Sunday, 3 February 2019

The real reason populism is rising in the West

In recent years, we have seen the emergence of 'populist' movements across many developed countries, from the US (Trump) to the UK (Brexit), to Italy and now even the Yellow Vest protests in France (not to mention the rise of what are sometimes described - often unfairly - as 'alt right' parties across Europe). This has given rise to much confusion and concern amongst the elite, but if the issues are properly understood, it shouldn't. I feel the underlying drivers are very poorly understood and often misdiagnosed, and I hope to shed a little light on what is going on with this post.

I have a very non-consensus view on this, and I'm not exactly sure why I see things so differently. However, one possibility is that unlike many of today's elite (I count myself as one of the elite today), I come from a working class background. The secondary school I attended was in the bottom decile of academic achievement (I grew up in West Auckland, New Zealand), and of the 300-400 people that started secondary school in my year, only about 100 completed their final year, and less than 10 graduated university. At least 2 people I personally knew from school are currently in jail. I worked at supermarkets and even at McDonalds for a while, for pocket money. As a result, I have real understanding and empathy for how hard life can be for the working classes, and how their life experience can be very different from those of the pampered elite.

To my mind, what is driving rising populist movements is little more than rising developed market inequality; a long period of falling living standards for the working classes, as the cost of living has continued to rise faster than after tax incomes; and a desire for a better life. As I discuss in more detail below, the cost of housing has risen significantly in many countries, for instance, and I have seen first hand the struggle most people have these days to afford even a basic home (even to rent one). Commute times have risen, as the working classes have been forced to buy or rent houses in suburbs further and further away from where they work, and this has taken a real toll on people's quality of life.

The cost of healthcare and university education has risen, while various consumption-based taxes have kept escalating (excise taxes on cigarettes and alcohol, and sales/VAT taxes, which hit the poor the hardest). The cost of gasoline and electricity has risen, as the rich in places like the EU, who have different priorities, have priced carbon and implemented climate policies that they can easily afford to comply with, but which many others can't (this prompted the French Yellow Vest protests), while retirement security has been undermined by the removal of corporate pensions and the growing indebtedness of Western governments. And alongside all this cost inflation, incomes have been relatively stagnant. Many were financially devastated during the GFC, and lost their life savings and houses. There is a sense that things are getting worse, not better, and that a different approach is needed. Indeed, things have got so bad that most Americans now believe that the 'American Dream' is dead.

This is in contrast to the narrative often presented in the mainstream media, controlled as it is by members of the privileged elite that have been immune from these pressures, and indeed on the right side of rising inequality. The narrative is that the working class Joe Blogs' of this world voted for Trump, Brexit, and various populist parties in Europe, because they are at best a bunch of ignorant fools that don't know what's best for them, and at worst, a bunch of hateful, racist bigots, that want to return the world to the sort of 20th Century nationalism that lead to the great wars.

As someone with many working class friends who understand how they think and what their lives are like, I find this accusation not only false and out of touch with reality, but highly offensive and unfair to these people. Indeed, I actually find it obscene, coming as it does from the richest, most privileged members of society, that have no idea what life is like for the working poor.

The truth is, these folk just want better lives, and they also have many legitimate reasons to feel aggrieved, and feel that most of the elite has ceased to understand them; care about them; or represent their interests. The elite flatter themselves too much - their leadership (or lack thereof) over the past 30-40 years has delivered outcomes that have fallen far short of what they could/should have (I agree with Peter Thiel that the idea of 'developed' economies is a bad one, as it implies that these economies have already reached a sort of final maturity, whereas in reality, many aspects of our society fall far short of what could be achieved with better leadership and policies).

We have seen healthcare and education costs mushroom; the cost of housing rise; commute times elongate; wages stagnate; inequality rise; the size of government and various indirect taxes increase; the amount of regulation significantly increase, pushing new business formation to new lows; and pension and employment security undermined (with corporate pension plans being phased out, and governments failing to set aside money to fund future entitlements, while government debt burdens rise). We have also seen monetary policy conducted in a manner that has generated asset price booms and busts (including the GFC), inflated house prices and encouraged the middle class to become heavily indebted. And the design of the Eurozone has also caused much economic suffering in Southern Europe for ordinary people.

A lot of the elite argue that these are uncontrollable forces of nature, but they are wrong. Most of these outcomes are the direct result of failed leadership and poor policy choices, and were entirely avoidable. There is too much mutual back slapping amongst the Davos elite, and not enough soul searching/introspection. There is too much externalisation of blame for the rise of populist movements ('it's just the ignorant masses electing bigoted leaders'), and not enough critical reexamination of how they have been capable of such epic economic mismanagement that the need for a populist backlash has arisen in the first place.

Why has there been so little empathy for, and so little understanding of, the plight of the working classes, and the populist movements they are voting for, from the elite, and more pointedly, such visceral opposition to/contempt for these movements? I think it is because there is sort of a bizarre bipartisan elite consensus working against populist leaders. From the traditional right, wealthy executives, business owners, and professionals, have all benefited from the status quo, being on the right side of rising inequality, so they don't want or see any need for change. Meanwhile, on the left, in addition to the leaders themselves being personally members of the elite ('champagne socialists'), left wing politicians and activists have historically benefited from having a growing pool of poorer demographics, as that is their core political base. So they are also content with the status quo.

A 'right wing' political movement catering to the poor is therefore a development that has upset everyone. They have policies that are potentially bad for corporate profitability (but good for labour), such as immigration and free trade restrictions, so the right don't like them. But the left resent that their monopoly on the poor's vote is being challenged (having lost it by focusing too much on minorities/identity issues, and not enough on the working class), and also remain pro immigration as it boosts the size of their core voting blocks. Populist leaders have therefore been 'encircled' by the elite, and singled out for self-righteous condemnation, which has resulted in the bizarre situation of what are really grass-roots workers-rights movements being described as alt-right or ethno-nationalist.


A closer look at the drivers of inequality and rising working-class malaise 

So if inequality and falling living standards has been driving populism, what's been driving the former factors? There have been multiple causes, but one of the most important has been globalisation and free trade. Globalisation and the offshoring of manufacturing jobs and other low-skilled labour (e.g. call centres) has resulted in a reduction in global inequality, as emerging economies have benefited from rising exports, but it has increased developed market inequality, as jobs migrated overseas (there has also been an intra-European imbalance, with the North benefiting at the expense of the South).

These policies boosted corporate profits (which are at record levels in places like the US), as labour costs fell (both direct tradeables labour costs, as cheaper offshore labour was used, and also domestic non-tradables labour, as the overall supply of labour rose as competing manufacturing jobs disappeared). Globalisation has basically integrated 6bn low cost labourours into the global economy, undermining the bargaining power of less than 1bn members of the developed market working class, and that has had the effect of radically diminishing the value of their labour. It has also devastated many working class towns/neighbourhoods, as factories closed down en mass.

If you are smart and well educated, you've been immune, as there continues to be a global shortage of highly-educated/skilled people. As the global economy has grown, the value of highly skilled labour has risen, and so the elite have prospered. But there has been a growing oversupply of low to moderately skilled labour, and it's value has therefore fallen in the developed world.

These forces undermining the value of developed market labour have been exacerbated by other trends, which since the 1980s have included the reduction of collective bargaining agreements and the power to undertake industrial action, and a move away from corporate defined benefit pension plans. In combination, people have seen both reduced job and retirement security. Many government pension entitlements remain in place, but instead of putting money aside to fund them, most developed market governments have instead run up huge debts, suggesting these unfunded entitlements will be extremely difficult to make good on. Retirement ages are already starting to be pushed back in many countries, and much more will be needed.

Furthermore, liberal immigration policies - so liberal that in the US at the moment, there is strident opposition to clamping down on illegal immigration, let alone reducing legal migration - have exacerbated the plight of low-skilled labour. Legal immigration can have favourable economic benefits if it targets highly-skilled migrants, or migrants that can work in sectors with labour shortages, and these migrants pay taxes. Those sorts of migrants generally have a net positive impact on their host economy. However, we have seen much low-skilled immigration in recent years in places like the UK, EU, and the US, which has had the effect of further weakening the bargaining power of labour, and suppressing wages.

