National Democrats Learned Nothing from the Shellacking in November.

Dec 6, 2016 (San Diego) So we have elections done at the leadership in Congress. Both Nancy Pelosi and Chuck Schumer in the senate, replacing Harry Reid who retired this year. What is the problem with both of these members? They have been part of a failing leadership, They also represent two of the wealthiest areas of the country. In fact, they represent two of the winners in the Neoliberal economic order. Thus voters who live where the losers of the new economic order live are getting the message: Democrats are out of touch with middle America. They are out of touch with the middle class they claim to defend.

Leader Pelosi stated on CBS Face the Nation “I don’t think people want a new direction,” which is as tone deaf as they come. She is also counting on things being the same as they were in 2006. They are not. There is a level of discontent in places that I suspect Leader Pelosi does not go visit. She is not alone, though.

There is further evidence of this lack of self-awareness. Hardcore Hillary Clinton Supporters are busy blaming all but themselves. For example one of those high-end supporters (who also are winners in the Neoliberal economic order that is under threat) has been going on about how much damage Bernie Sanders did to Democrats. This is Peter Daou, head of Shareblue, He tweeted: “I’ll be crystal clear: Bernie Sanders has absolutely no business determining the course of the Democratic Party after the harm he did to us.”

To say that this tweet is tone deaf, is to put it mildly. People like Daou are not just tone deaf, they are the winners. So of course, they do not want anything that will threaten the status quo. twitter. He even attacked whatever he thinks is the left and Hillary bashes this way: “How many leftist purist Hillary-bashers railing against Wall St. would take a job with Goldman Sachs in a heartbeat if they could?.”

This is the kind of ignorance that is pervasive, then there is this  fantasy from Steve Choice: “As long as we keep growing our base (aka the Latino population continues to grow), we won’t need them, anyway.” Perhaps Mr. Choice missed this, but Trump over performed with all minorities during the election and in particular Latinos.

No, the numbers were not those needed to capture the White House with only them. But the numbers, combined with a complete collapse of the Obama 2008 and 2012 coalition, led to this disaster. Yet, Democrats are unable to look at cold facts and ask, what happened? Why are we going from a successful party, with an incoming permanent majority, to a coastal, wealthy city party?

Populist Campaigns

This year the United States saw both a right wing and a left wing populist candidate. They both promised to take on the elite. This is not just limited to the United States. John B Judis writes in The Populist Explosion about these campaigns:

 …they often function as warning signs of a political crisis. American populist movements have arisen only under very exceptional circumstances. In Europe, populist parties have endured on the fringes at times, because the European multi-party systems tolerate smaller players. But like American populists, they have won success only under certain circumstances. These conditions come when people see the prevailing political norms—put forward, preserved and defended by the leading segments in the country—as being at odds with their own hopes, fears, and concerns. The populists express these neglected concerns and frame them in politics that pits the people against an intransigent elite. By doing so, they become catalysts for political change.

It is critical to understand that none of these populist moments come from the ether, but take place after an extended period of an economic and political system that has failed. In the United States, this has been the Neoliberal order that Democrats (and business-friendly Republicans) embraced fully in the 1980s. The ascent to the presidency by Bill Clinton was the moment the Third Way took power in the United States. He was hardly alone. In the United Kingdom, John Major and New Labor meant the capture of the British system. Germany was somewhat behind, These days though it has fully embraced a system that includes heavy doses of austerity, especially for the Greek government.


It is critical to understand that in Germany Helmut Kohl took the first steps towards neoliberal policies, but Gerhard Schröder adopted the new ideology of free trade, and globalization . This thinking left many people behind. Mostly the working class industrial workers were left behind with promises of new income and new jobs that never came to be. Globalization meant that jobs, good jobs, went overseas where both wages and environmental standards were weak, to non-existent.


Joseph Stieglitz writes in The Price of Inequality:

 The last time inequality approached the alarming level we see today was in the years before the Great Depression. The economic instability we saw then and the instability we have seen more recently are closely related to this growing inequality.


