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The Trump Conundrum

Maitreesh Ghatak is Professor of Economics at the London School of Economics
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How come ordinary voters are falling for his message despite its patent lack of credibility?

The US Presidential Election has become a reality show – albeit a surreal one – that has the whole world as its captive audience. We have the candidacy of businessman and reality-show host Donald Trump of the Republican Party to thank for this.

To call Trump controversial is like saying fish live in water. The controversies revolve not just around ideology or policy but more centrally around his persona. Trump makes someone like Silvio Berlusconi seem sober, even dull, in comparison. When he is not actually insulting women or an ethnic or religious minority or groups considered untouchable in US politics, such as the families of slain war heroes, he is busy battling allegations of sexual misconduct, tax-evasion, and controversial business practices resulting in literally thousands of lawsuits. His behaviour and temperament make him appear more like a teenager with serious mood swings and anger and impulse-control issues, who does not seem suited to hold any position of responsibility, let alone be the President of the US with nuclear codes at his fingertips. Even major leaders in his own party -- recent Presidential candidates like Mitt Romney and John McCain, and past Presidents like George Bush Senior, or Junior -- have refused to support him.

So the question is: even though he is trailing in the opinion polls (the average of various polls puts Clinton ahead by 5 percentage points as I write) how has Trump come this far and this close to being elected President? Who are the Trump supporters and what is driving their support?

One explanation centres round economic factors. There is simmering discontent all over the developed world due to the effects of trade and capital flows, skill-biased technological change, and migration. The outsourcing of jobs to India and China has contributed to a reduction in global poverty over the last three to four decades but it has also created significant pockets of deindustrialization and impoverishment in the Western world. A vast number of Americans, especially from the lower middle class and the working classes, have faced job losses, stagnating wages, and falling standards of living. The financial crisis has only accentuated this trend.

At the same time, the same economic forces have increased the prosperity at the very top since owners of capital and skills have benefited from the higher returns in a globalized economy. Therefore, even though poverty and inequality have declined globally, they have gone up within the US. As Thomas Piketty has documented, the share of national income going to the top 1 per cent has increased from 8 per cent in 1980 to nearly 18 per cent in recent years. In contrast, the hourly wages of middle-wage workers have gone up by only 6 per cent since 1979, while those of low-wage workers are actually down by 5 per cent. With the rich becoming richer and declining growth rates making upward mobility near impossible for the rest, ordinary Americans feel they are worse off even compared to their parents’ generation. As a result, they are in despair about their own economic future and that of their children.

According to the economic narrative explaining Trump’s appeal to sections of the working class and lower-middle class Americans, one has to understand the politically explosive combination of three potent economic forces – falling standards of living, lack of prospects of growth and mobility, and increasing inequality. Economic hardship or rising inequality or slowdown of economic growth alone can create political discontent. When any two of these three aspects of economic malaise coincide, discontent turns to despair, but there is still a vent through which some steam goes off. For example, economic hardship and rising inequality may still seem tolerable if there is some prospect of economic growth, the benefits of which are expected to trickle down in the form of a higher standard of living in the future.

But when long-term income stagnation for most of the population, and decline for some go together with high rates of income growth at the very top, you have zero sum economics – when your loss is someone else’s gain. Zero sum economics turns despair into rage against the establishment and whips up a perfect political storm, which is what Trump’s candidacy is.

It is not surprising that trade, capital flows and immigration, or from a broader perspective, economic liberalism and globalization will create an anti-establishment wave when the promised trickle-down does not materialize. It is also not surprising that zero sum economics will lead to the politics of division. The puzzle, though, is this: why has the resulting anger taken the form of right-wing identity politics, tapping into xenophobia and isolationism, rather than a more left-wing agenda favouring greater taxation of the rich, expansion of the welfare state, and a tougher policy on corporations? Why did it not fuel the success of a political movement that emphasizes solidarity among the economically disadvantaged, cutting across racial and ethnic lines, like the one that Bernie Sanders led? Why did Trump’s xenophobic, anti-immigrant and isolationist messages, such as building a wall on the Mexican border, banning Muslims from entering the country, and acting tough with China, resonate so much with the disgruntled White majority?

The puzzle becomes deeper if we examine Trump’s proposed policies. He wants to crack the whip on US companies so that they do not outsource jobs, strike a tough bargain with China so that it will agree to trade deals that are much more favourable to the US, and stop the flow of immigrants.

None of these are particularly realistic in terms of implementation given how the US political system works, with the Congress and the Senate often being in deadlock and under the influence of various lobbies. Moreover, even if trade and immigration are completely stopped, there is no reason to think that US companies will employ domestic unskilled workers at a higher wage – rather, there will be greater mechanisation and permanent flight of capital. Trump is not talking about raising taxes on the rich, expanding the welfare state to help the less well-off deal with the negative effects of globalization and technological change, or to facilitate mobility by helping their children to acquire the skills and education that will enable them to take advantage of the opportunities that globalization offers. On the contrary, he plans to create more jobs by lowering taxes on the very rich and removing regulations that burden companies, the same trickle-down policies adopted by George W. Bush and his Republican predecessors that created the economic problems in the first place.

How come ordinary voters are falling for Trump’s message despite its patent lack of credibility?

This highlights the limitation of a purely economic narrative. After all, if people voted in their economic self-interest, then clearly the policy choices will be much more egalitarian in the US or elsewhere, with greater redistribution and welfare spending. Ironically enough, the whites in the southern states of the US form the staunchest pro-Republican voting-block, even though they are poorer compared to the rest of the country, and benefit more from the welfare schemes disdained by the Republican Party.

