against these threats.” This barrier is “an engaged public, an informed, engaged public acting together to develop means to confront the threat and respond to it.” But the establishment wants people to “become more passive and apathetic and not to disturb things too much, and that’s what the neoliberal programs do.” While Chomsky uses “neoliberal” to describe what he sees as the worst elements of the political and economic status quo, Bannon uses equally vague epithets like “Party of Davos.” Here’s a typical Bannonism: “What we’ve become with this permanent political class … this Party of Davos has turned us into an expeditionary humanitarian force.” From the overextension of American power to the “fetish” of the “post-war international rules-based order,” the Party of Davos is always the culprit. Like Chomsky, Bannon has managed to fit everything he doesn’t like under a single neat little heading.
“Neoliberal” is one of those words, like “globalist” or “elite,” that’s almost always used as a sneer. How many politicians and intellectuals actually call themselves “neoliberals”? How many consciously pursue or defend what they would describe as neoliberal policies? The looseness of the word is what makes it so useful for anyone who advocates a radical departure from the status quo, whether on the right or the left. By condemning the “system” or the “Washington consensus”—intentionally amorphous terms that encompass just about everything—ideologues can make a case that sweeping, fundamental change is necessary. It’s useful to have someone to blame for virtually every political and social problem. As Trump’s campaign demonstrated, scapegoating can be a powerful tool—immigrants were sneaking into the country, stealing jobs, and committing crimes; other countries were “laughing” at the United States and undermining the American workforce with one-sided trade deals and exploitative international agreements; and the elites had nothing but contempt for the working class. We’re seeing a similar phenomenon with the rise of the populist left, but the scapegoats are wealthy Americans and a political establishment that has become too friendly with influence-peddling oligarchs. As Elizabeth Warren put it in her announcement speech, she’s fighting against a “rigged system that props up the rich and the powerful and kicks dirt on everyone else.”
There’s a reason words like “system,” “consensus,” “establishment,” “elite,” “political class,” “status quo,” etc. are so politically effective. For one thing, they include both major parties. One of the reasons Trump was so successful in the primaries was the fact that he seemed to reject the Republican consensus on so many issues—particularly trade and foreign policy. If anything, establishment opposition to Trump (whether in the form of open letters from GOP national security leaders or stern rebukes from Mitt Romney) helped him solidify his image as the agent of change Washington needed. When Trump was elected, only 32 percent of Americans thought the country was on the “right track”—a number that was even lower during the campaign. Bannon often cites this as the only measure he cared about—as long as Americans thought the country was on the “wrong track,” Trump’s message would continue to resonate. During the general election, when Trump was running against someone who embodied the political establishment that so many Americans loathed, his outsider image helped him even more. The establishment doesn’t have many fans these days. According to Pew data, public trust in government has been collapsing since the middle of the twentieth century. While there was a resurgence in trust throughout the 1990s and at the beginning of the 21st century, it fell from 54 percent in October 2001 to just 18 percent in December 2017. These numbers suggest that Bannon and Chomsky’s diagnosis is right – decade after decade of frustration with the establishment opened the way for a subversive candidate like Trump.
But Trump hasn’t been the transformative figure he promised to be. As Scott Sumner explained in a recent article for EconLog (
titled “Is neoliberalism dead?”): “Neoliberalism is indeed rapidly losing support among intellectuals on both the left and the right. But there is almost no evidence that countries are going to actually walk away from neoliberal policy regimes.” He points to Trump’s support for the GOP’s tax plan, which is “about as neoliberal a policy as one could imagine.” It’s difficult to see how Bannon reconciles his anti-elitism with the fact that the Party of Davos is well represented in the Trump administration—Trump’s Cabinet is stuffed with more millionaires and billionaires than any Cabinet in modern history. With Trump, we get a perpetuation of all the establishment’s problems with none of its stability – the Washington consensus with the added chaos of an erratic and corrupt demagogue in the Oval Office. It’s true that the political status quo in the United States has become more and more dysfunctional over the past few decades—just look at the fact that government shutdowns have become routine negotiating tools (the most recent one was the longest in American history) or the surging level of polarization in Congress. But all the anti-establishment fury on the Left and the Right didn’t give us revolution or reform —it just gave us Trump. You’d think this outcome would occasion a little modesty, but it has had the opposite effect. To the people who hate the establishment, Trump is just more evidence that the establishment is rotten. Chomsky now describes the GOP as the “most dangerous organization in world history.”
Please Don’t Defile The Fed
Don’t you understand, what I’m trying to say?
And can’t you feel the fears I’m feeling today?
If the button is pushed, there’s no running away,
There’ll be no one to save with the world in a grave,
Take a look around you, boy, it’s bound to scare you, boy,
And you tell me over and over and over again my friend,
Ah, you don’t believe we’re on the eve of destruction.
Yeah, my blood’s so mad, feels like coagulatin’,
I’m sittin’ here, just contemplatin’,
I can’t twist the truth, it knows no regulation,
Handful of Senators don’t pass legislation,
And marches alone can’t bring integration,
When human respect is disintegratin’,
This whole crazy world is just too frustratin’,
And you tell me over and over and over again my friend,
Ah, you don’t believe we’re on the eve of destruction.
Think of all the hate there is in Red China!
Then take a look around to Selma, Alabama!
Ah, you may leave here, for four days in space,
But when your return, it’s the same old place,
The poundin’ of the drums, the pride and disgrace,
You can bury your dead, but don’t leave a trace,
Hate your next door neighbor, but don’t forget to say grace,
And you tell me over and over and over and over again my friend,
You don’t believe we’re on the eve of destruction.
No, no, you don’t believe we’re on the eve of destruction.