This is particularly so for undocumented migrants, who may not pay tax, and who may be prepared to work for much less for 'cash under the table'. Furthermore, many such migrants will oftentimes remit large parts of their paychecks back to their home countries to support extended families, rather than spend it in their host economies (migrants are consumers as well as producers; if they spend what they earn in their host economies, they create demand for labour as well as supply it; but if they save and remit most of their income overseas, which they often do, they subtract from overall labour demand in their host economy, and instead boost demand/employment in their home countries).

Heavy migration into big cities can also have the effect of driving up rents/house prices, and worsening commute times, which hit the poor disproportionately. Strict building codes in places like Auckland and Sydney, which have sought to preserve leafy, low-density development in wealthy inner-city suburbs, has - alongside a heavy influx of migrants - driven up the cost of housing/rents meaningfully. This has forced the working classes to live further and further out of the city, and endure longer and longer commutes - particularly those that don't own houses. Some are even being forced to leave the city where they grew up entirely, because they can no longer afford to live there. I went back to visit Auckland recently and was shocked at how much rents have increased, even in relatively poor neighbourhoods, and the ever more marginalised housing many people are forced to live in for affordability reasons. It is a real struggle for people, and immigration has played a significant role.

The economics are pretty simple here. If you have housing for 1m people, and the housing stock grows by 1% a year to say 1.01m, but the population by 2% to 1.02m, then prices will have to rise to ration demand, and the poorest 10k people will be forced to either leave the city, go homeless, or overcrowd into tiny dwellings. Needless to say, while the rich elite don't see any problems with liberal immigration, the poorer working classes don't necessarily see it the same way.

Immigration also benefits the elite in many in other ways. There might be, say, only two major supermarket chains in a given city, in a comfortable duopoly. Consequently, if you increase the size of the population by, say, 5%, through immigration, you won't end up with 2.10 supermarket chains. You'll still have two, and they will make a lot more money, as revenues go up against a relatively fixed cost base. Furthermore, an ample supply of immigrant labour will keep their labour costs suppressed. So corporate profit margins will rise, and so will stock prices, while rising populations also push up the value of the real estate their stores sit on (and the homes and rental properties of their executives and shareholders). All of these forces disproportionately advantage the rich.

There is therefore a strong alignment of incentives for the elite to be pro immigration, because they personally benefit from it economically, while the poor suffer. And as a bonus, they also get to claim the moral high-ground by accusing opponents of liberal immigration policies of xenophobia/racism, and get to virtue signal about how much better human beings they are. When you understand the real situation, you can see that this type of behaviour is actually obscene. They are literally adding insult to injury to the poor; kicking them when they are down. I for one find it highly objectionable.

But it gets even worse, because much of the liberal-captured elite are seeking (and succeeding) in shutting down the perspective I just outlined, branding it 'hate speech' against immigrants. This allegation makes it fair game to be blocked by liberal-elite controlled social media companies; and the advocates deplatformed and even fired upon accusations of racism. They are defending their interests in extremely underhanded ways, and manifesting a stunning callousness and lack of empathy towards the interests of the working poor, which make up a large portion of the electorate, and whose interests deserve representation. Anyone living in a poor neighbourhood blighted by excess illegal immigration, who wants to build a wall, now not only has to live in poverty, but also has to suffer the indignity of being called a racist and being forcibly shamed into silence as well. The white working class in poverty-ravaged communities also have to endure being repeatedly told by the rich elite that they have 'white privilege' as well.

Another important driver of falling living standards has been rising healthcare costs, which have mushroomed over the past 30-40 years. They have gone from about 5% of GDP in the US, to 17-18%, driven by a bunch of flawed government policies that have, despite good intentions with respect to 'access', succeeded in doing little more than perverting incentives and creating truly disastrous outcomes. This has exacerbated inequality, as excess costs are a regressive tax on everyone, whereas a small group of elites capture all the excess rents generated by the healthcare industry, from highly paid professionals, to executives and stockholders in drug, hospital, health insurance, and medial device companies.

Most people in the US get access to healthcare through employer-sponsored private insurance, without which people can face financial ruin if they suffer a health misfortune, and although it may seem as though employers pay for this insurance, it is included in the total cost of employing someone, and so the burden is effectively borne by employees (with premiums effectively deducted from their wages). This growing de facto deduction has likely been an important contributor to stagnant real US middle-class wages since the 1970s, as rising healthcare costs have offset what would otherwise have been some growth in real wages. It didn't have to be this way. The elite screwed it up - epicly. And the middle class and poor have paid the price, while a small number of well-placed individuals have got extraordinary rich.

The cost of university education has also spiraled ever higher - another outcome that was not a force of nature, but has instead been driven by flawed policies and incentives, as well as market failure. This has resulted in a situation where students now often have to take on six-figure debt burdens in order to attain a university degree (sometimes of questionable real value), which remains essential for access into many better-paid areas of the global labour market.

Furthermore, students were essentially promised that this debt burden would be more than offset by enhanced job/earnings prospects post graduation, and accepted that dictum unquestioningly. However, a combination of the GFC, which weakened job availability for many years, and the reduced value of a degree, as everyone has been encouraged and financed in to get one (the value of a degree's exclusivity and signalling declines as degrees become ubiquitous), many students have found it much harder to find well-paid work than promised, while emerging with massive debts.

Furthermore, in the US for instance, students have been charged a fixed 7% pa on their student loans over the past decade - far higher than reasonable market interest rates, in a decade where Fed rates were essentially zero - and students cannot escape this debt, even if they file for bankruptcy (student loans are the only loans that cannot be repudiated/restructured in personal bankruptcy proceedings). This has created a growing class of indebted 20-30yos that cannot afford to buy houses and raise kids, let along start a business. Marriage and birth rates have plunged, and the level of new household formations has continued to undershoot expectations. But a small number of tenured professors and university deans have benefited, as this heavy tax on students benefits a small well-heeled elite - many of whom use their secure position to condemn populist movements and their voters.

A growing excess of regulations has also stifled new business formation, and contributed to growing market consolidation/power by industry incumbents across many industries, as heavy regulation increases barriers to entry and favours incumbents. New business formation in the US is currently at all time lows on a per-capita basis. It has never been harder to start a new business (outside of tech). This has restricted upward social mobility, and entrenched wealthy interests, not to mention slowed down economic growth. It also grants corporates more bargaining power with labour.

In the Eurozone, structural flaws in the union's design have driven disastrous economic outcomes in places like Italy, Greece, Spain, and Portugal over the past decade. Youth unemployment has sat as high as 30-50% in many of these regions for large parts of the past decade, and living standards have plunged. A large part of the blame for this lies with structural flaws in the design of the currency union that were evident to many observers right from the very outset. And the punishment meted out to the working classes, who have borne the brunt of the fallout from these design flaws, has been exacerbated further by forced austerity measures prescribed by the German/EU elite in the crises' wake.

Forced liberal EU immigration policies have also made things even worse. For instance, the EU required Italy to keep its borders open. Italy, being on the Mediterranean (unlike their Northern European overlords), has therefore seen a significant influx of African/Middle Eastern migration. Italy had to spend a lot of money on social welfare and infrastructure to accommodate this rapid influx, at a time when domestic unemployment was already high, and the EU was at the same time forcing the government into austerity measures to reduce its fiscal deficit.

What this essentially meant was that the EU was asking Italy to raise taxes and cut public spending/pensions/welfare for ordinary Italians, in order to bear the burden of the cost of significant waves of immigration, and to do so despite ordinary Italians having already suffered terribly from a drawn-out economic crisis, caused to a large extent by the very EU bureaucrats forcing this hardship. So why, exactly, are people so surprised that ordinary Italians are finally saying, 'we've had enough'? And why do people believe it is ok to call Italians and their new leadership a bunch of ethno-nationalist bigots?

