Rethinking Trump’s electoral win and the current populist wave

Rethinking Trump’s electoral win and the current populist wave
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“Let’s put it straight: Trump’s victory is to be explained first and foremost by the explosion of economic and territorial inequalities in the US.”

This is how Thomas Piketty, author of the famous “Capital in the 21st century” started his recent piece discussing the election results in the weekend edition of Le Monde. This and similar types of claims by many fellow economists omnipresent in the media as well as various columnists and journalists have pushed forward the story, now mainstream, that Brexit as well as the Trump phenomenon are due to the poor working class losers from globalization — what has been called the “left behind” narrative.

Joseph Stiglitz sums it up very well in these terms: “Too many Americans feel left behind. It is not just a feeling; many Americans really have been left behind. It can be seen in the data no less clearly than in their anger. And, as I have argued repeatedly, an economic system that doesn’t “deliver” for large parts of the population is a failed economic system.”

But this story does not show up in the data in the recent elections. Furthermore, it can potentially be misleading if governments and international organizations don’t address the root cause of today’s populism in Western democracies.

This time “it is NOT the economy, stupid”. The successes of Trump and Brexit appear to be related mostly to deeper structural developments of Western democracies: the unstoppable movement of post-materialist values, combined and reinforced by deep ethnic changes at the local level through widespread immigration, and anchored by absolutist democracy. It is, down the road, a kind of “last battle” for the white conservative majority – already considering itself a minority – to fight for the type of values like order, religion, tradition and stability that prevailed in the 20th century.

Stagnant income, deep unemployment, booming inequalities?

What about the economy? Are the latest populist victories underpinned by frustration about economic outcomes and prospects and a backlash against globalization? It is necessary to look in depth at the data, both economic and electoral combined, to get hints at what could explain the victory of Trump and the like. A story about the left behind could talk about unemployment, job losses from globalization, stagnant income or low mobility, and booming inequalities.

Unemployment

No serious analyst can claim that a massive crowd of unemployed people is leading to a Trump vote. In fact, the US is doing especially well in regard to unemployment compared to the rest of the Western world. Its unemployment rate of around 5% is accepted as “full employment” in economic terms. The fact that this basic statistic is overlooking some long-term unemployed people who give up on the labor market appears not sufficient to support a claim of widespread unemployment. That jobs are being created, at a good pace, is a fact.

Trade globalization

Going further, do people feel that globalization is responsible for job losses? The decline in manufacturing in western societies is clear for a number of reasons, including technology and globalisation, but again, votes for Trump or Brexit  do not seem to be consistent with a general claim that globalization is the root of all evil jobs wise.

In the UK, indeed, a striking example relates to the Nissan workers of the Sunderland plant in the North of England. In a rapidly de-industrializing United Kingdom, with finance coming in the last decades to represent more than a third of the country’s GDP, it was exactly globalization and foreign direct investment that allowed the UK to revive its car manufacturing by, for instance, the creation of the Nissan plant of Sunderland. Then, Nissan threatened to cut part of its 6700 employees in case of Brexit. Sunderland, home of 80 overseas owned companies, and a part of Northeast England which sends 58% of its exports to the EU, should have thought twice about unemployment before voting. Yet, the city voted massively for leaving the EU with 61.3%. Similarly, in the US, Trump, promoting trade protectionism, is massively leading in rural areas, while the US is by far a net exporter of agricultural goods.

The conclusion is that either the people in these states and regions do not understand how trade and investment work and what protectionist policies would do, or simply voted for Trump or Brexit for very different reasons than trade policy and economic globalization.

Inequality

Lastly, those arguing for the economic rationale behind the populist movement point to growing inequality as a key driver behind Trump and Brexit votes.

Stiglitz and Piketty deserve a lot of credit for their efforts to compute long term data on inequality in the US and elsewhere and pushing this issue to the forefront of the political agenda. In the last decades, they show that inequality has been booming with the top always taking a bigger piece of the pie.

But was this the key factor to the elections?

Below are two maps displaying two different measures of income inequality, by US states. The first is the ratio of the average top 1% income to the bottom 99%, the second is the Gini coefficient.

Inequality in the US by top 1% ratio

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Inequality in the US by Gini coefficient

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Now contrast these two maps with the electoral map.

There does not seem to be much correlation between inequality and the votes for one candidate or the other. California, Nevada, New York, Connecticut, New Jersey and Massachusetts are among the most unequal states in the US and they all have voted with a wide margin for Clinton.

Trump on the other hand seems to have won fewer but still some of these very unequal states: Texas, Louisiana, Florida, Michigan and Georgia.

Election Results

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Such a comparison is obviously crude and one could point to the fact that such aggregate data at the state level is not a good metric to explain if inequality mattered, that maybe the aggregate inequality at the country level explains the resentment. Behavioral economics have shown, however, that people do care about inequality (reasoning and deriving utility from income in relative terms and not in absolute) but that this happens at the local level when visible; that is, craving what your neighbor has and not thinking about whether there are more billionaires in Shanghai or Silicon Valley than before.

