US Midterms in an Era of Division

Pascal Bedard
Street Smart
Published in
9 min readNov 5, 2018

Although there is general peace and prosperity, the USA is a highly divided nation. On both sides, you have extreme positions, such as communists on the “left” and white supremacists on the right, along with thin-state libertarians and “social spenders” fighting to gain the balance of power and tilt policies in their preferred direction.

Looking at indicators

The labour market is booming and the general economic context is rather good. Why so much anger? People seem to fear what COULD happen if “the other team” takes over for a long time. Conservative voters fear taxes and Big Government, while progressive voters fear a disappearing of the social safety net, racism, and more.

With a super low unemployment rate and a roaring economy, you won’t see anything to worry about in the “macro variables” and it seems there is more imagination-and-media-driven drama than real-world drama on a broad scale. Since life is generally good on the job and economic front, maybe crime is exploding?

Nope. The crime rate is on a secular downtrend since 1990.

Less crime. Plenty of jobs. Now contrast this with perceptions of crime by the general population. Here are the answers to the question “is there more crime today relative to last year?” in a survey to the US population:

Perceptions and reality were aligned BEFORE 9–11 (decreasing actual crime and decreasing perceptions of actual crime), but reality and perceptions disconnected after 9–11… and the reality never came back to claim its rightful place!

Politics vs Perceptions

Who is getting political gains from this general vibe of fear of “strangers” and imminent danger? The Republican Party, and more specifically the hardliners of that party. When perceived threat increases, those who are seen as “military”, “hardline”, and “nationalist” are entrusted with the “safety of the country” against some kind of outside or domestic threat.

Regardless of how much you liked or hated Obama, we can only notice that he was perhaps the unluckiest President in a very long time. A Republican President would have been just as unlucky. He came into power as the worst financial and economic crisis in 80 years was just starting. It takes about a decade for an economy to fully recover from such a shock, and that covered his total years in Office. Of course the population noticed that things were taking forever to come back to normal and they pointed to Obama and Democrats for the context, not having the nuance or ability to properly identify the real causes of the observed phenomenon. Reality is that any way you look at it, things would not have been very different regardless of who was there!

Now Donald Trump spotted the “political profit” to be made from perceptions along with the accumulated frustration of a stagnating economy and went all-in with his “anti-establishment” message, saying things that emboldened crazies about “other people”, “women”, “progressives”, “those climate scientists”, and more. Nuance, decency, respect, and maturity were out the door. And here we are.

What you don’t see in macro statistics is the general erosion of social fabric, with a rising tide of xenophobia, misoginy, division, a seemingly eternal rejection of science and facts when it doesn’t fit opinions, and a general nostalgia about “the good old times” of America… the time when white men did all the work and decisions, women and blacks did not vote, and things were all well… It is a quiet revolution in reverse. A pushback against decency and science and a return to closed circles and ideology-driven policies and social trends. A no-holds-barred norm of insult and demeaning, because, you know, those “politically correct” people are so annoying, and MAN do we hate those “social justice warriors” who want to tax everything to death and finance the lazy and undeserving.

There are those who think that as long as your very immediate life is going well and nothing stops you from doing whatever you want, then all is well, and there are those who see a broader picture of issues, which are typically those concerned about equality of opportunity, segregation, “the environment”, and so on.

The Era of opinions, Ego, and ignorance

We live in an Era where Internet provides infinite sources of articles and data that you can find to “prove” that you are “right” about pretty much any subject you can think of: prosperity, crime, racism, climate and the environment, nutrition, and the list goes to infinity. Tell me what you want to believe and I’ll find you 100 articles that at least seem convincing and well-written that will cajole your opinion and make you feel good about not changing your habits, opinions, or voting.

I hate it when non-economists come tell me how an economy and financial markets “really work.” They seem to think that hundreds of years of research and pondering by incredibly intelligent individuals is worthless and that their “insights and opinions” are new and ground-breaking. It never dawns on them that MANY others have thought of those “ground breaking insights” decades ago… centuries ago… and have flipped things in all directions, measured and re-measured and questioned everything and came up with a science that holds tremendous coherence and rigour. Yes, there are debates and “schools of thought” between economists and there are incompetent economists, but all-in-all, there is tremendous agreement on a LOT of stuff, even between opposing schools of thought.

The same holds true for other subjects. “The environment” is one such subject. People seem to think that because the forest beside their house is pristine and bustling with animal life, the empirically measured and objectively agreed-upon conclusion by a VAST array of highly qualified scientitists specialized in their respective fields that humans are currently causing the 6th mass extinction is all bullshit, as is the science-based fact that there is indeed “global warming” and that their obervations about a cold Winter or more ice somewhere is of exactly zero value. The acidification of oceans? All BS. Denial has infinite weaponry against reality.

The strategy is simple: if you don’t “like it”, 1) call it “fake news” and/or 2) call it “biased research.” Donald Trump is a master of such slight of hand: lie away reality and spin it even to your advantage!