The only surprise should be that it has taken so long for populist movements to arise, given just how many sources of legitimate grievance the working classes have claim to. Living in their gated communities, cashing their six or seven figure salaries, and attending prestigious meetings in Davos by private jet, the elite are completely immune from the practical consequences of their own ideology. They do not have to suffer rising crime and poverty in their neighbourhoods, falling job and retirement security, and falling wages and public services, if they can get a job at all. And now, the liberal elite feels entitled to call these people xenophobic, racist, and ethno-nationalists, as well.

This is fundamentally where nationalist-populism is coming from. Politicans are starting to stand up and say, you know, it's high time someone paid attention to the plight of the working class; listened to them; and represented them; and it's time we started to gear policy towards what is good for the mainstream working class of our own country (country X first), instead of just the rich, and the overseas poor (e.g. through free trade and liberal immigration). And it shouldn't come as a great surprise that this message is resonating with voters.

And Euroskepticm is rising because Brussels is democratically unaccountable; uncompromising in its approach; and fully captured by the liberal-elite, who do not understand or represent the interests of large portions of the populations they govern. Immigration is the issue that has really tipped the balance and catalysed change, because this is where the gaps between liberal idealism and on-the-ground practical reality have become simply too large for people to ignore.

Aside from the economic impacts of immigration, which are less immediately visible, there are parts of major European cities that have become completely Islamified on account of rapid Middle Eastern and African immigration. Crime, gang rape, intimidation of women, and illiberal attitudes, have grown significantly in these areas, and rendered these parts of European cities dangerous and unsafe to visit - parts a lot of residents used to call home. This is just a fact. It's not an opinion. You just have to go and take a look.

The belief that 'everyone is liberal and tolerant at their core, and deep down share Western values', and 'assimilation and acculturation to Western values will automatically happen on its own, irrespective of how much immigration occurs, and who the immigrants are', is a dictum that has been proven naive and false. And again, a big part of the problem is that it hasn't impacted rich neighbourhoods in the way it has impacted poorer ones. The rich are either unaware of, or don't care about, the actual impacts of their ideology on the poor.

But the poor see the impact on their communities; they no longer feel safe and welcome in neighbourhoods where they grew up; and are starting to say, enough is enough. But because of their EU overlords, many European countries have not been able to effectuate tighter immigration laws within their own natural boundaries, and have been harshly criticised by EU governing bodies for attempting to do so, and accused of xenophobia. With living standards having declined so much already, for so long, people are saying, if the EU won't listen, we have to simply forge ahead and implement change anyway.


The takeaway

The pro-populist working classes aren't racist, and they don't support a brand of nationalism that could lead to war. This movement has absolutely nothing to do with ethno-nationalism, and it is high time they stopped being falsely accused of as much, and someone spoke out in their defense. Instead, working class people simply want better lives, and they want their leaders to listen to them, represent them, and understand the reality on the ground, rather than living in their ideological bubbles. I, personally, do not believe they are asking too much.


LT3000




50 comments:

  1. Very impressive how many reasons you found for this tragedy and how they interact with each other. It is indeed depressing how society developed. Young men today in Europe where I am from are scared and depressed on a level I could never have imagined. Social media is indeed a very strong factor too, which accelerated the development further.

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  2. What you are describing has for the most part been around for a while. And I think you assume people are much more rational than they really are (as in they see a problem developing and become angry about said problem, instead of often becoming angry for little to no reason). Also some countries like Poland have been doing quite well economically, even for the lower class people, and they are far more populist today. See here:
    http://ec.europa.eu/employment_social/employment_analysis/evidence_in_focus/income/income_Poland.png

    I think social media and increased ease of communication has had a far bigger effect.

    To expand on this, previously if someone had a variant world view on something it was much harder to find like minded people. The more extreme their ideas were, the harder it would be to find others. So their idea's would not be reinforced, probably quite the opposite. Now with social media this is much easier. So for example, the yellow vest movement dies out much harder. They find each other much easier, and reinforce and radicalize each others beliefs. Previously with lower social media and internet access penetration it was much harder for something to go viral. The flow of information was much more controlled by a few large media organizations. Now with facebook, youtube, reddit etc, I can find like minded people online and have my beliefs strengthened by the fact that there is a significant group of people out there believing the same thing.

    Then add to all of this the fact that social media and regular media companies make more money by feeding into people's bias. And the more extreme someone is, the more they engage and watch longer repetitive content. I saw this with my very (almost fundamentalist) religious parents. They would read the same bible stories hundreds of times.

    This is also true for people interested in alt right or alt left world views. The more extreme the higher the engagement. Even if you watch vegetarian video's on youtube it will recommend vegan video's. You watch moderate right wing or left wing video's and it will recommend more extreme content. This does not happen because some people consciously want this, but because machine learning algorithms determine this is the best way to make more money on advertising.

    Similar thing with old media, as people's biases become more entrenched and grow, it becomes more profitable to give in to them, so this becomes a self reinforcing process. If you stay more moderate as a media outlet you make less money. And at some point you literally cannot go back without losing your audience. Especially with increased competition out there from the many youtube channels and websites. And the angrier and extreme things get, the more quickly your audience will radicalize.

    Then add what you described in your post to this mix, maybe some trolls from Russia and China to fuel the fire (on both sides) and you get increased amounts of radicalization and close mindedness.

    I don't think this process is linear either, I think Munger's Lollapalooza mental model is of good use here. This is why I am scared for a moderate economic shock. Things are pretty damn good right now economically compared to the past 10 years. But increase unemployment by 50%, and things could get far worse politically. I think since 2009 social media penetration has more than doubled in America. And in some poorer countries it has more than tripled. Looking at older generations, social media penetration has gone up 500-1000%.

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    1. I second this. Excellent points. The economic forces that LT well describes are real and important causes. But they are slow moving ones that have been around for a few decades now. You have to ask the question of what has changed in more recent history. And I think the role of social media in hypercharging political polarization is huge (and if anything only getting worse). A few decades ago there were just a few major TV networks and most people read the same newspaper in the mornings. However imperfect, there was a common shared reality. This no longer exists -- and the old gatekeepers are gone. The other important factor that I think is part of the story is big changes in the demographic makeup. Whites are projected to be a minority in the US within 25 years. This is causing a lot of anxiety. And Trump is exploiting these anxieties with all the talk about immigrant crime, building a wall, and so on. It's a ripe environment for populism.

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    2. I'll 'third' this - thanks for your excellent observations. I agree & you've convinced me that I probably should have placed more emphasis on the importance of social media.

      I'd add that social media has also created a direct-to-voter communication channel outside traditional gatekeepers, that has allowed non-traditional politicans to build an audience. Trump used Twitter very actively, for instance. With respect to the US, a good case can be made that the forces you identify have been a large contributor - particularly because economic conditions had been slowly improving in the decade leading up to Trump.

      In Europe, I tend to believe Syrian refugees and mass immigration generally was the tipping point, as well as long periods of economic malaise. But social media definitely played an enabling role as well.

      I guess what needs to happen is that the big social media/content sharing websites need to try to tweak their algorithms so instead of suggesting veganism to vegetarians, or 'more like this', they link to rebuttal videos etc that bring people more towards the center rather than pushing them further to the extreme. The challenge is that this will be much less profitable, as you note.

      I don't like the approach being taken at the moment which is simply 'we will ban/restrict videos we deem disinformation', because the standard is too subjective and capable of being enforced in a politically biased way (e.g. Spotify have said recently they will be blocking Prager University ads - an organisation that is not spreading conspiracy theories, but rather fairly traditional/conservative political perspectives). But I guess simply blocking content ad hoc when people complain, allow them to claim to be taking action, while being able to keep their highly profitable algorithms as is.

      Like many things in life, the decline in traditional gatekeepers control is a double-edged sword. It prevents them from controlling the flow of information and is therefore empowering as information is democratised, but it can also allow for the spread of bad ideas as well without checks and balances.

