Why Trump happens? Part 2

"True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made."   -  FDR (during great depression)

This is continuation of the previous article on the 'Trump phenomenon'. In previous article, i explained the structural flaws in our political and economic system, the plutocratic takeover of national institutions, the crisis in Democracy and uncertainty of election lottery - all of which enables a highly incompetent and unfit person like Trump to rise to power. 

I mentioned how Plutocrats are the financiers of politicians and how their media enterprises do hard labor to 'normalize' someone like Trump. I also mentioned how masses vote on basis of populist sentiments rather than rational objectivity. But despite all these things; the irrationality of masses, the plutocratic backing of politician and media doing everything to 'normalize' him - it still requires a certain environment for politician like Trump to become acceptable by the people.

Parallels of Trump phenomenon and Fascism - Fascism emerged during the economic breakdown crisis of 20th century - Present crisis of capitalism

Abnormal appears normal in a crisis. Abnormal becomes acceptable in times of crisis. All scholars of conventional wisdom on Fascism who have compared Trump phenomenon to Fascism have left out an important commonality in the prerequisite of Fascism of past and Trumpism of today. Fascism emerged during the economic breakdown crisis of civilization in Western Europe. The Economic system had collapsed, the unemployment rose sky high, the standards of living plummeted and there was huge uncertainty in the western world; a time of desperation and social panic.

The recessions of 1920s in Europe and ultimately the great depression across the Atlantic broke down the Capitalist economic order. How this crisis came about and how it impacted the world? This discussion will take us this article astray. I would recommend two insightful books on this - one by a Marxian thinker and one by a Liberal economist.

The rise of Fascism in Italy and rise of Nazism (more extreme form of Fascism) in Germany and some other mutations of Fascist phenomenon in other European states emerged during the breakdown crisis of economic systems. It's always said with great admiration - thank god that America had Roosevelt. FDR was at the forefront of dealing with American depression and realized not just its economic costs but also its great social impact. Poverty, mass unemployment, desperation of masses, economic uncertainty - these are the breeding grounds of dictatorships. People are driven by sentiments and emotion, rather than rational and objective reasoning. When people are desperate, they are high on sentiments and emotions and very low on objective logical thinking. This is precisely the period when they are most vulnerable to demagogic Pathocratic leaders and fanatic adventurers in politics.

Demagogic politicians are propelled by the Plutocrats. As it was done by big business elites of Germany and Italy in the old times, the same holds true today. The early 20th century was period of Colonialism. The British and French reaped the most from there Colonial empires. Why should Germany be left behind? Such was the thinking of German elites. In fanatics like Hitler and Mussolini, they saw an opportunity to make their Colonial grabs and expand their business empires across Europe and across the world. 

But there was a stronger economic reason to sponsor the Fascist politicians. In Europe, the economic breakdown popularized socialist ideas in the masses as Russian revolution had just occurred in neigborhood. Without the Keynesian ideas, the governments in European Capitalist systems didn't understand how to restore their sinking economies. They pushed hard with old classical economic ideas of austerity, budget cuts, wage reduction etc - all this made economic downturn only worse. The unemployment in Germany preceding Hitler reached as high as 30%. This created revulsion among the masses and their drifting more towards socialist direction. The labor started mass strikes and workers started banging fists on bosses' table. A possibility of socialist revolution sent shivers to the big businesses and plutocrats who feared nationalization of their enterprises and usurpation of their accumulated wealth. 

The plutocracy and big businesses wanted governments to rescue their business empires in economic downturn and also to neutralize labor uprisings and squash any possibility of a socialist revolution. But pushing unpopular policies like austerity, suppressing labor movements and wage reduction is difficult in Democratic systems as people can revolt through ballot boxes in elections. It's tempting to think of old autocratic times, the feudal/monarchical authoritarian systems where masses can forced into submission through brute force and made to accept unpopular policies. But that times had passed. So a dictatorship is needed with a facade of Democracy. That's where Fascism was born - a plebeian revolution which exploited the populist anger and desperation of masses to consolidate a dictatorship.

