Democratic Schadenfreude premature

clintonlaugh

Hillary Clinton must be feeling very confident these days.  She has beaten back the Sanders insurgency and the Republican party is in full scale civil war as they grapple with the possibility of nominating Donald Trump as their Presidential candidate.  Indeed, conservatives are attacking other conservatives, there are calls to “blacklist” anyone who dares support Trump, and the Republican party is in complete disarray.   Once they touted a “deep and talented field.”  Now Trump’s main opposition is Ted Cruz, a man almost just as hated by the party elite.

Conventional wisdom says that this is all very good news for Hillary Clinton.   After all, the GOP is divided now – and may end up with a brokered convention or even riots.  Certainly that will dampen GOP enthusiasm in the fall, and one would expect the Democrats to be motivated to defeat Trump.

Still, while Democratic Schadenfreude – joy caused by the suffering of someone else – is understandable, it is premature.

trumpmovement

Donald Trump may be a con man, he may be crude, he may even be destined for defeat, but it’s not like he is masterfully manipulating an otherwise satisfied public.  The reason Trump is so popular is that he tapped into something real – something that turned strong Republican candidates into losers, and which Hillary might find far harder to defeat than expected.

Starting in 1985 the phenomenon of globalization begun to shape the world economy.  A mix of technological advancement and economic deregulation allowed investors – global capital – to transcend borders.   Where once large corporations belonged to a country, now they had subsidiaries in many countries, with no true home.   If you bought a Toyota in 1980 it was likely made in Japan.   Now you’ll find it’s made in the US or Mexico.  Is a Ford made in Poland more American than a Nissan made in Tennessee?

Accompanying this was a proliferation of free trade agreements – NAFTA, the World Trade Organization, and others globally.  The European Union made European borders all but irrelevant with 19 states giving up control of their national currency in favor of the Euro.

AfD Demonstration

It’s not just Trump; in Germany similar Angst is causing the rise of a populist right wing movement, “Alternative fuer Deutschland”

For a long time the critics of globalization were on the left.  They disrupted the meetings of the G8, even causing riots against the WTO.   As the economy seemed moving onward and upward, with Walmart offering ever cheaper foreign goods, most people were content.   Those anti-globalization folk are simply anti-capitalist, and capitalism is working!

antiwto

While offering radically different solutions, movements on the left and the right share a distrust of globalization.

Then in 2008 insane trading of over the counter derivative bonds fueled a housing bubble.  When the bubble burst the resulting crash of mortgage backed bonds yielded the worst economic collapse since the 1930s.  Wall Street used its political connections to fight off any serious regulatory attempts, and the market is near all time highs.

The middle class, however, did not recover after the collapse.  Instead, their standard of living, their job security, and prospects for the future are more in peril than ever.  The jobs that left as global capital raced to invest in places with low wage workers never came back.  Factories closed.  Mills closed.  And the service sector jobs that seemed to be replacing them – albeit at lower wages – dwindled after the collapse.   Many Americans see a future that looks bleaker than the past, and they don’t like it.

middleclassincome

To be sure, this graph fudges a bit by using a narrow 45% to 55% range, but it’s still significant

Who to blame?   The foreigners first, of course.  Build a wall!  Win against China!  Don’t let Muslims in the country!  People often fear what is different so attacking foreigners or minorities at home works.   Second: attack the politicians as being in on the rigged game.   The politicians don’t do anything, they live in a gilded cage where they get a piece of the action and wink and nod at special interests even as they tell the public they’ll fix things.

Blaming foreigners/minorities is not fair.  Blaming politicians is.   Neither the Republicans nor the Democrats have realized how much anger is brewing.  Not all the anger is justified.  Some people are angry about demographic and cultural change and want the world to revert to what it was like when Reagan was President.  That’s not going to happen.  But economic insecurity is rational, and Trump is taping into that.

Therein likes the danger for Hillary.  Trump isn’t winning because he’s Trump, he’s winning because the conditions are right for someone with his style and tone.  Sanders challenged Hillary more powerfully than anyone imagined for the same reason – he speaks to the same concerns (albeit much more rationally).

Politics as usual was not enough for to beat Trump in the GOP primary.  It may not be enough for Hillary to beat Trump in the fall.   Both parties have to come to grips with the fact that globalization has restructured the national economy and is now provoking a populist uproar.   Trump is not the answer.   But it’s not at all clear that Hillary truly understands the problem.

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