How Did We Get Here?

When populism goes to shit.

To save you from the gimmicky introductions to this newsletter I had previously written, I will cut straight to the chase. I write this article with the intention of zooming out and examining how we got to this point.

A point at which about 77 percent of Trump voters believe the election was stolen from him, despite his absolutely baseless evidence. And a point at which thousands of gullible, sycophantic, and obnoxious toadies are willing to become revolutionaries for a President whose biggest accomplishment was tax cuts for corporations. After years of listening to sensationalist media pundits taking many moments of the Trump presidency completely out of proportion, when something utterly insane took place such as the events of yesterday, I actually found my reaction to be subdued. It was not until today that I fully realized what atrocities had taken place and what it means going forward.

There are many who deserve blame here, including but not limited to:

1. Donald Trump, who ordered his minions to march to the Capitol in the first place and plays with the fiery rage of his supporters like it's some sort of game.

2. Opportunistic politicians aiming for a 2024 Presidential run such as Senators Hawley (who I used to somewhat respect) and Cruz, who decided to follow through with their malicious political calculations even after their objections to the election directly threatened their colleagues in the Senate.

3. Social media companies, who seemingly think they can be let off the hook by censoring Trump (which sets a dangerous precedent for the future) when their business models literally thrive on feeding people misinformation and conspiracy theories so that they can sell more ads. 

4. The supporters themselves who by their own agency fawn over a man, who could not care less about them, to the point that they would actually break into Capitol Hill.

5. The factors that brought us Trump in the first place.

Time and time again, I make arguments about the economic anxiety and hopelessness that power voters’ enthusiasm for Trump. But after yesterday’s events, it is clear to me that whatever anxiety and hopelessness may have been there before, has subsided and been replaced by complete disillusionment with his cult of personality. Stopping Trump now will become infinitely more difficult than it would have been decades ago — when we could have prevented him from assuming power before he even announced his candidacy.

Given the course of recent history, the election of Donald Trump was all but inevitable. Understanding why means examining the method behind his madness — in other words, how his strategy proved successful. Trump campaigned in 2016 as a populist, in that he centered his politics around ordinary people and in opposition to established elite groups. He attacked globalization and relations with China, criticized special interests, denounced his competitors for their corruption, and opted for a more pro-worker stance than most of his colleagues. I look back at his campaign as if it were a stint of calculated chaos that consistently took advantage of the decades-long desperation of the American public, only to wrong them again and again when he became president. In spite of his corporate-friendly policies, cuts to Medicaid, repeals of bank regulation, and other policy pursuits as President that likely hurt the segments of his base his populism appealed to, so many still stuck with him. Because for many of his supporters, it no longer was about what Trump would do for you, it is about the lengths you will go to defend him. 

Trump’s presidency will be written about in textbooks as an example of populism gone awry. While I still believe populism can be done right, a populism that governs by the ‘will of the people’ without consideration to the ‘rule of law’ or ethics, has always given way to authoritarianism. But what will often be left out of the textbooks are the people who mismanaged crisis after crisis and botched decision after decision, enabling the democratic election of Donald Trump to be within the realm of possibilities. The people I refer to are the corporations, bankers, technocrats (elite experts), and intelligence communities (think military-industrial complex) that Trump, along with leftist populists such as Bernie Sanders, commonly group together as ‘the establishment.’ We are where we are, in part because of how the elites within the establishment undermined their relationship with the American people, making the public susceptible to a character such as Trump. Mass distrust in the individuals and institutions that the establishment consists of breeds life to populism — for better or worse. Addressing this does not mean eradicating the establishment; it means replacing it or at the very least, challenging them to learn from their mistakes.

I used to secretly like Steve Bannon

A few nights ago, I spontaneously decided to spend a solid hour-and-a-half torturing myself by watching Panic: The Untold Story of the 2008 Financial Crisis, a documentary produced by Vice News that is available on YouTube for free if you’re up for some self-harm. Surely, I thought, a documentary that features exclusive interviews with George W. Bush, Barack Obama, former Treasury Secretaries Hank Paulson and Tim Geithner, former Federal Reserve Chairman Ben Bernanke, and investment bank CEOs Jamie Dimon and John Mack must be as fun and informative as it sounds. I thought wrong.