The Fascism was a populist phenomenon which gave the impression that it's the will of the masses but it really was a dictatorship backed by plutocratic interests. A key idea of Fascism is to neutralize class struggle by diverting the labor and proletarian anger away from local capitalists and towards the foreign nations, local minorities (Jews) and external imperialists - this was called 'Nationalist socialism'. Daniel Guerin has explained the Fascism as psychological phenomenon in Germany & Italy and how it infected desperate people (small business owners, unemployed, peasants, war vets etc). Fascism is psychological phenomenon for sure and here Dr Bandy Lee's thesis about mass psychosis and Trump contagion covers the ground in present America. The Fascists were deranged Pathocratic leaders in which the ruling class saw opportunity. 

Now we look into the parallels between above mentioned history of Fascism during economic breakdown crisis of past century to the present times of Trump phenomenon. The history doesn't repeat itself but it rhymes. There's not an acute breakdown crisis of economy but there's a slow brewing crisis of Neoliberal capitalism since last several decades. The great socioeconomic inequality is a critical feature of this crisis. The capitalism collapsed in 1920s and government lacked understanding to rebuild it. The economic crisis dragged for painful long years. In 21st century, the Neoliberal capitalism collapsed in 2008 but the government now had the understanding and tools to rescue the economy. However, it chose to only rescue the big financial institutions and Wall Street.

While the government bailed out the Wall Street, the main street was ignored. This resulted in mass unemployment which was completely avoidable. While the Wall Street was quickly propped up with big bailouts from government and central bank, the same urgency was not shown to bailout households, small businesses and average Americans. Most of the economic stimulus and bailouts were meant to save financial institutions rather than boosting economic demand through necessary fiscal spending. It took seven years for US unemployment to recover pre-recession level - some call it a wasted decade. (fortunately, US learned the lesson. In response to Covid-19 induced recession, US fiscal policy restored labor markets and employment to a position of normalcy within just a year)

The slow brewing crisis of Neoliberalism - The dumbing down and intellectual decline of the electorate through past decades

A Republican Party poster in 1956

American politics was different in its golden years (1945 - late 1960s). Both political parties were healthy. The Democrats were party of New Deal, the great progressive reforms started by FDR and later Truman, JFK and LBJ - all competent people. President Eisenhower and Republicans in post World War 2 era also acknowledged that New Deal reforms - the Social security act, is now a permanent feature of American politics. Even someone slimy as Richard Nixon identified himself as "Keynesian" - a term for liberal economic thinking. In this era, the income tax rate reached over 90% for top earners, the national income share of middle and lower class was highest, Union membership surged and Average Americans had their wages rising in tandem with productivity. But things started to change starting in 1970s and 80s with rise of Chicago school economics and Reaganomics - the turning point towards a Neoliberalism. 

The Government started to step back from its roles and responsibility in economy, leaving it to the laissez-faire markets. Government started cutting social spending, public works and infrastructure investment while deregulating the economy and giving tax cuts to corporations and wealthy people. The corporations, the super-rich are the drivers of economic growth and national prosperity while government is a hindrance - so was the doctrine of trickle down economics of Reagan. Pour enough money at the top (through tax cuts and subsidies to the rich) and the money will trickle down to the bottom as economy will expand. 

The Neoliberal turn wasn't really popular and later it would turn out to be disastrous for America. With Americans that went through golden years of post WW2 era, they wouldn't readily accept a different set of economic policies - union busting, tax cuts to the rich & austerity for common people, closure of industries, deregulation etc. So to mask economic policy shift and divert electorate on rudimentary issues, the rube bait issues were invented - Guns, Gays, God, Race & Abortion. These issues polarized American public and helped Republican party to consolidate again in American south. Republicans replaced the politics of constructive competition (against Democrats) with politics of polarization to divide the masses - this was resurgence of southern strategy. 