      Cheers,
      LT

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  3. Some good comments so far. I always appreciate an application of Munger's Lollapalooza model, and especially interesting to note both picked up on the impact of social media. Not to deflate any of LT's points in any way, but it has occurred to me that social media might be "hypercharging" democracy more generally (which frankly, gives someone like myself pause, when I prefer a more constitutional and republican form of government). This is why, for all the points I disagree with him on, someone like Bannon may have correctly diagnosed that the challenge will be between populist left and populist right in the time we are living. Yet, it could be nearly as much the case that one could say democratic left and democratic right. To the extent that both are reactions against "elite" bogeymen and scapegoats – against the "billionaire class" or capitalists on the left and against the "Davos globalists" or "liberal coastal elites" on the right – they are aptly described as populist, but to the extent social media is coordinating blocs of voters and instilling in them a belief that they can elect leaders who will address as directly as possible their concerns, they might also be described as democratic. (People which have a particularly favorable conception of pure democracy will be happy about this, as well.) Hence, I'm of the view that Obama might have been our last "indirectly representative" president for some time to come – where people voted from a vague hope and belief only to find that his policies were frequently not the ones they would have liked if they had more direct control. Trump is providing a model – and a risky if not potentially dangerous one – where voters might expect to get what they were promised, or at least someone who will fight doggedly for those things. We will see if the next president, whether on the left or right, continues this new dynamic.

    I'm not sure this view is correct, incidentally, but I appreciate posts like LT's and the subsequent comments because (unfortunately, in my view) the stakes might be rising in proportion to the extent constitutionally and normatively constrained indirect democracy is on the decline and a social media fueled conception of active political engagement and direct representation is in the ascendant.

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  4. Anecdotal, but in the Netherlands we have a party advocating for direct democracy. Thierry Baudet and his party Forum for Democracy. He went from being a nobody to polling 10% of votes in the last 2 years or so. Which is a pretty big deal here, especially since he took away almost no voters from the other right leaning radical political party, Geert Wilders who has slightly more than 10% of votes. The biggest party has 16%.

    What is interesting is he advocates for a more direct form of democracy and it is hard to pin him down as either radical left or radical right. And he has a pretty diverse set of supporters. Although the argument that he is alt right might be easier to make than radical left.

    It is interesting that both Wilders and Baudet heavily used social media and essentially grabbed attention by doing various crazy stunts and saying crazy things. It seems that in politics you need to be pretty narcissistic to succeed (but probably nothing new under the sun here).

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    1. Interesting data point, thank you. For the record, as the one commenting on democracy above, I am 100% for democracy as the means of legitimizing and reorienting government. My reservations lie in viewing democracy as a means of actually governing. Speaking of non-consensus views, I wonder if this is one, especially the way citizens in the U.S. seem to speak about, learn about, and come to understand the role of democracy in our own society.

      PS: I apologize if my own commentary has been overly U.S.-centric. I don't know if Australia or NZ have equivalent developments on-going, and I might have included "Brussels elite" in my list of populist right scapegoats in Europe, if I understand the dynamics their in a fair way.

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    2. (Among my many other typos, my apologies for the "their" in the last sentence. Nothing can undercut a point one is trying to make like something so egregious as that mistake.)

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    3. So the issue is, what type of democracy do you want? I don't think a direct democracy works well. You want to elect people who are advised by people who know all the technical details. There are so many things the average person does not know the first thing about. Which also opens you up to foreign manipulation.

      Direct democracy has more resemblance to mob rule.

      BUT then again, a lot of the time these bureaucrats do a lot of things I disagree with and that are often only good for their careers and not for the country. Tell me you genuinely root for the bureaucrats in this (hilarious) clip:

      https://www.youtube.com/watch?v=gmOvEwtDycs

      Although this (hilarious) clip does a good job illustrating that the public is not much better:

      https://www.youtube.com/watch?v=G0ZZJXw4MTA

      So I am not sure what the solution is there.

      I don't trust the mob to know what is right, but I don't trust some career climbing bureaucrat either. Although historically more indirect democracies tend to do better.

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    4. I just find it extremely refreshing to hear another person express views that I find as uncommon as I do intelligent. The fundamental problem is that "the wisdom of crowds" works very well on some problems, but not on others. Guessing the weight of a prize pig? Very effective, and we can think of theoretical reasons why. Guessing the right policy vis-a-vis Syria? Very ineffective, and we can think of the theoretical reasons why. And your prescription is damned near perfect: "You want to elect people who are advised by people who know all the technical details." Yet, I might impose a bit more emphasis, in this way: "You want to elect people you have reason to believe are the best and most trustworthy leaders, managers, and decision makers, where one might, then, take for granted that such people would naturally seek out and be best able to use the advice and knowledge of the people most expert in the technical details." All I did was add a bunch of qualifiers, but I think doing so helps to get at the solution (my solution, anyway) to the problem you perceive.

      What type of democracy do I want? How does a society get from here to there? I think it starts with discussions and ideas like these. They, then, need to be spread, supported, explained, justified, until they become conventional wisdom and accepted norms (I hesitate to say ideology, but perhaps that is really what it would be in the end, a new ideology). I would like to imagine a society of people who have heard it explained this way many times – think of how limited each of our abilities is to acquire, process, and assimilate knowledge, and appreciate how special it is to find people who have proven themselves, and had the benefit of the learning they gained by being in the position of proving themselves, as people who can make good decisions, build and manage large organizations, persuade and lead people as to the wisdom of good actions, and ultimately deliver concrete results and improvement. If the solution I am proposing were possible, it would be because a society could come to know, and know that everyone knows, that the role of a voter is to elect excellent and honest leaders who will then work out and effect the best policies, rather than to decide first what they think are excellent policies and then to elect any person who can convince them that they will implement those policies on their behalf.

      This has obviously not been the view I have held my whole life, so I am open to the idea that someday I will see things a different way, but this is my idea of how we avoid your "career climbing bureaucrat" – that by placing an emphasis on the positive traits of elected officials (and I don't mean such "positive" traits as being good looking or good sounding), I imagine that the negative traits such as "career climbing" and "bureaucratic" will find much less of a home amongst those ultimately elected. This is optimistic, yes, but it is currently the only vision that keeps me from being completely pessimistic.

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    5. * Great video clips by the way. I'd seen the first one before, and possibly in the context of a discussion like this one. Just classic! Thanks.

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    6. ** Also, reflecting a bit on the first clip, I think there is a big difference between local, regional, and national government. In the U.S., the various levels of government are a blessing and a curse, but especially a blessing, in my opinion. I live in a small town in New England that still has town meetings, the ones where anyone can speak and every single person's vote counts exactly the same. Of course, what you find is about 10-20% of the population is actually politically active, but the more important point is that, at the local level, every thing people are voting for affects them directly. If you vote for more spending, you are voting to pay for that spending yourself essentially. If you vote for less spending, you are voting to see less in the way of some of the government services you would otherwise actually benefit from. Not that I think he's as important, powerful, or consistently correct as he thinks he is, but in this case, Taleb's models around fragility/robustness/anti-fragility are just one way to appreciate some of the the most salient differences between centralized and decentralized forms of government. (I could also have invoked Hayek's models on some of the coordination and information problems involved, but the point is to think about why different kinds of government might work better or worse under different conditions.) I am open to direct democracy insofar as it works, and at the local or town level it might work fairly well, indeed. (Incidentally, if the Netherlands were really small enough, homogeneous enough, and in a sense, local enough, perhaps direct democracy is at least a less crazy notion than it would be for a country like the U.S. And yet in the U.S., it is common to howl about our electoral college and how a bare majority built on massive majorities in coastal cities should have the right to dictate policies to communities thousands of miles away.)

      Of course, I might still prefer the stewardship of wise and trustworthy leaders even in cases where direct democracy would work fine, but the potential benefits are probably less stark. At something like a national level, though, you have a different level of informational problems, a different level of competition with respect to other concentrations of power, a whole different level of agency-related issues, and finally the issue of governing a presumably vastly more diverse population than one might find in a small community or even one's own territory or state. The idea that calls for direct democracy might be more misguided under those conditions is obviously one I find to be very reasonable.