What I see happening in the USA is a slow, invisible-yet-steady erosion of social fabric, boosted by influencial individuals who suffer from extreme ignorance and self-importance who tailor to people’s “preferences and opinions” and simply tell them what they want to hear, not what IS, with a never-ending tone of extreme certainty and absoluteness. It is too abstract to measure or quantify, but the trend is serious, because it is building a tide of anti-science, anti-facts, anti-reality in large parts of the population, with top politicians actually adding fuel to this fire of ignorance, denial, and retreat into sectarism, hate, fear, and defiance of true experts and honest academics.

There is no crisis of immigrants creating crime and death in the USA on a broad scale. There is no crisis of Muslims in the USA going around killing people. There are NO evidence-based research papers that slightly higher taxes used to finance high-quality, low-cost education, health care, and even old age pension and help to the disabled are prosperity killers. In fact, since 1990, the UK, Canada, Australia, most Scandinavian countries and many others BEAT the USA on average annual growth rates of GDP per capita, and all have higher taxes and more “social stuff.”

Back to reality

The path of US government debt is not sustainable. Environmental degredation is real and will have serious and far-reaching consequences for future generations. White supremacist violence and hate is real and growing. The Republican Party is preparing a “fiscal crisis” to have a “reason” to slash major “social programs” such as healthcare, education, old age pension, and environmental protection. The USA scores very poorly in PISA rankings, not even making the top 20 (!!!), and is always in the worst countries for depression rates, suicide rates, obesity rates, and more. Misoginy is still very alive and is now emboldened by the President, repeatedly, who of course serves as a barometer of what is “OK” to say and do. Trump is all good with the needless murder of animals, defending this immoral “sport” by saying it feeds poor people… Even in rich countries like the USA, where he gave the go to murder without restraint any wild animals you feel like killing for fun? Isn’t it obvious even for conservatives that Trump and the GOP have gone out of control and pose a threat to basic decency and common sense?

I understand and respect the view of the world by libertarians that the gains of the upper incomes are “their own” and should not be grabbed and distributed to “others” via the State in the form of public education, healthcare and more, but I beg to differ about this simplistic view of modern society. The problem in complex modern societies is that uncoordinated individual actions can bring about suboptimal outcomes that reinforce themselves over time in self-perpetuating feedback loops, perpetuated by habit, social norms, and lobbies.

The huge majority of the US population would be BETTER OFF with more progressive taxation and preserving and even improving the basic “social net” such as QUALITY education to all, and the rest. This includes Republican voters. Life in other countries is significantly better than in the USA, by the way. Apart from cold weather, my country Canada offers a better life for about 80% of it’s population, and the “top 20%” are very happy and doing fine as well, and Canada has HUGE immigration and scores better on pretty much all the indicators you can possibly think of that are pertinent for the majority of everyday people!

Swing voters and swing states

In the USA as in most other countries, some regions are “sold” to one political party. No matter how much they lie and deceive. No matter how stupid, incompetent, or ill-informed they are, politicians of party X will “get” the votes of that region. You won’t make “hard-GOP” states and people vote DEM and you won’t make “hard-DEM” states and people vote GOP, pretty much irrespective of how catastrophic the specific politicians seem to be.

What to do to win elections and seats in Congress?

First, you make sure your “base voters” are happy: the GOP makes sure Texas and Wyoming are happy: oil, meat, hunting, etc., as well as a general denial of any importance of anything related to “the environment.” Second, you target the undecided in close-call states and you focus on what sells most, while undermining the “other’s” ideas and policies. Complex social and policy issues such as quality education for all, science-based facts and nuanced reasoning, globalization, automation, good economic policy, and others are not sexy.

What is simple and sexy? Fear and identity. “Us vs Them” debates. Fear of “others” such as immigrants, “socialists”, and more. Identity is key. You flick the switch of division, you boost the “tribal reflex” and then you say that you are the only one with a solution to a “problem” that really is not even there!

It also helps that rural, low-density states are over-represented in Congress, as a consequence of the 1789 “Great Compromise”, which would need some refreshing. These states are mostly Republican. It is perfectly understandable that entire states should have “some weight” in the Presidential Elections, even if they have less people, which justifies this system. But it might be exagerated when California gets one Electoral College vote for 670 000 citizens, while Wyoming gets one vote for 186 000 citizens, tilting the advantage to states such as Wyoming 4-to-1. Anyone with some capacity for independent and “fair” thinking and detached reasoning would think that this is overblown. I fully understand citizens of Wyoming not wanting this to change, but how would they feel if the situation was reversed?

The problems are clear and I listed a few in this text. NONE of these issues are discussed by politicians in Trump’s Republican Party. Things are good on the surface, but if you stratch a bit, you uncover quite a few issues that could get worse in the next decade, and the 2018 Midterm elections will play a role in the bigger long run picture… Clap, like, and share!

Pascal Bedard

--

--

Pascal Bedard
Street Smart

Sharing thoughts on economics, finance, business, trading, and life lessons. Founder of www.PascalBedard.com