Crossing the Political-Economic Divide

Crossing the Political-Economic Divide

March 1, 2020 · by · in , , , , , , , , , ,

How do entrepreneurs assess political risk? Other than Mark Zuckerberg, do they even think about it? Are technology companies and social networks on the side of the populists?

Division is in the air. Everything I read and everything I hear is about the great global divide. The populists are rising up against the elites. The cognoscenti dancing at the Davos’ “World Economic Forum”, last month couldn’t have been less relevant (or less aware of their ghostliness). Or so the story goes.

Prime Minister of Finland, Alexander Stubb, worried that there is a “new world disorder” that needs to be addressed. The rise of populism is a key concern as various electorates refuse to behave in the prescribed “orderly” manner. They are electing non-traditional politicians in the UK, Poland, Philippines, Brazil, the U.S. and elsewhere.

Mainstream political analysts are working hard to push the populists into a “deplorable” basket as right-wing crazies. But the reality is more nuanced. These movements have cultural roots, economic angst, and broad-based frustration with government’s failure. According to The Atlantic, “the most common [driver] was anti-establishment populism, which pits ‘the people’ against the political elites and the mainstream parties they represent.”*

We can’t help but wonder if those Magna Carta advocates that met King John at Runnymede, in 1215, would be considered populist leaders in today’s political taxonomy.

In the U.S., we have two populist movements with similar complaints about failed government. Die-hard Trump and Sanders supporters are the same in that regard, albeit with different solutions. One group is positing that government institutions are over extended, burdensome and too costly. The other is seeking a much greater centralization of power through increased government control of healthcare, energy, education, emigration and social networks.

A core difference between these views is individual free choice in a market economy vs. required compliance with government statutes.

The ACA (Affordable Care Act) is classic example. Embedded in the law was the first federal poll tax. (As a reminder a poll tax is a “head tax”, a liability that you incur without any economic transaction. In effect, you owe it because you exist. It was a poll tax in the U.K. that contributed to the fall of Margaret Thatcher.) A free-market advocate might argue for some market interventions or subsidy but would leave the ultimate choice in the hands of individuals.

Are we going to hear a full-throated discussion of free market capitalism from the leaders in Silicon Valley? Or will they continue to waffle towards greater government control of the economy? Perhaps they are more comfortable with market control by a government that they can handily influence. It certainly cuts down the potential competition.

This Trump-Sanders ideological difference is huge. Free market capitalism vs. socialism is the debate we ought to have. Unfortunately, that is unlikely, as the established parties are not favorably disposed to have an intelligent discussion about, well, anything.

A recent commentary in the WSJ reported that a 2018 AXIOS poll found that about half of Democrats think Republicans are ignorant (54%) and spiteful (44%). Similarly, about half of Republicans think Democrats are ignorant (49%) and spiteful (54%). More importantly perhaps, 21% of Democrats think Republicans are evil, and about the same share of Republicans (23%) think Democrats are evil. Finally, 61% of Democrats see Republicans as “racist/bigoted/sexist”.

It may be safe to assume that these extreme views are concentrated with party stalwarts in leadership positions. If they cannot discuss economic systems, maybe they should have a debate about spitefulness, ignorance and being evil. Fantastically, they do argue about which side is most divisive!

What the WSJ commentary failed to note is that a plurality of Americans are neither Democrat nor Republican (41% according to a Gallup tally last December). So to recap the above alarming results, a mere 12.2% of American voters believe their opponents are evil. That gives us hope for some potential dialogue among the 87.8% that do not suffer from the evilness projection syndrome.

As a bit of a political junkie and former member of Obama’s “Truth Squad”, I get numerous very personal messages from all sides. Normally they surface some new outrage by their opponents before asking for money. A little ominously, the DNC reported that 28 people in my neighborhood (which voted 85% for Hillary) donated to the Trump re-election campaign. It wasn’t clear whether I was to donate money to offset these folks or seek them out and confront them.

DNC Chair, Tom Perez emailed that, “Jim, I felt sick to my stomach”, after the impeachment vote. Senator Tammy Duckworth writes, “Jim, I​ am asking you to join me in defending our Constitution, our values, and our Democracy.” Messaging from the other side is just as bizarre, constantly haranguing about the “swamp” and the recent effort to “nullify 60 million votes.”

Given the near record turnout in the 2018, mid-term elections, it strikes us that our democracy is working quite well. I also believe that most “swamp dwellers” are likely just trying to get through the week, make some progress with their work assignments, pay the mortgage and take care of their families.

As we can see some have a vested interest in preserving and exploiting this divide. Clearly, all news media live off of conflict and they are unabashedly promoting these confrontations. Unfortunately, in recent years, the unity message has fallen away with both political parties working to demonize the other side.

Sadly, it has been awhile since the nation was more or less on one page. With the end of the outrages of communism in Europe, Americans felt good about their system and their government. There was peace, a robust economic expansion and voters awarded the last true national presidential mandate. In 1988, George H.W. Bush won 79% of electors and 40 states. That was 32 years ago.

Postscript. A COVID-19 etiquette question. Last week I traveled from Ecuador to my new temporary residence in Conakry, Guinée. Thus far, neither country has any coronavirus cases. When I changed planes in Paris I couldn’t help but notice all the people with face-masks. I carry masks myself but have never used them. The etiquette question: Do you wear a mask because you are feeling ill, or because all the other unmasked people may be ill?

*Populism Is Morphing in Insidious Ways – The Atlantic, January 6, 2020.