Even from a neutral standpoint, the documentary seemed like a sorry attempt from the most significant players in the Financial Crisis response to convince you that the American public wrongly protested against an economic response they simply could not understand. According to what Paulson, Geithner, and Bernanke claim in the documentary, the populist responses, notably Donald Trump’s rise, were a result of an inability to communicate the esoteric complexities of the earth-shaking events of 2008 to us mere mortals, rather than a legitimate rejection of the elites who mismanaged the crisis, the financial sector that caused the crisis, and the politicians who inadequately took preventative measures to regulate finance so the crisis would never happen.

The documentary actually conveys how the Financial Crisis led to populist responses pretty decently, albeit unintentionally. Fittingly, the film opened with all of the technocrats involved with the Financial Crisis attending a fancy dinner and discussing which of their Wall Street bailouts were the most undeservingly unpopular (I’m serious) and ended with a montage showcasing Donald Trump’s rise, including a clip of his former Chief Strategist Steve Bannon outright claiming ‘[Trump] is a result of the Financial Crisis. The fuse was lit in 2008.’ Talk about ‘show, don’t tell.’

Steve Bannon, in particular, is a fascinating character. I first knew him as the founder of the right-wing news outlet that my tenth-grade Chemistry teacher would avidly read. Then I learned more about him and actually grew a secret admiration for his instrumental role in overthrowing the Republican Party establishment in 2016, which I used to think was for the better. Momentarily looking past his prioritization of the ‘white supremacy’ vote and fetish for saying the phrase ‘Judeo-Christian West’ as much as possible, I saw the appeal of his ideology. Bannon acknowledged the failure of elites and the government in recent decades in a manner that Mitt Romney, John McCain, and other pre-2016 GOP figureheads did not. Instead of worshipping capitalism, military spending, and globalization, Bannon opted for action countering cronyism, corruption, stagnated wage growth, and concentrated financial power. While former Republican Vice Presidential Nominee Paul Ryan fawned over Ayn Rand, Bannon consistently associated himself with Christian Traditionalism while sprinkling in philosophy borrowed from Hindu Vedanta, Sufism, among other Eastern philosophical works. Weird but true.

Bannon also had one of the steepest drop-offs for a political operative as successful as him in recent memory. In 2020, he was charged with money laundering and mail fraud in connection to the ‘We Build the Wall’ campaign, becoming the corrupt politico that he swore to destroy. He also suggested that Anthony Fauci be beheaded. But even bad people can have good ideas. And good ideas start with identifying the right problems. And while I won’t argue that Bannon had good ideas, I can certainly say he was identifying the right problems.

An accurate diagnosis

Bannon cites three events from the 21st century that led to the coercion of millions of Americans into the movement that was led by his vision: the 2008 Financial Crisis, the Iraq War, and the rise of China. He’s not wrong and what is perhaps most depressing about his accuracy, from a left perspective, is the utter neglect that most Democratic party leaders have towards the damage caused by the three aforementioned events, save for some lip service.

The Financial Crisis especially was a monumental event that wiped out many people’s livelihoods. To rehash, the crisis was the product of excessive speculation in the housing market, in particular with securities backed by homeowners’ mortgages, which were disproportionately unstable, in part because of predatory lending practices and the fabricated safety of these securities because of fraud within the rating process. While certain individuals may have profited, institutions as a whole including investment banks, hedge funds, insurance companies such as AIG suffered huge losses. And they got bailouts from the government. But what their losses all hinged upon were the Americans who lost their homes. Who got no bailout.

Maybe Bernanke, Geithner, and Paulson were right in the documentary. Maybe there were no alternatives to bailing out Wall Street firms if we wanted to help Americans. Was there more that could be done? Perhaps. But maybe the bare minimum stimulus that was needed was what was done — we just need a PhD in Economics or experience in banking to understand why. Nevertheless, whether or not you believe the Wall Street bailouts were necessary, the elites still should not be absolved of blame. The fact that such vast amounts of power became concentrated within finance in the first place, should be enough to comprehend the populist hatred of the elites in charge that Bannon and Trump rhetorically fueled.