It also seems intuitively strange to have a billionaire who inherited a big part of his capital from his father, and who developed this capital in rent-seeking industries like real estate, representing the ‘left behind’ and claiming to care about inequalities, yet this did not deter his voters.

What did voters care about above all? Immigration and values

So if the economic story of the left behind does not appear clear-cut at all, what underpins these results? What was the predominant characteristic of Trump voters and what does this specific part of the population care about?

Who voted?

Crude exit polls give insights into what happened in the elections. Trump voters won among older voters (above 40) – who are supposed to care the least about economic mobility and who are much less economically vulnerable  -, overwhelmingly white, least educated (high school or less or a start of college education), and the richer part of the electorate (above 50k of income per year). Overall, at first sight, this hardly makes up a photofit of a “poor loser of globalization”.  

Exit Polls in the US elections

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figure-4-contIndeed, what is important in these demographic statistics is “white”. Turning these stats upside down, “white” trumps all other factor like education, age and income.

The question then becomes, what led white people to slide to populism?

Immigration as a key driver

Eric Kaufman from the University of London has recently analyzed the white vote and concerns in two pieces on the UK and the US. As the following two charts taken from surveys highlight, strong Trump backers (rating Trump 10 out of 10) simply worry much more about immigration (10 times more than Trump detractors) than inequality (hardly mentioned by Trump detractors). And as for Brexit supporters, the story is very much the same.

Surveys of American Whites and British Whites

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Kaufmann goes on mapping votes distribution and ethnic changes to show that indeed Trump support was strongest in places with rapid ethnic changes.

A large body of empirical research has tried to link immigration and economic changes and concludes with a broad consensus that attitudes toward immigration seem simply uncorrelated with personal economic circumstances.

The patterns have been the same all over Western democracies, non-economic issues are becoming much more salient, and the populist parties are seizing these topics. Le Pen in France, Trump, Farage in the UK, Hofer in Austria, and Wilders in the Netherlands have all campaigned on the same platform: values, not economic issues, as highlighted in the next two figures from Inglehart.

Rising salience of non economic issues in the party manifestos of Western democracies

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Classification of European parties on economic v. culture values spectrum  

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What all of these statistics show is that it is not primarily a story of income or education, and above all not a story of class. It is a story of values, cultural order, and ethnic change that best fits the puzzle.

The long awaited cultural backlash against the globalist ideology

Some have highlighted the deep developments that are underpinning today’s right wing populism for quite some years. Sociologists, political scientists, and historians have designed the theoretical tools enabling the understanding of these movements.

Urban Densitaria vs. Exurban Posturbia and the ‘Silent revolution’ theory of value change

These first two rather wordy but useful concepts were used by the historian Michael Lind to describe the new structural cleavage in the US and other western societies.

On the one side, global cities like New York, London or Paris, analyzed as early as the 80s in a prescient way by Columbia sociologist Saskia Sassen, are home to an elite working in very highly skill intensive services like finance, consulting and law, together with very low skilled labor, mostly minorities from immigration working as cleaners, construction workers, nannies and gardeners. By definition globally-focused, it is in these hyper connected, hyper dynamic and hyper unequal cities that a new ideology came to be born. The urban elite moved away from the “traditional values”, and prioritizes “freedom over security, autonomy over authority, diversity over uniformity, and creativity over discipline” as Christian Welzel describes. Residents hold themselves as “citizens of the world” and despise nationalism, religion, and traditions.

The sociologist Ronald Inglehart has been documenting for decades a “silent revolution”, an intergenerational shift toward post-materialist values, underpinned by the cosmopolitanism and multiculturalism seen in these global cities, exemplifying “increased tolerance for diverse forms of sexuality, more secular values, open-mindedness towards migrants, refugees, foreigners, and multicultural diversity of lifestyles, foods, and travel; and cosmopolitan support for international cooperation, humanitarian assistance, and multilateral agencies like the United Nations and EU”.

On the other side, in the vast low-density spaces between these big cities, more are born in the country, whites are in the majority, fewer are very rich, fewer are very poor, less work in service oriented jobs, and more work is agricultural and manufacturing based. This white majority has seen years after years the national culture it grew up with and cherished progressively erode – the kind of shared sense of identity and norms without which one lives lost in “anomie” in terms of French sociologist Emile Durkheim. Religion is still very much present, and values of order and traditions are fought for. Having experienced ethnic changes at the local level, seen religious sentiment fading, family weakening, and patriotism disappearing, they are witnessing this erosion of these values.

This tension is extremely well described by NYU psychology professor Jonathan Haidt in a recent piece and described in the British case by the following chart of his: the people most likely to think that immigration enriches Britain’s cultural life are the least likely to vote Brexit, the most likely to be in London, and the least likely to be in the exurban posturbia.