      I don't know if any of those ideas are exactly right or helpful, but again, I'm starting to wonder if it is becoming more worth my time to have these discussions and hone my own thinking in preparation for a time when these forces – driven especially by economics, as LT points out, but also information, technology, and ideology – require citizens to become more politically engaged, even when the level of political engagement that they would find ideal would be a much more limited one. (To this last point, I find it odd that I'm the only person I know who would gladly express the view that I would prefer to be much LESS politically engaged and active. Let me elect a handful of representatives every 2-4 years from people well qualified to do the job, and I would be just as glad to go back to my personal life and interests while those elected representatives then do their job of making the gears of government function smoothly and effectively. The ideal amongst some in the U.S. would seem to be debating politics in every spare moment and attending political marches every few weekends. I now see national politics showing up in my local paper. It's an interesting time.)

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    7. I think there needs to be a better system of accountability. More transparent accounting on how the money is spent. More of that information should be public. More competitive pay within government would be fine by me, give them bonuses if waste can be cut.

      The problem is though, the success of a bureaucracy is often measured by its size. It is kind of a catch 22, and would require some major event to be triggered.

      I'm not a big fan of requiring a significant portion of the population to be very politically active constantly to make things work. It seems especially in big cities this is impractical. I think the incentives need to be changed, and voters priorities need to be shifted.

      Force departments to make a new budget ever year, and set up a powerful department that looks for waste.

      And what would you think of getting rid of the electoral college in the US? Make it a majority vote. Dems might pull it off if they get congress and the presidency.

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  5. Very few in the USA are arguing that illegal immigration is OK. Personally, I'm arguing that Trump and his lackeys have grossly misrepresented the issue, and further that a wall simply isn't an effective solution. The current walls on the Mexican border are ineffective, as many of the ranchers who live there will tell you. All 8 prototypes for Trump's wall were recently breached by Marines using tools available at most hardware stores. Moreover, increased border security has often had the effect of "trapping" seasonal migrant workers in the US, and thus increasing the population of illegals.

    Please don't equate opposition to Trump's immigration policies with being out of touch with the working class.

    PS - I grew up in a working class town in the middle of nowhere, in case that matters here.

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    1. Thanks Mike.

      I don't think any reasonable person would object to having a sensible discussion/debate like this on the merits of the wall. For mine, I don't even have an opinion on the wall. I haven't done the research, as frankly I don't care that much.

      The only opinions I have are that (1) Trump was elected with a clear mandate to build one from his voter base, and so that should be taken into consideration; and (2) that there are some legitimate issues that need to be discussed on immigration, because the consensus view that immigration in any number and kind is good, is not correct; and (3) it is wrong to merely assume anyone who wants to have this conversation is motivated by racism/xenophobia.

      What the solutions are is of course a much more difficult question. I'm not even necessarily convinced populist leaders will, for the most part, succeed with their ambitions, or make the correct policy choices. But that's not really the point of this article.

      I'm more than open to be convinced the wall is not the best solution by people knowledgeable on the issue. Like I say, I haven't researched the issue and don't really have an opinion.

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    2. At this point I really dont care either, it's a drop in the US budget and if it makes 40% of the population happy then maybe it is worth it. All the data show however, that illegals are mainly coming in through ports of entry and overstaying their terms rather than hopping the fence. Same thing with drugs, why would you bring drugs over a fence when you can have mules go right through the port legally or try to ship them in via cargo of which only a small portion will ever get checked? The flow of migrants has shifted over the past 20 years, so more people are leaving for Mexico than coming to the US. I understand there are always counter-examples and bad stories, but the wall would be ineffective at stopping anything but the few of those who try to jump it, and the fence remodeling that's now being done was planned 8 years ago. Again, if we want a much larger barrier honestly fine, but the problem is a bit more complicated than that. The cartels haven't been getting drugs into America by having border crossers run with drugs lol, there is massive demand here for them and they mostly get in through ports.

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  6. Also, lots of those awful pampered, privileged "elites" are pushing for things like single-payer health care, lower cost college education, and fought against Trump's tax bill which has exacerbated income inequality while producing little in change in corporate job-creating investment. All of which is on the side of the working class.

    This blog post makes some very good points. But I've read a lot of soul-searching polemics by "elites" that seem to almost vilify anyone with a good education and rarely mention that some of the politicians claiming to be working class saviors are selling snake oil.

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    1. Dear Mike,

      LT has merely laid out what he believes are the most likely and most significant factors driving the rise in populism. He is not endorsing any particular set of policies in order to improve the conditions for the so-called working class, nor is he even saying that those conditions can definitely be improved. In fact, you are only lending support to LT’s case – that the source of populism is primarily economic – when you go on to indicate the efforts on the left to appeal to the economic concerns of the working class. From what you have written, I can’t tell if you actually support left populism or merely oppose right populism, but you have made clear that you do not believe that success could lie in the direction of Trumpism. Yet, if the working class can continue to swing elections in the U.S. or elsewhere, it will be their opinion that matters, and it will be by deciding whether they prefer policies on the right, like “JOBS, JOBS, JOBS,” or on the left, like “Medicare-For-All.”

      Thus, we might consider two questions: (1) “Can either set of policies actually work?” and (2) “Which set of policies will the working class find most persuasive and appealing?” As mentioned, you don’t seem to think Trumpism can be effective, let alone moral or just, and your arguments seem fairly consistent with those I am familiar with from “educated” people on the left (not so much from “educated” people on the right, incidentally). An example of this would be the assertion that the tax cuts are pure snake oil – and this despite having no access to the counterfactual of how the economy would have evolved without them or the counterfactual of how the policy will lead the economy to continue to evolve as businesses and workers adapt to the changes. I am not saying I agree with the tax cuts, only that I believe I am familiar with the thinking behind them and how they can be understood as supporting other elements of Trumpism (especially the corporate tax cuts, in order to compete with other jurisdictions having similarly low rates – e.g., China). Further, I much prefer to be an empiricist when I can afford to be, and if I can understand the reasoning behind a policy and am not convinced of obviously harmful or unjust effects, then I prefer to wait and see if the policy bears results, not in the first year, but perhaps over a more intermediate time frame. Given my own criterion, though, I am not offended by people on the left who can’t afford to give TCJA a chance on the grounds that they perceive it to be obviously unjust in a way that I don’t. But to assert that something is “snake oil” is quite different than having strong empirical evidence for the claim. (1)

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    2. I might make a similar argument for why it is not so obviously wrong to consider a compromise on the “wall,” but again, what either of us think will not matter if it is the working class that needs to be convinced, so I will only share one final thought. Take “lower cost college education,” as you put it. First, consider the savings that someone in the working class is expected to realize from the current policy proposals on the populist left relative to what they would spend in the absence of those policies. I’ll let you decide on the figures that make sense to you. Now take people who are in or benefit from the “education business” as it is currently constituted in the U.S., of whom most might reasonably be considered members of the “elite.” I’d ask you to contemplate the additional earnings that such a person might stand to gain. If the working class has an inkling that, on a net basis, the real winners will, once again, be the “elites,” and worse, that their taxes will have to support any new policies as much as anyone else’s, even if the bulk can be extracted from wealthier citizens, then I can see how the working class might reject a policy that, on its face, would appear to benefit them. And the elites would howl once again, “But they’re voting against their own interests!”