This paradox, discussed by Thomas Frank in his influential book What’s the Matter with Kansas: How Conservatives Won the Heart of America, opens up the possibility of an identity-politics narrative centred round the shrinking White Christian majority. The proportion of White Christians have gone down from slightly above to slightly below half the total population over the course of the last decade, but 70 per cent of Republicans are drawn from this group. The most important demographic group supporting Trump are White men without college degrees. Trump’s message of “Make America Great Again” (which detractors say really means 'Make America White Again'), with anti-immigrant sentiments and xenophobia at its core, clearly has some appeal to this group.

Now as much as one cannot have a mono-causal explanation of voting patterns based on economic factors, one cannot solely rely on an identity-based account in the context of the US Presidential elections. Barack Obama was elected President twice in the last eight years, and no successful Presidential Democratic candidate has won the majority of the White vote since Lyndon Johnson signed the Civil Rights Act. It is perfectly possible to win the election without getting a majority of the White vote, as Jimmy Carter, Bill Clinton, and Obama did.

To understand the outcome of US elections, we should look not at groups whose voting pattern is steady, but at swing voters who move from one party to the other in any given election, energized voters who are more likely to turn out and vote than stay at home, and new voters (first-time voters and naturalized citizens).

This is where the “angry White men” cannot be ignored as an electoral constituency. According to some opinion polls Trump’s margin of support relative to Hillary Clinton for this group is sixty points! In contrast, Mitt Romney had a thirty-point advantage with respect to Obama for this group. To explain the shift within this group, one has to marry the identity-based narrative with the economic one. In other words, identity and economic fundamentals are not independent. Certain identities become more salient depending on the economic fundamentals and whether social or economic issues will get more weight may depend on the economic situation.

Consider the following example. Suppose you are waiting at the bus-stop, along with some people who are visibly different from you. If buses keep on coming, whether you feel positively towards these outsiders or not, you will mind your own business and focus on your journey. Now consider a scenario where buses come infrequently, and when they do, they are terribly crowded. The bus stop will get more and more congested and you are going to get more and more frustrated and ready to vent your anger if you found a target. If everyone around you looks the same, then you are more likely to blame the bus company rather than fight among yourselves. However, if there is a small but visibly different group of “outsiders,” then as a member of the majority group, you might begin to find their presence highly annoying.

If we take the arrival of buses as a metaphor for economic opportunities, so long as the buses keep coming – or as long as there is the prospect of economic mobility -- you do not want to disrupt the system even though you do not necessarily like people who are visibly different from you. But as growth slows down, you are likely to get angrier at visible scapegoats whose ethnic and cultural differences now seem more salient than their class affinities with you. The immigrants then become symbolic of all that is wrong with the “system”. Not just that; earlier, you may have tolerated the rich driving in cars while you waited for a bus, thinking one day you or your kids will have cars. When that possibility becomes increasingly remote, other than being upset with the “others” at the bus-stop, you also become angry at those driving cars since you feel the whole system is unfair.

For political entrepreneurs who want to make capital out of this resentment, it is easier to sell a narrative where there are good guys and bad guys, than one that has to do with global reallocation of resources due to lower transactions costs and the IT revolution. That is why Trump’s railing against the elites who have sold the ordinary citizens’ interest off to benefit themselves, and against all those dark-skinned foreigners who are coming in and taking over the country fires up the heartland!

Neither economics nor identity can explain the Trump phenomenon purely by itself. As has been noted, many Trump supporters are not poor or unemployed themselves, and are not direct victims of globalisation, immigration, and free trade. But a careful study by David Autor of MIT and his co-authors shows that areas that have been more affected by job losses due to Chinese imports chose more ideologically strident candidates in congressional races. In the heartland, these tend to be right-wing populists, represented by the Tea-party and now, strong supporters of Trump.

As I said, it is not one’s current economic status that drives political attitudes. Like the stock market, these are driven by expectations about the future. And anxious people often seek solace in cultural identity and crave a strongman. Someone like Trump can provide them with a narrative that puts the blame on identifiable external targets, and promises easy solutions, exactly like godmen.

Contrast this with Sanders’ message. He (correctly) attributes stagnant wages and the loss of US jobs to globalization, capital mobility, and technological change. Rather than railing at immigrants and foreign workers, he proposes to counter this by introducing a fairer tax system that would prevent the very rich like Trump from evading taxes, and redesigning the welfare state to meet the domestic challenges of globalization. Whether one agrees with the specifics of his solution or not, Sanders’s view is more complex and appeals more to the educated. No wonder college students and academics were among his most enthusiastic supporters. On the other hand, for Trump’s supporters any solution that talks about redistribution or welfare is anathema, given their suspicion that this will benefit immigrants and minorities, and their mistrust of elites and any 'government' solution to their problems. That is why the less affluent whites in the Southern states oppose welfare schemes like Obamacare, even though on average they benefit (on grounds of lower average incomes) from these schemes much more than residents of Democratic-leaning coastal states.

However, identity has many dimensions, and so identity politics can be undone by its own internal contradictions. Since 1980 women have voted Democratic at a higher rate than men – for example, in 2012, 55 per cent of all women voted Democratic, as opposed to 45 per cent of all men. And if there is one demographic group that has a significant Clinton-bump corresponding to the 'angry White men for Trump,' it is that of White women with a college degree. They support Clinton by a 25-point margin over Trump, while they supported Romney with a 5-point margin in 2012. That is a 30-point swing, which exactly offsets the swing Trump enjoys from White men without college degrees. But the share of the latter in the electorate has slipped to 16 per cent, from more than a quarter in 1980, while the share of college-educated White women has almost doubled from 10 per cent in 1980. Trump has bumped against a most formidable electoral glass ceiling, which is likely to prove decisive. If instead of him, a White educated woman with similar views but fewer scandals came around – think of someone like Marine La Pen – the result would have easily gone her way.