Geographic distribution of immigration position & Brexit vote

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Inglehart and Harvard Professor Pippa Norris have systematized these anecdotal insights and found support for the ‘cultural backlash’ hypothesis over the ‘economic left behind’ hypothesis by analyzing support for populist parties from 2002 to 2014 in Europe. The conclusion is univocal: all cultural values scales they developed proved consistent predictors for populist support, while economic inequality and social deprivation are not significant.

Political correctness, absolutist democracy & repressive civism

Going beyond, in recent years, the “silent revolution” that Inglehart described since the 1970s has become less silent and more institutionalized, while societal changes were becoming more visible.

As political scientist Guy Hermet puts it, this majority got sick of the urban elite telling them “that the destiny of mankind is a race toward a constantly more global world, immigration is an imprescriptible right and an inevitable inexorable fatality, gay marriage as a necessary horizon, and death of jail sentence as the continuity of the end of death penalty”. The speech of the post national urban elite of the global cities turned immensely moralizing and people who don’t think like this are held as racists, backwards, and idiots.

New York Times columnist Ross Douthat rightly makes the link with the debates about speech policing in elite campuses in the US that made headlines last year. Professors have no right anymore to say things that would run counter to this ideology, schools holding names of historical characters like Wilson began to be criticized for not fitting the perfect ethical fit for what is held today as “right”.

The New York Times, New Yorker, Vox columns and others are reminding us, as Michael Lind highlights, what we were supposed to believe and endorse as “moral” and what cannot be accepted and systematically ranged in the “racist” or “backward” category.

Free speech is being curtailed, language is being criminalised by law. This stifles debate and society ends up with the opposite result : strengthening the populist message even further.

The political scientist Karen Stenner explains that authoritarian tendencies (to which we can add the consequent dispositions for populist support) are not stable and are activated only in certain situations. It is under “normative threat” – threat to the integrity of a perceived moral order – that people become intolerant.

The institutionalization and imposition of the post materialist values fit this theory and have indeed triggered the revival of authoritarian sentiments into the majority, which expresses itself today in Trump and voting in general.

Trump, Brexit and European populism are thus very much a backlash against progressive value change seen as authoritatively imposed by a dismissive globalized urban elite.

Risks and lessons

So, where do we go from there?

There may first be a lesson for economists. A purely economic analysis of populism and the consequent promotion of specific policies cannot achieve much. This may come from the inability of many in the profession to think in an interdisciplinary fashion and the pretension to think that all problems in society have economic roots, as was researched by Yann Algan and co-authors in a piece on “the superiority of economists”. Economics appears to be the discipline that cites the least work from other social sciences, and disagrees most with the statement that interdisciplinary knowledge is better than knowledge obtained by a single discipline.

Behavioral economics and psychology would also teach that, when someone has put a lot of effort into a project, idea or theory, it is very hard to deviate from it or analyze a situation in a neutral manner. It thus seems normal that the people who have studied, for example, inequalities their entire life would automatically apply this lens to any single new topic.

Economists, mostly for good, have managed to obtain a very important role in the design of policies. The problem from this is then that by adopting the wrong lens – say globalization has not delivered so people are angry – policies would not manage to address the problem, and people will continue to resort to anger, xenophobic and populist tendencies.

Stopping or restricting free trade to respond to populist anger (wrongly held as entirely due to anger of blue collar workers having lost their job from globalization) will only make the matter worse for the society as a whole, as a majority of top economists have concluded. Stopping or restricting labor migration is also not going to help and will ultimately make society worse off from an economic perspective.

And with regards to domestic policies, of course policies should be targeted at reducing unemployment even further and to fighting inequalities, which is a general common good and goal for societies. But as Eric Kaufman puts it, policymakers and pundits would be wrong to “imagine that old remedies – schools, hospitals, jobs – will put the populist genie back in the bottle.”

It may feel that the cultural shock from cosmopolitanism has been imposed without sufficient coping mechanisms for societies. It is a hard question whether governments can really manage to keep pace in order to smooth shocks from the technological and cultural evolutions of today.

But at the very least, globalist elites should depart from an imposition perspective. Societies should engage in dialogue about the long term benefits (and costs) that come with such changes, a dialogue that goes far beyond elections in the democratic space, and that entails providing a vision or direction for the years to come. This vision would give everyone something to look for, a certain idea, prospects of what will happen to the next generations.

Policymakers in western societies have systematically failed in the last decades to deliver such a project and catch up with the frustrations building up. Yet, without this, we might have to face “political risk” for a significant period of time.

Disclaimer: the views expressed in this piece are the author’s own and do not represent the views of any institution he has worked for.

Categories: Politics

About Author

Etienne Lepers

Etienne has worked as economist for the OECD, the European Systemic Risk Board at the ECB, the European Parliament, and in the country risk department of Coface. He holds master degree from LSE and Sciences Po. The views expressed here are my own and do not represent the views of any institution I worked for.