      I’m happy to take the other side, incidentally, and consider Trump’s “JOBS, JOBS, JOBS.” I’d suggest performing the same exercise. First, consider what a member of the working class might expect to gain over a lifetime of earnings if, for example, more manufacturing jobs, with relatively higher productivity, were to come back to the country, while labor supply growth was kept moderate, admitting that the figure should be handicapped for the probability that these objectives can actually be achieved via the proposed policies. Then, just as we did for those members of the “elite” that stand to benefit from expanding government spending on higher education (or health care, for that matter), consider the benefits to the members of the “elite” who are capital owners. Of course, the correct analysis is to consider the benefits relative to the counterfactual, and in this case, why would one expect capitalists to do so much better than they have already been doing in the absence of such policies – and the capitalists have been doing better than ever, I am told by the populist left. In this case, the net gain to capitalists, relative to the working class or the broader society, might be much smaller than one might expect. Without such policies the capitalist would continue to earn returns on the economy that currently exists – one that might be less productive and less inclusive than it could be under different policies – or they might continue to earn more and more of their returns in other places around the globe altogether. Do you think it’s possible that a member of the working class might be happy to take their lifetime earnings gains – especially if they dwarf the promised savings on education or healthcare – even if it means inevitably partnering with capital? For how is anything paid for, including policies on the left, if not by accepting the role of capital? (2)

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    3. LT was just diagnosing why it is the working class that might have to be won and on what grounds, specifically, economic ones. And so the populist left and populist right will continue to vie for them, but to be clear, our arguments are merely those that the “elite” on either side will put forth to win them over. Many will simply be pursuing their own interests and attempting to win the political fight at any cost, but I belong to those that would simply prefer to be on the side that has the best prospects of actually providing the benefits promised or, even better, those who can find a way to win pursuing a different and better path. Given a choice between populist left and populist right, perhaps you see the left policies as more likely to succeed, while I see those on the right as offering relatively better prospects. Given a choice of a third way, you and I might find that there is a way we can agree and do even better than either of these policy sets. (end)

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  7. "This movement has absolutely nothing to do with ethno-nationalism, and it is high time they stopped being falsely accused of as much, and someone spoke out in their defense. Instead, working class people simply want better lives, and they want their leaders to listen to them, represent them, and understand the reality on the ground, rather than living in their ideological bubbles."

    You sure they're not the ones living in bubbles? There's a reason those who live in coastal cities are on average more educated, better traveled and more tolerant. Maybe it's possible that the average citizen in Kentucky who has never left the state and who hasn't had the opportunity to study or observe other cultures and ideologies is the one in the bubble. Many of the articles you write on politics present marked bias that you apparently are not aware of and present only one perspective; you are doing yourself as well as your readers a disservice by believing it is the only accurate portrayal of things or that you are simply being an arbiter of truth here.

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    1. The only perspective i am capable of providing is the one i have. I dont doubt i have biases. Please feel free to point them out and explain what i may have missed.

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    2. PS a few further observations:

      "You sure they're not the ones living in bubbles? There's a reason those who live in coastal cities are on average more educated, better traveled and more tolerant."

      Yes, and one of the reasons they are more liberal is that their life experience over the past few decades has been very different, because they have been on the right side of rising income inequality.

      "Maybe it's possible that the average citizen in Kentucky who has never left the state and who hasn't had the opportunity to study or observe other cultures and ideologies is the one in the bubble"

      I'm not denying that there are parochial & intolerant folk out there. Of course there are. What I'm arguing is that it is wrong to suggest the primary motivation for populism is this intolerance for other cultures. My views are that (1) the motivations are far more economic in nature; and (2) that there are in fact good justifications for grievance, given the policy failings I outline.

      Please be aware that I am not arguing that populist leaders will necessarily have better policies or be able to solve these problems. Nor that populist politicans will not merely seek to exploit this (justified) grievance for personal political gain. Those are entirely different issues.

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  8. Would you like to provide data on how islamification of western European cities has made them more dangerous, as you say? I've been to many of them, and "going to take a look" doesn't qualify as evidence.

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    1. Crimes are disproportionally committed by immigrants from poor (and often Muslim) countries.

      I can provide data from Netherlands, Turks and Moroccans are making up some 15% of prison population while only being 4% of the general population. Moroccans are especially bad, somewhere between 15-20% of all Moroccan men in the Netherlands are currently in prison. Which is a pretty insane number since we are not exactly a country that happily locks people up like the US.

      And I know in Sweden the situation is similar:

      https://www.bbc.com/news/world-europe-45269764

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    2. Whoa, whoa, whoa... It's obvious from the data that we lock people up in the U.S., but not happily. I know what you mean, though, but as I understand it, through the 70s, 80s, and into the 90s, the rate of violent crime was soaring in the U.S., and the subsequent incarceration rates were partly due to a firm commitment to halt those trends. In fact, the rates have been sharply reduced since then and the trend mostly reversed, with violent crime falling steadily since then to some of the lowest levels in decades if not ever. People seem reluctant to concede that at least some of this success was due to higher rates of incarceration of probably violent offenders. If one needed evidence of room to improve, however, I'm not sure you could do better than the bipartisan criminal justice reform that just passed, which is an attempt to address some of the more egregious features of criminal justice in the U.S. I'm sure the long term goal is to do as well as any other country, but just as the Netherlands has found that different populations, facing different challenges, can result in divergent rates, some of what has contributed to rates in the U.S. has not been purely arbitrary.

      But I very much appreciate the insights and data. These are hard problems, and perhaps both the left and right have ideas that can help improve matters.

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    3. * "provably violent offenders"

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    4. The link you posted shows a minority of offenses committed by immigrants from North African and Middle Eastern countries with a quote stipulating that a small percentage of immigrants were offenders. As far as I'm aware, there is no good data on ethnic or religious breakdowns of crime in Europe, which is why I see it dubious at best to say "it's a fact" that muslims have made Europe more dangerous. There have also been studies over the past few decades showing that while immigrants from any other country commit more crimes (even those from other EU countries), the crime rate of their descendants are on par with native borns. From what I've seen, in the US immigrant crime rates are on par with that of native borns, possibly due to better integration. In any case, I dont think the data exists to say that muslims are inherently more dangerous than other immigrants, or that islamification is taking over Europe and leading to higher crime rates. If it's the case that immigrants in the EU commit crimes at a higher rate than natives, which certainly could be true, it may be due to the high rate of migration rather than their religion or ethnicity. Any country with such high rates will likely experience crime increases (and to be clear, all European countries have experienced lower crime over the past 20 years, even if immigration policies have reduced the decline). You would need much better data and more time before making any claims as to a link between Islam and crime. I'm starting to feel like I'm reading Breitbart articles here honestly, or just repeats of the latest episode of Ben Shapiro that Lyall has listened to.

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    5. First, I agree that the statistics in the BBC article are somewhat ambiguous, but not as much as you would appear to claim. It seems highly likely to me that these particular violent crimes (i.e., rape and attempted rape) are committed at a higher rate amongst non-Swedes if ~60% of convictions were of foreign-born while foreign-born represent something closer to 20-25% of the population overall, as I understand it. I admit that even this is not conclusive, as we have not controlled for bias or discrimination in reporting or convictions, but it seems like material evidence all the same. As for the statistic you allude to about how it is a small percentage of immigrants who are offenders, that would be true of almost any group, as crime (especially violent crime) is a sufficiently uncommon occurrence. Look up the highest murder rates in the world and you get something like 100 per 100,000 on an annual basis. This implicates an extremely small percentage of the population but it doesn't mean that it is not a relatively dangerous and tragic situation.

      Second, would you feel better if Islam weren't implicated in connection with these statistics? Perhaps that would be to concede too much, but at least one could not be accused of Islamophobia in that case. Yet, perhaps you would, then, be willing to concede that to the extent the statistics show immigration as complicating the safety picture for long-time citizens, that they might have reason to question the rationale and policy objectives of certain immigration policies.

      Frankly, I'd prefer unlimited immigration to the extent newcomers could be counted on to be law-abiding, but even then it runs into complications as a consequence of the modern welfare state. As Milton Friedman once said of the U.S. circa 197? - and I know there is no love lost on him from the left, but the point is worth at least raising - immigration appears to work as long as it is illegal, for then the immigrants get the work they are looking for, while the taxpayers (especially the ones that really do most of the paying) aren't overly burdened by newfound obligations.

      I'm not sure the answer to any of this, and it's most certainly NOT ethno-nationalism, but I'm not sure it would hurt to curtail immigration, illegal and/or legal, if efforts were redoubled to address the problems facing vulnerable populations around the globe where they are originally found.

      * Since this is a sensitive issue, I can only hope that no one takes offense, as my only goal is to learn and get closer to what is and has the potential to be good and true in this world we all share.