This is the heart of the crisis which Democrats are unable to comprehend. It is as if we were looking for President Herbert Hoover try to show empathy for those left behind by the Great Depression. Neoliberalism has accelerated this road to mass inequality and even now after it cost Democrats the House, the Senate, the White House and over 1000 legislative seats nationwide, they are still unable to look in the mirror. It is the economy stupid, as they once did understand. They are blamed by many Americans for the current economic morass.



But we are almost at full employment, we are told. The problem is with the type of employment this economy is generating. Those with college degrees, especially advanced degrees, from elite universities, are part of the meritocracy. They are part of the system that has benefited them greatly. This is exactly the same group in control of the Democratic Party. They see the Bernie Sanders rebellion as a threat to the status quo. If we are, to be honest, it is a challenge to this status quo by a man who in another age would have been called an FDR Democrat. Those are a species in danger of extinction, though not quite dead yet. They are the ones who gave a full-throated challenge to the establishment. The same that this same establishment will continue to treat as second class citizens. Never mind they are the ones with the economic and populist message that worked the last time we reached this level of income inequality. That was the Great Depression. While the Great Recession was deep, it did not reach the levels of despair of the Great Depression.

Stieglitz also points out another feature of our current system. The income distribution is the effect of market distortions that have created a lot of pain and inefficiencies. It is not just Stieglitz sounding the alarms., Mathew Drennan writes in Income Inequality and why it Matters, about the split in income what is further evidence to the crisis. He pointed out to the well-known split in 1973.


But the average growth rates conceal how the productivity gains have been distributed. In an analysis of Internal Revenue Service (IRS) data examining productivity growth, the authors conclude, “Our most surprising result from the large IRS data set is that, over the entire period 1966–2001, only the top 10 percent of the income distribution enjoyed a growth rate of total real income (excluding capital gains) equal to or above the average rate of economy-wide productivity growth. The bottom 90 percent of the income distribution fell behind or were even left out of the productivity gains entirely.” 8 This pattern of productivity growth outstripping wage growth over the past three decades is repeated for other rich nations.


This is creating a severe crisis in the United States. During the campaign, we heard both Sanders and Trump explain that the system was rigged. Granted, they were coming from different sides of the equation. They still resonated with working class people, and millennials for the same reasons. This is the first time that expectations of a better future for coming generations are dashed. This is also the first time that an advanced economy sees life expectation rates go down.



While Republicans seem ascendant, this crisis is affecting them too. The Republican Party was taken over by a right-wing populist. It is clear that he does not fit the traditional business friendly northeastern Republican. Some of his statements during the campaign were downright friendly to both labor and the heritage of Franklin Delano Roosevelt. He promised to defend Social Security and Medicare, standard language one would have expected in the past from Democrats. HIs appointment to the Cabinet might reflect a different intent, but time will tell on this.


Just like the Democratic coalition, the Republicans are also frayed at the edges, and they are for the same reasons. It is the economy.  This has created a crisis for lower income people. There is an awareness that there is a problem and that governing for Republicans might even mean keeping the Affordable Care Act (ACA), though with significant changes to the program. Some of those changes would have had to happen whether Trump was elected or he lost the election.


The problem that Republicans have is that now they have to produce results, as this is expected. This is an issue for a party that has followed a philosophy of blocking all the other side did for the last eight years. We do not expect Democrats to oppose them on everything. There are things that both parties agree, fundamentally. One of them is actually entitlement reform and austerity. While there were promises to save Social Security, president-elect Trump will have a problem with his own party. Some of these programs are opposed by not just the business-friendly establishment Republicans, but also by a fair number of the tea party caucus.


We suspect, though that the Trump victory is marking a critical point in Republican Party history. While Democrats are still fighting to continue to move right, Republicans have likely started to realign left. They will not admit it. Most people will not notice this for a few years. It will be in the policy where the party is going.


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