With Neoliberal turn, a politician cannot really compete on merits of economic prosperity, so diversionary issues in politics were invented. With inequality rising, wages stagnating, unemployment rising and de-industrialization happening, it was essential to distract the public towards rube bait issues. The unemployment, the falling standards of living, the economic stagnation - all this was a matter of choice at the time. US could've adopted a different set of economic policies during globalization era that would've maintained higher living standards for average Americans - Like more investment by government in re-training of labor force, public infrastructure, public education, research and development and creating new avenues of employment (US is now trying some of these things in present industrial policy). But the ideological Neoliberal doctrine forbade Govt to guide national economies. Hence began the era of stagnation of America. The avenues of employment shrunk, jobs went overseas but more crucially, the national governments did not compensate these things with new set of policies to nurture new industries and employment opportunities. 

Guns, Gays, Gods, Race and Abortion were made the central issues. Here we know how media shapes and 'normalize' issues and politicians. The demagogic politicians and media started dumbing down the electorate. When pushing for reactionary policies, it's essential to degrade the intellect of society. An intelligent society is a threat to destructive and corrupted policies, and incompetent and unfit Politicians. In present day, the cumulative decline of intellect of American electorate has brought them to the destiny of Trump. The decline of electorate started decades ago, and obviously enabled by the media and demagogic politicians. If you look at American politics today across the parties - it's fragmented into variety of identity groups, rube bait issues, cultic politics; all mostly driven by populist sentiments. The electorate has significantly deteriorated in intellect and rational thinking. 

Global financial crisis and the Great recession of 2008 - The breakdown crisis of capitalism and its social impact

The Capitalism is a fluid system which throughout the decades have mutated into newer forms. From old industrial capitalism to later Neoliberalism, finance capitalism and Technofeudalism. The Neoliberalism and finance capitalism is what we crudely refer to as 'casino economy', the hyper-financialized global economic system run by transnational 'too big to fail' financial institutions centered around New York (& to some extent London, Frankfurt & Paris). This system collapsed in 2008 with world derivatives panic - the blowing up of enormous bubble of financial instruments. I would recommend two books if you wanna know epistemology of this collapse (1, 2). 

The real economy (the industrial capital, the labor, the tangible goods and assets) and the financial system are intertwined. When financial system broke down, the real economy was left astray. The markets froze, the demand collapsed, the businesses ran out of liquidity and mass layoffs ensued.  If it wasn't for the Trillions of dollars poured into financial institutions by central banks and governments (through variety of central bank programs and government legislation), the finance capitalism would've been dead. This is why it's called a bankrupt system - one which runs well but when it breaks down, it has to be rescued by large bailouts without any accountability. There is no accountability for too big to fail institutions and their CEOs.

With economic breakdown comes mass unemployment and erosion of savings of middle and lower class, falling standards of living, widening of inequality. And thus comes populist anger in the masses. FDR knew this well during great depression. Obama did not. Obama had no substantive vision or philosophy about economy and lacked understanding about the structural crisis of Neoliberalism. 

In response to Great depression, variety of reforms were done. Government created direct avenues of employment (through bodies like WPA etc), creation of social safety net, regulation of banking sector, large public investment in infrastructure etc. These had two primary reasons - regenerating economic demand that a collapsing market could not fix and fixing the 'free markets' through supervision and regulatory reforms because markets if left to themselves are inherently unstable. This was precisely the difference between in America and European nations in 1920s and 30s. The socio-political-economic fabric of Germany was torn apart in spiraling economic breakdown while America with sensible policy escaped the tragedy. 

In response to great financial crisis of 2008, many things were needed. The most radical proposal would've been full or partial nationalization of financial system and outlawing the most speculative components of it. But this could not have been digestible. A more reasonable thing would've been the government liquidating the sickest of too big to fail institutions, retiring the top management of these institutions and prosecuting some of the most notorious ones, re-regulating the financial system and outlawing the worst form of financial instruments like derivatives. On the real economic side, the government should've launched an open ended fiscal stimulus for full recovery - Direct job creation programs, Public works and investment, expansion of social safety net and welfare (unemployment benefits, Child tax credit etc), targeted assistance to small businesses, struggling households and farms. (Some of these things were now put into motion in response to pandemic induced recession.)

