The hard-working staff here at Spoiler Alerts is exhausted. It might be the mild food poisoning that felled me this week (note to self: do not eat chicken shawarma again). It might also be due to the fact that I’ve been a bit busy putting four different articles and book chapters to bed. All of them will be out in the next month or two. Also, all of them are rather pessimistic accounts of the current moment in the United States and what that means for the rest of the world.
An occupational hazard with this kind of writing is that new data points emerge between the writing and editing of something and its eventual appearance in print. There are times when, late in the game, one can add a new nugget of information that bolsters the argument. There are also times when it is too late.
In the latter category is a book chapter that came out last week in a Peterson Institute for International Economics volume titled “Facing Up to Low Productivity Growth,” edited by Adam Posen and Jeromin Zettelmeyer. The book’s starting premise is acknowledging the mid-2000s slowdown in labor productivity growth in the advanced industrialized economies. There are lots of debates about why there was a productivity slowdown and whether it can be reversed. This volume asked a different question: What happens to the U.S. political economy if the slowdown is the new status quo?
I was asked to write about the political effects, and the result is one of the most radical, depressing argument I have made in print:
In a polarized political climate, secular stagnation will encourage America’s economic elite to tilt further rightward in the coming decade, even though the Republican Party will continue to drift in a populist direction, supporting new barriers to international trade and migration. In the past, economic elites might have been comfortable with a market-friendly approach from left-leaning parties. In the future, that comfort will fade, because both the political space for a moderate left approach to governing and the economic growth generated by such an approach appear to be shrinking. Between accommodating economic populism from the left and nationalist populism from the right, plutocrats will opt for the latter. Populist nationalism will not generate greater economic growth, but it does lead to redistribution that favors owners of capital. Preliminary evidence for this redistribution can already be seen from the reactions of plutocrats to the Trump administration’s first year in office.
To be clear, most high-net-worth individuals and corporate officials don’t love President Trump, and they did not really support him in 2016. They do not like his protectionism, his immigration restrictionism, or his casual bigotry and sexism. They do like the tax cuts, light regulatory touch and business-friendly judiciary, however. Equally important, they like it a lot more than anything that the left is offering them
You will have to buy the book to see the argument elaborated in greater detail (or try to decipher this PowerPoint). However, here are three stories over the past month or so that support the arguments made in the chapter.
The first, from Center for Public Integrity staff and published by Mother Jones, connects the contributions made by wealthy donors to the GOP and their push for the 2017 tax cut. Observers were already aware of anecdotal information about donor pressure for the tax cuts. As Rep. Chris Collins said at the time, “My donors are basically saying, ‘Get it done or don’t ever call me again.’ ” The larger data back up the connection between wealthy giving and the GOP tax cut:
From the time the tax bill was first introduced on Nov. 2, 2017, until the end of the year, a 60-day period, dozens of billionaires and millionaires dramatically boosted their political contributions unlike they had in past years, giving a total of $31.1 million in that two months, a Center for Public Integrity analysis of data from the Center for Responsive Politics found.
The Center’s analysis found that 144 wealthy donors, some household names and some behind-the-scenes, contributed at least $50,000 to Republicans and conservative groups in that time frame. For 87 of those, three out of five, the surge of giving at year’s end reflected a marked change in their giving behavior. These well-heeled donors increased the share of their annual giving in the last two months of 2017 compared with previous off-year elections going back to 2009.
Most telling, say campaign finance experts, is that 25 wealthy donors gave all their 2017 money in the final two months of the year, the first time they did so during the previous four off-election years.
The tax cuts might not be popular, but they helped cement the donor class to the Trump administration.
Second, Ben White wrote in Politico about the wariness that Wall Street feels toward the Democratic presidential candidates. His opening sentence: “Top Wall Street executives would love to be rid of President Donald Trump. But they are getting panicked about the prospect of an ultraliberal Democratic nominee bent on raising taxes and slapping regulations on their firms.” In the story, White discovers the platonic ideal of a quote from a Wall Street CEO:
“I’m a socially liberal, fiscally conservative centrist who would love to vote for a rational Democrat and get Trump out of the White House,” said the CEO of one of the nation’s largest banks, who, like a dozen other executives interviewed for this story, declined to be identified by name for fear of angering a volatile president. “Personally, I’d love to see Bloomberg run and get the nomination. I’ve just never thought he could get the nomination the way the primary process works.”
Democratic activists will surely mock the “socially liberal, fiscally conservative” line, but the CEO ain’t wrong about the primary process. Bloomberg announced on Tuesday that he was not running, saying that he was “clear-eyed” about his chances. The odds are excellent that whoever wins the nomination will be well to the left of the 2016 version of Hillary Clinton.
Finally, the New Yorker’s Jane Mayer came out with a long story this week on the unholy marriage of Trump and Fox News. An aside in that story was the ways that Murdoch has personally profited from having an ally in the White House:
By the time Trump was elected, Murdoch had adeptly improved ties with him. In the summer of 2016, he and his fourth wife, Jerry Hall, joined Trump for a visit to Trump’s golf club in Scotland. Murdoch appears to have been wise in securing a rapprochement. Telecommunications is a highly regulated industry, and under Trump the government has consistently furthered Murdoch’s business interests, to the detriment of his rivals. [Reed] Hundt, the former F.C.C. chairman, told me that “there have been three moves that have taken place in the regulatory and antitrust world” involving telecommunications “that are extremely unusual, and the only way to explain them is that they’re pro-Fox, pro-Fox, and pro-Fox.”
Spoiler Alert: Those three actions were the administration’s rapid approval of Fox’s sale of its entertainment assets to Disney, the blocking of Sinclair Broadcast Group’s attempted merger with the Tribune Media Company, and the Justice Department’s decision to go to court to block AT&T’s takeover of Time-Warner, which owns CNN.
All of this suggests that high-net-worth individuals and cash-rich corporations are very likely to back Trump come 2020. This does not mean that Trump will win, of course; the relationship between money and votes is neither clear-cut nor simple. Bernie Sanders suggests the power of small donors to counteract the spending advantage of the plutocratic class. Still, as the election approaches, it is highly likely that capital will double down on Trump should he face electoral peril. In a low-growth environment, it will be very difficult for the Democrats to offer them anything appealing.