Liberals Are Still Misreading Trump’s Victory And Underestimating Its Causes

This is not an independent piece but a response to a piece that Martin Sandbu has written after the US election results have been announced. His ‘free lunch’ piece (‘Silver linings for friends of liberal society’) may be behind a subscription firewall.

These are his two concluding paragraphs:

This is a thorough misreading of the vote – from Brexit to Trump’s candidacy to Trump’s victory. First, one has to acknowledge the fact that Trump has won votes among the city-bred, educated, non-white, black and Latino voters. Similarly, Clinton had won votes among rural white men and women without a college degree. So, the voting fault lines are more blurred than what Sandbu would like to have us believe. Of course, in a few of these categories, the vote share has been overwhelming in favour of one candidate. But, those are the exceptions.

There are many ways to interpret the voting pattern. One is Sandbu’s way. However, there are other interpretations too. One, it could be said that the young are relatively inexperienced and that, in the fullness of the time, they may come to appreciate the chasm between the discourse and delivery on globalisation and free movement of factors of production (both labour and capital). Two, populations are ageing. So, more people will join the ranks of the old – the world over – and not the other way around. Our preferences and attitudes towards risk and cultural assimilation shift as we age. Third, with technology – robotics and artificial intelligence – many so-called educated young people will eventually feel the way that white under-educated men and women might be feeling today. It is not the ‘last gasp of the vanishing one’. It may be the beginning in which these distinctions between race, nationality and age profiles might be blurred. He may have to thank robots and their (Silicon valley?) creators in a future piece for uniting us all in our disaffection and frustration!

In any case, it is a betrayal of elitist thinking that those who have not spent time with formal schooling are not educated. They may be less complicated in their thinking.

It is good thinking on his part to spread the cheer among his colleagues who might be drained and exhausted. But, if he really wishes to see this as the ‘last gasp of a vanishing one’, many things need to change. Tax rates on top incomes (corporate and individual) might have to go up in some countries. Tax compliance has to be improved. Tax arbitrage has to be eliminated. Financialisation of advanced economies has to be rolled back. Executive compensation must be de-linked from short-term stock price movements. Monetary policy in many parts of the advanced world must be exorcised of the spell that asset prices have cast over it, for decades.

If Sandbu is yet to read the paper ‘Stock returns over the FOMC cycle’, he might wish to do so to begin to understand the election verdict. Creative destruction of capitalism must be allowed to play its role instead of monetary policy propping up asset prices in the guise of delivering on output and employment growth. Recessions and slowdowns are necessary ingredients of a healthy economy. Once he has finished that paper, he can read the speech delivered by William White while accepting the Adam Smith prize from the National Association of Business and Economics.

Instead of the above, if defiance is his only response, then he should not be surprised if he and his fellow travellers continue to add to their exemplary record of failures in understanding and anticipating Brexit, American elections, etc.

Well, from reading Gideon Rachman and Ed Luce in FT analysing the verdict, it is clear that the elites are far too steeply trapped in their own morass to smell anything other than the stink that their morass generates. This comment under Luce’s article sums it up well:

In contrast, this blog post by a Clinton supporter is far more mature and reasonable. It is a tragedy for FT that its senior journalists cannot write something like this.

Note

(1) Just a month ago, I wrote the piece, ‘The beginning of history’ in Mint. In my view, it explains the election result rather well.

(2) The Republican Party kept its control of both the chambers of the Congress only because of Trump:

(3) This WSJ video is quite useful in understanding who voted for whom

This piece was first published on the writer’s blog, The Gold Standard, and has been republished here with permission.