Obama administration was elected with a great Congressional & Senate majority in Great recession era which gave Democrats a tremendous political capital. This political capital could've been used for many structural reforms. But what Obama administration did was very little. The fiscal stimulus was small and short lived which was mostly over in less than a year even when economic recovery was nowhere complete. The economic policy continued to be driven by same Neoliberal thinking (and same people like Summers, Geithner etc) which created the crisis in first place, and Neoliberal solutions failed to be any helpful. The Neoliberal experiments of monetary policy, zero interest rates and quantitative easing failed to restart economic demand and cycle of investment. The economy continued to stagnate with long unemployment. But Wall Street bounced back to its highs and CEOs, top managers and bankers got their fat paychecks. 

People like Noam Chomsky, although correctly recognize Trump as counter-insurgency against Class Struggle (a narrative already developed by Daniel Guerin & other thinkers many decades ago), he doesn't see this similarity with Obama. Obama was a populist on the left with very little substance. Obama was projected as a social liberal unifier - A man that transcended the race barrier and winning popular vote. But the crisis America faced during the period was the breakdown crisis of Capitalism - not the crisis of race and black identity. On this, Obama's legacy was resuscitating the collapsed Neoliberal system and rescuing the bankrupt institutions of finance capitalism. 

Here some of the conventional wisdom of American authors again needs to be dispelled. American authors have presented Obama as the first black President, the savior of America. Obama was a savior of Neoliberal capitalism, a populist President who used his political capital to rescue Wall Street while throwing some bread crumbs to the main street. Obama came into office with tremendous opportunity to initiate reforms but he did very little. 

In conventional wisdom of liberal experts, Obama is presented as dawn of social justice when a black man became the first American President. These liberal authors present a simplistic narrative that resurgence of white nationalism was a reactionary response to first black President. But a more prominent factor behind unpopularity of Obama was his Neoliberal policies, the ignoring of main street, bailing out of the wall street, austerity for average Americans and more power to plutocrats. The people had justifiable anger and grievances with Obama administration. This populist anger was later capitalized upon by Trump. 

Undoubtedly, Trump had no substantive policies for America but he was a master reality TV star who knew how to exploit the populist sentiments of American public. His demagogic slogans - 'Make America Great Again', 'American dream is dead' and 'Build the Wall" become instantly popular, striking a cord with American public. 

With decades of rising inequality, falling standards of living and economic stagnation, the society was dismayed at the political system and ruling politicians. Ordinary people started realizing that system doesn't work for them. The great recession, the long unemployment and government austerity while the Wall Street was rescued, all this further alienated common people. Various authors of thesis on Trump phenomenon have simply dismissed the public frustration against Obama as reaction of white Americans to election of Black President. This is wrong analysis at best and intellectual dishonesty at worst. 

It took 7 long years for unemployment to recover after great recession to its past level. With trillions of transfusion into financial system, economy did recover after a period. But the recovery was highly uneven - erosion of wealth of middle & lower class and enormous accumulation of wealth at the top. By the time, economy started to get to some degree of normalcy, Trump had then arrived on political scene in 2015. Trump had the skills to exploit the sentiments of people - the feelings of unfairness, frustration, anger and desperation - that were building through the decades and more prominently since last 7 years. People were also aggrieved by other things like endless foreign wars, cultural degradation (real or perceived) and more importantly - the feeling of alienation. People felt that the political class has forgotten about them and their problems. 

Today, there are diverse nations and cultures in the world but they share a common fabric - globalized Neoliberal economic system. Now you can also see a common theme in rise of 'Trump like' politicians in the last decade - these other nations have also experienced a breakdown crisis in their economy. A crisis that has enraged and radicalized a large section of their society, making it a fertile ground for populist demagogic and indeed Pathocratic politicians.