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    6. As I said and as the article alluded to, its likely the case that many of those offenders were immigrants, and who knows it is possible that the majority of new crime has come about from immigrants, but there are many confounding factors including the high rate of recent immigration as well as integration policies. My primary point was there seemed no basis on which to assert that any violence was the result of islamism, given that in the US islamic immigrants are no more likely to commit crimes than native borns, and we have no data on islamic vs non islamic EU immigrant crime rates. Many of these immigrants have moved from much more deprived countries, and if they are more violent than the average EU citizen we cannot say whether it is due to religious/cultural idealogy, or merely because of their circumstances and poor conditions in their home countries, or because the EU has allowed too many to come in without proper thought towards integration. I frankly don't care what your opinions on Islam are, and you could be right if there were to be found any proof, but my point was that it was an unsubstantiated and baseless claim and there are many factors to consider with regard to immigrant crime. The entire point was that the issue isn't as simple as the article make it seem and such side-effects of immigration depend significantly on policy. To assert that a particular religion, nationality or ethnicity of immigrants will cause more trouble is pretty much the definition of an ethno-nationalist ideology and without basis in fact. To assert something like that, there needs to be a better burden of proof then "go look at some European countries" for example, or citing the fact that immigrants to a single nation are more violent than the average native-born, when it may not be the case for other countries with better implementation.

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    7. The most unsafe neighborhoods are generally places where you hear Mosques and see women in head scarfs. So that is why it tends to get that association.

      Generally though, Islam has a negative influence on Europe. They do not adapt to the local culture, and if a group gets large enough it becomes a small Islamic country within a country. With things like Sharia, western women being cussed out if they don't cover their hair etc.

      If they live isolated from each other, they tend to moderate and adapt more, not if they all group together in certain places. Radicalization is then far more likely to happen.

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  9. Very interesting take. I strongly agree with a lot of this. I think empathy for the working class and those who voted for Trump is really important, and totally agree on the stunning cluelessness of the “Davos elite” that made many of the decisions that got us in the pickle we are in today.

    If you haven’t read it, I really recommend Yascha Mounk’s book “The People vs. Democracy.” He talks about liberal democracy devolving into two strands. The first is illiberal democracies (think of Orban in Hungary and Erdogan in Turkey). This is essentially democracy without rights – authoritarian leaders that were democratically elected but who are trampling on institutions, the free press, etc. The second strand is a kind of undemocratic liberalism, or rights without democracy. This is today’s EU, where citizens’ freedom of expression and so on are well protected, but decisions are made by often unelected bureaucrats in Brussels. Citizen’s views on important topics like immigration are not reflected in public policy. We have a version of this in the US, albeit for slightly different reasons (money in politics). Popular views on everything from immigration to gun control to healthcare are simply not reflected in public policy. Gun control is a good example here – the vast majority of Americans believe in sensible regulations (not confiscation of guns), yet a small, well funded and well armed lobbying group has managed to hijack the political process to block any such legislation. This type of thing can be seen across a large number of issues of importance to both the left and the right.

    Where I strongly depart with your analysis is the idea that right-wing political movements like Trumpism are actually catering to the poor. They do so in name only. What has Trump done to lower the cost of education or healthcare? (healthcare premiums are now growing at a much faster pace than under Obama). The only notable achievement of this administration is a highly regressive tax cut that was massively skewed toward tax relief for the rich and corporations. In other words, a doubling down of the “trickle down” supply side economics that the elite thought was the answer for the past few decades, and which has utterly failed to help the middle class. This is the danger of the snake oil version of populism. It is going to result in an even bigger backlash when voters eventually realize they have been duped.

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    1. Dear Anonymous,

      What makes you think LT is in disagreement with you so far as Trump is concerned? It seems to me like an equivocation on the word "catering" where in one sentence you suggest Trump is not catering, but in the next you suggest that he is catering (just "in name only"). LT has only identified the phenomenon of catering to the working class, but has not, as far as I can tell, taken the position you've imputed to him. Perhaps he agrees with you that the catering is nothing but demagoguery and posturing, but as you concede, that would be a form of catering nonetheless.

      And as I replied to Mr. Kruger, it is possible you are right on all the points you put forth, yet when one keeps an open mind, stays informed, and understands that changes don't happen overnight in a government that was originally designed to work slowly, if at all (banning bump stocks took more than a year and some local "common sense" and popular gun control policies that have been enacted have been or are at risk of being found unconstitutional and undone), I would suggest that you do find some signs that Trumpism is not merely demagoguery and at the very least results in policy intentions if not actual implementation. If you are not interested in the economics of tariffs, trade deals, tax cuts, "buy American, hire American" policies, and the economic implications of border security, I am happy to suggest a few policies or proposals that the Trump administration has offered which would represent their solutions to health care or education problems. As for health care, I would suggest considering an FDA commissioner who has, as I understand it, accelerated the rate at which generics have been approved, a proposal to limit the cost the U.S. govt pays for drugs to that which other govts in the world are able to negotiate, a proposal to limit or eliminate certain rebate mechanisms used by pharmacy benefit managers (PBMs) and the insurance industry, the ability for insurers to offer slimmer plans with different durations that may be more affordable and attractive to some segments of the population, and a pressure campaign on drug companies to limit annual price hikes that appears to have had at least some modest effect. Those are just some of the policies, as I understand them. In education, first we would have to agree on the reasons why costs have gotten as high as they have, and whether much of the spending is basically justified, but to the extent the rise of educational bureaucracies have mirrored the rise of regulations of the so-called administrative state, I would say the Trump administration has done what it can given that many proposals would appear very ugly indeed as much of the bureaucracy is ostensibly in place to further various social objectives.

      To be clear, I don't necessarily endorse these policies of Trump, and don't subscribe to much of what Trumpism represents, but to say that there is nothing there, or is "in name only," or is "snake oil" is yet to be determined in my opinion. Yet my opinion means little when either time will tell when it comes to Trump's ability to achieve policy successes, or voters will decide to go another way before we get/have to find out.

      My apologies to Mr. Taylor, however, as he hardly needs and probably doesn't appreciate my defense.

      * My sincere apologies for any typos and run-on sentences, but trying to offer these thoughts from a phone.

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    2. Hey anon. I'm not sure we need to wait years to see how this stuff plays out. Take the tax cuts. I can send you links if interested, but there is huge empirical evidence that supply side economics doesn't work. It certainly doesn't translate into higher real wages for workers. In theory it could, but that's not how it has played out.

      Or take "the economics of border security," as you put it. If the Trump crowd were really interested in the economics of border security they would be interested first in establishing the facts of the problem. And second they would be doing some kind of rigorous cost-benefit analysis on whether "The Wall" was the best way to address the problem. For example, they purport to be concerned about importation of illegal drugs, and that is an often stated reason for building the wall. But the facts (again happy to send links) show that the vast majority of illicit drugs enter the country through legal ports of entry, such as airports. So a rational policy response would be to tighten up security at these legal ports of entry. But that wouldn't be consistent with the broader game being played here, which is to keep people fearful about hoards of drug dealers and rapists crossing the southern border. So we get nonsense proposals for a wall that are not supported by any facts or rational policy analysis.

      I think snake oil is pretty apt here.

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    3. Hey, I appreciate the thoughtful response. As I said, you might be 100% right.