A new social contract

Populism is precisely the rejection of figures such as Bernanke, Geithner, and Paulson who tell the public ‘there was no other way.’ These people treat populism as a side effect of catastrophic events like the Financial Crisis instead of a direct result of their own failures. They turn a blind eye to their failures while continuing to fail upward in industry and in government, getting involved with anything and everything important. It’s what happened in the Financial Crisis, when people such as Larry Summers, who was directly involved with enabling the causes of the crisis, were invited with open arms into the Obama administration to help shoot down any economic response that would be too generous to the American people. Or more recently, how the Trump administration, despite their populist tendencies, consulted Art Laffer, one of the three horsemen of Reaganomics, to overcome the Coronavirus economic crisis. 

We also see the ‘not-having-the-self-awareness-to-realize-you-are-the-problem’ phenomenon in areas other than economics such as defense and trade policy. Somehow the people who started the Iraq War still lurk in large numbers around Washington and positions of power. They fear-monger at every instance anyone, including the President of the United States, mentions withdrawing troops from Afghanistan or hints at justice for Edward Snowden, often citing the all too familiar tune of ‘national security concerns.’ The same happens within relations with China, in which people who speak out against globalization are constantly shut down with one-liners about ‘consumer welfare’ or ‘cheaper iPhones’ as if it's a West Wing episode. 

In each of these situations, there are ‘experts,’ who represent the banking, multinationals, the intelligence community, etc., that possess an informational advantage (a Freakonomics concept) over the American public, which forms a quasi-social contract between the public and experts. The public is encouraged to trust experts because experts understand their specific field more. But it must also be ensured that experts do not manipulate this advantage for their own self-interest and that they actually contribute to the benefit of the public. Idealistically speaking, CEOs should chase profit, for example, but as a byproduct of producing societally beneficial goods. Bankers oversee a sound financial system that promotes public security and stability. Military experts dictate foreign policy with peace and public safety prioritized. But even remnants of these relationships are nowhere to be found. 

Also distrusted are the ways in which people initially reach these decision-making positions. Within this theory I am making up on the fly, there needs to be a mutually agreed upon method of certifying that the experts can be trusted with their understanding of their areas. These certification methods consist not only of higher education institutions but also the market, which funnels people to expertise-based positions of power through institutions such as banks and corporate law firms, all of which people increasingly distrust. The result of this distrust, among other notable factors such as inequality and lack of economic mobility, is a major reason why populism has emerged in the US and the world over. 

For many, merely acknowledging these problems was undoubtedly better than the pre-2016 GOP ignorance to these issues and arguably better, at least in the eyes of the many Bernie and Obama supporters who either stayed home or voted for Trump in 2016, than what establishment Democrats offer. The problem is that Trump’s populism was never poised to be realized through policy. It never seemed that he was legitimately interested in adopting populism as a vehicle to overcome the problems that he identified. Even if he did, it is unlikely that his anti-immigration and revisions to trade policy would have been substantive or ambitious enough in scope, to truly ‘Make America Great Again.’ Instead, Trump has sought to exhibit populism in the worst way possible — with the goal of expanding his power, facilitating possibilities for authoritarianism. Now that he has his own ‘revolutionary’ army of supporters who are subservient to him, the scenarios surrounding how he could exploit them for his own gain are endless. It is the quite possibly permanent damage suffered from decades of failures to address the conditions that led to the democratic election of Donald Trump in the first place.

Note about future newsletters — I appreciate everyone who has subscribed and read my newsletters over the past few months. Writing them has been a very fulfilling experience, and getting feedback and comments from people always makes my day. Heading into 2021, I wanted to establish some thematic structure for what I write about going forward. From now on, my newsletter will officially be about ‘the ongoing war between markets and ethics.’ Markets refer to the space in which exchange takes place, but more broadly indicate how certain decisions are made, how resources are allocated, and where power lies, among other things. Reflecting on my past newsletters, they often incorporate tidbits of history from the 1970s and 80s, which describe how ‘market supremacy’ came to be, with whatever I feel like writing about that week. My favorite newsletters I have written thus far, have centered around advocacy for doing things that the market does not particularly favor, whether it is certain career paths that people have now become cornered into following or areas in which markets discourage economic mobility.

What is most fascinating to me about markets, is how it can come in conflict with principles such as democracy and freedom as it does for many multinationals’ relationship with China. Or how the management of markets can bring ethical dilemmas concerning the concentration of power and the emergence of private governments who engage in censorship such as Facebook. The media’s role in stoking the divide that we currently see in full force is also an issue between markets and ethics. While I still plan on writing about anything I want for around half of my newsletters, I look forward to examining issues under the framework of markets and ethics as the year moves forward.