      Nevertheless, one problem is that I believe Marx's analysis of capitalism was essentially correct, and that workers are structurally disadvantaged relative to labor, so systematically raising wages is not even a problem that I'm sure has a policy solution. Second, to the extent one is trying to draw broad conclusions about something like "supply-side economics," it's complicated by the multiplicity of other factors that cause economics results during a period to be overdetermined. If a supply-side policy occurs at the same time as trends which are driving outsourcing and offshoring, then it becomes a bit difficult to establish why wages did or didn’t rise as fast as one wanted. I'd say I'd want to defer in the experts in such a case, but since I'm familiar the phenomenon of think tanks on each side being able to pin the problem on the other's policy, I'm not sure that would effectively dispose of the problem. This is separate from a different sort of over-determination, for is TCJA really meant to be just another supply-side policy, or was it specifically meant to make it more expensive for capital to operate outside the U.S. and less expensive inside, hence features of the policy like GILTI? If the latter, then even having evidence that supply-side policies have not been shown to reliably drive wages is not the same as having evidence that bringing investment back to the States, if successful, would not. And I'd go further, which is why I don't think evidence from one year since TCJA is dispositive, which is that the effect on wages can only occur when the supply of excess labor is finally absorbed, which may only happen after enough new investment has taken place and taken up the existing supply. Look at labor force participation rates finally creeping back up. How far does this need to go before one would expect much larger wage gains and how long will it take? Quite possibly more than one or two years, is the problem. Again, I am merely following Marx here, and to do so also raises the bigger question of whether capital will ever let this surplus run down for any appreciable amount of time. If not, then that’s not just a flaw of the TCJA, or supply-side economics, but might be a fundamental flaw or limitation of capitalism, but then that would be more like a law of economics very difficult to affect or repeal without much more dramatic policies, and much more dramatic consequences from such policies. (cont’d)

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    4. That is my best effort at addressing the TCJA, or how someone on the right might defend it, at least, if only as an experiment that might be worth undertaking. As for border security, I would say that Trump has already announced that he would be willing to compromise on a comprehensive package including, specifically, the technology at ports of entry which the Dems have requested. At this point the Dems can have everything they've asked for, and the cost to them would be an additional low to mid single-digit billions of dollars in the form of the wall on a budget that, last I checked, ran in the $3-5T range and an annual deficit in the hundreds of billions. And the idea that a cost-benefit analysis can be done is amusing to me, as it will be at the whim of assumptions which I'm not sure how one would make except for ideologically. No, the question in my mind is whether it is a reasonable outcome of a political process to have a compromise on an important issue that errs on the side of being more rather than less comprehensive, where I concede, some parts might prove much less effective than hoped for or promised. I would be willing to accept that kind of uncertainty and tradeoff, while it sounds like you are not. I suppose my only other problem with a position such as the Dems is my impression that they are imposing a burden of proof on the wall that they are not imposing on the technologies designated for ports of entry. On one hand, the wall might prove perfectly vulnerable to an innovation by anyone who cares to bypass it (that seems to be the Dems’ argument), but why couldn't innovation in the same vein render the expensive new technologies at the ports of entry equally ineffective? As for the “economics of border security,” I am even prepared to concede that there might not be any. I’ve conceded that it’s possible all of Trump’s policies will fail, that at best we might learn something from their failure, and that, especially if they fail, he can be voted out. Yet the economic rationale for border security as it pertains to workers is again one I find perfectly intelligible and, in fact, roughly the same as the one given for elements of the TCJA – that wages can’t rise for workers until excess labor has been absorbed in productive activity, and that illegal immigration might exacerbate the tendency for this excess to persist and at much lower wage rates than non-immigrants are willing or able to accept. Will the policy succeed in countering this effect? As Trump often says, not very reassuringly, I admit, “Who knows?”

      I'm trying to reason soundly and in good faith, but I don't know how without being consistent. In my case, I find myself saying I have to be open-minded to policies that are within reason so long as I don't perceive then to be obviously harmful or wrong (such as TCJA or the wall) because I just don't know enough. So you know where I’m coming from, I’m still evaluating the ACA, as I know people who have personally benefited from receiving substantial government subsidies, enabling them to be insured when they otherwise would not be. Yet, on these issues, you seem to be so sure of what you know that I can perfectly understand how you are reaching the conclusions different from my own. (end)

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    5. Thanks for your comment. 'The People vs. Democracy' sounds interesting - I will take a look. I agree with everything you say in the first two paragraphs.

      On your final paragraph, I believe you may be imputing certain beliefs/perspectives to me that I don't hold and don't believe I argued for. I don't, for instance, hold the belief that populist politicans will necessarily succeed in actualising the aims on which their campaigns were based, or implement the correct policy choices, and nor do I deny that politicans won't merely cynically exploit grievance for their own political gain. I was just explaining why I thought populism was rising, and why there was an appetite for it from the electorate, not what I thought the outcome would be. I am hopeful it will lead to better, more inclusive policymaking, but I am not necessarily optimistic it will.

      If you watch the movie 'Trump at War', it's clear why people voted for him. Bannon's campaign was genius and resonated with voters. But it was a campaign carefully crafted to simply win votes. And since Trump has come to power, some of his policy actions are certainly not consistent with the meme of helping the forgotten workers (e.g. pushing to repeal estate taxes), although I believe cuts in corporate taxes were more about boosting US competitiveness and repatriating manufacturing than providing a hand-out to the rich. He has also failed to effect real change to healthcare costs, etc (albeit partly due to his efforts being frustrated by other parts of government).

      I never particularly liked Trump. In 2016, if I was a US citizen, I would have voted for Hilary (not because I liked Hilary, but because I like many, I despised Trump and thought he was a joke). I've also traditionally aligned more with Democrats on policy choices. I am an atheist; pro gun control; pro choice (at least in the first & probably second trimester); and pro gay rights, for instance. I also believe in some degree of progressive taxation and polices designed to lift disadvantaged groups/individuals up (although I don't like policies that try to tear advantaged groups down in the name of greater equality).

      However, I stridently oppose identity politics, censorship based on political perspectives, and a lack of democratic accountability, and all of these factors have been contributing to the legitimate needs of large parts of the working class electorate being completely ignored, and in that respect, populism is both understandable and arguably even needed. But how outcomes shake out remains to be seen.

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    6. Hey Lyall. Thanks for the thoughtful response. You're right, I may have inferred certain beliefs that you don't necessarily hold, based on your "Trump is the lesser evil" take in previous posts. I very much share your hope that populism can lead to better, more inclusive policymaking.

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  10. * Obvious type in the first part of my response: should have read "workers are structurally disadvantaged relative to capital." In particular, that capital can "go on strike" in a way that labor finds much more difficult, but I'm sure you figured out what I meant.

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  11. Anon - You’re absolutely right that this stuff is a lot more nuanced that what I made out. That’s actually related to the broader point that I may have failed to get across above. Populists like Trump love to proclaim “Only I can solve problem x.” They promise simple solutions (eg. a wall) to very complex problems. And my worry is that when these simplistic solutions fail to have the promised effect, the resulting backlash will only lead to even more toxic forms of populism - of the far right or far left variety. Take Brexit. Whatever your views here, the Leave campaign was extraordinarily disingenuous. A simplistic notion that leaving the EU would make the UK great again. That doing so would finally allow them to take control of their borders. That they would save billions of dollars sent to the EU every year. And so on. Never was it made clear to the people voting that leaving would be an extremely complex process, with uncertain first and second order effects. And that there would be very real costs and trade offs.

    There will be a backlash to this, and one that may end up with the election of Jeremy Corbyn. Unlike Elizabeth Warren, he is an actual socialist. This should scare all of us. And it is why, unlike LT, I do not view the recent populist outcomes in the US or UK as the lesser evil. Very hard to see how we put the genie back in the bottle now.

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    1. Yeah, I think you're right. I have to remember to get properly indignant when I see or hear Trump doing potentially harmful things, especially when the consequences may reverberate for years to come. Believe me, I'm not happy. LT mentioned Hillary, and I didn't like her at all but I voted for her. My position tends to heavily emphasize the economic side of life. I try to remember the limitations of that, but on the other hand, there is the concept of the moral consequences of economic growth. Since the values of classical liberalism appeal to me, I think the best to hope for is making capitalism work as well as possible for the most vulnerable class, which I assume is labor. Hence, I assume we want to avoid having artificially tight credit and unnecessary output gaps and unemployment. Incidentally, high marginal tax rates on the highest incomes are my best guess at optimal tax policy for funding reasonable (and as much as possible, classically liberal) government spending. If I support some of the economic ideas that Trump has championed, it is probably from a combination of naivete, optimism, and willingness to try new things to see just where the limits of our best intentions should lie. But I'd much prefer a centrist who is more accepting of what can reasonably hoped for and more measured efforts to continue to improve the quality of society. Thanks for understanding where I was trying to come from, though.

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  12. This should explain a lot as well:

    https://www.youtube.com/watch?v=meiU6TxysCg

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    1. To add, isn't it funny that both being unequal is very natural, and being very pissed off about said equality is also very natural? Mother nature being very ironic.

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