Understanding Chinese President Xi Jinping’s Anti-Corruption Campaign

Chinese President Xi Jinping has made fighting official corruption a cornerstone of his reign.

Judging by the numbers alone, the campaign has achieved impressive results. Astonishingly, the Chinese Communist Party (CCP) has disciplined well over one million officials since Xi took power in 2012. The anti-corruption campaign has snared hundreds of high-level leaders – including, most recently, former Chongqing Communist Party General Secretary and Politburo member Sun Zhengcai.

Xi’s fight against corruption has made him enormously popular among the Chinese people. As a political scientist and close observer of Chinese politics, however, I would argue that Xi’s enthusiasm to root out corrupt officials isn’t based on his own rectitude. Indeed, Xi’s family has inexplicably managed to accumulate over $1 billion in wealth, according to reports by Bloomberg. Rather, it rests on Xi’s determination to strengthen his personal power and that of the party he leads.

We should pay attention. If Xi succeeds in centralizing his control over the world’s most populous country, the United States will be presented with an increasingly confident and formidable competitor.

Sun Zhengcai was one of the more prominent targets of Xi Jinping’s crackdown on corruption. AP Photo/Mark Schiefelbein

Managing corruption

Corruption is built into the structure of China’s governing institutions.Xi’s campaign is more about managing the scope and consequences of corrupt practices than rooting them out altogether.

As China scholar Minxin Pei has documented, corruption in China typically takes the form of organized schemes involving groups of bureaucrats and private business people to plunder state resources.

Corruption fuels job promotions, the awarding of government contracts and the transfer of public assets into private hands at fire sale prices. Corruption in China is rooted in the blurred lines that come with a system combining weak rule of law, considerable autonomy on the part of local officials and an economic model featuring opaque relations between private enterprise and a large state-owned sector.

Xi has approached the problem of corruption much like his predecessors, though with unusual vigor, scale and persistence. Periodically, the CCP leadership has undertaken highly visible campaigns against corruption. During these campaigns, teams of officers from the CCP’s Discipline Inspection Commission sweep the offices of municipal or provincial governments and party units. These efforts have succeeded in preventing corruption from overwhelming the political system and undermining the economy. But the misuse and plunder of state resources nevertheless remains pervasive.

If Xi were serious about rooting out corruption more thoroughly, deep institutional reforms would be required. In countries where corruption has been successfully addressed, these have included strengthened rule of law, greater judicial independence, democratic accountability, institutional transparency and greater space for media and civil society watchdogs.

In China, scholar Pei emphasizes the need for clearer property rights that prevent officials from exploiting public assets for private gain. Such measures would both limit the opportunities for graft and more easily expose that which does take place.

Yet Xi has shown little interest in these kinds of reforms, which would threaten the leading role of the Communist Party. Indeed, his attacks on rights lawyersindependent media and non-governmental organizations– precisely the groups that in other societies hold public officials to account – have pushed in the opposite directions.

Too many pigs at the trough

So if Xi has ruled out the most effective anti-corruption tools, why is he going after corrupt officials at all?

In The Dictator’s Handbook, political scientists Bueno de Mesquita and Alastair Smith theorize that authoritarian leaders cannot rule without the support of other powerful players, such as military generals, business leaders and key intellectuals. Their demands must be met. Such leaders survive, therefore, by channeling rewards to those supporters most essential to the leader’s maintenance of power. Over time, however, the number of individuals attached to the ruling coalition tends to grow, as does the price that each member demands for support. We might call this the “too many pigs at the trough” problem.

This may be sustainable if the economy is rapidly growing, but becomes more problematic once growth slows, as indeed it has in China in recent years. Because the monetary gains extracted by corrupt officials serve as dead weight from an economic perspective, corruption itself can become a source of worsening economic performance. The costs of paying off a bloated coalition of greedy supporters are considerable: a reduced take for the dictator himself, lagging revenue growth and declining popular legitimacy, the latter necessitating increasingly costly repression.

All of this explains why newly installed leaders move quickly to cull the number of pigs at the trough, as Xi has done since taking power in 2012. By retargeting private rewards only to those whose support is truly essential and reducing the size of payoffs to the minimum necessary to avert defection, the leader thereby shores up his power position with a smaller and more manageable ruling coalition.

Of course, culling the herd means more than simply cutting rewards to non-essential coalition members. They must be jailed or otherwise rendered incapable of retaliating. Factions organized around political rivals must be disrupted.

Such is the case with Xi’s recent uses of the anti-corruption campaign to undermine the Communist Youth League associated with Xi’s predecessor, former Chinese President Hu Jintao. Ruthlessness toward those unlucky enough to be targeted also sends a warning to the remaining coalition members.

Xi’s anti-corruption campaign is reshaping the magnitude and composition of the ruling coalition and the size of the payoffs to remaining members, thereby strengthening his own hold on power. But as long as China’s political order remains dominated by a single party, a system for funneling private rewards to members of the ruling coalition will remain essential to its functioning. Xi’s image as China’s “Mr. Clean” is more mirage than reality.


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How China’s skewed sex ratio is making President Xi’s job a whole lot harder

As odd as it sounds, China’s economic policy is being held hostage by its heavily skewed sex ratio.

China’s excess of young, unmarriageable males poses an acute dilemma for President Xi Jinping and other leaders as they set the country’s path for the next five years during the 19th Chinese Communist Party Congress, which opened on Oct. 18.

After years of heavy spending and investment to boost growth and employment, China is at risk of economic stagnation if it doesn’t restructure the economy. Yet there is peril that doing so will lead to dangerous levels of unrest among the millions of unmarried men — known as “bare branches” — who will be laid off from shuttered unneeded steel, coal and auto factories.

So far Xi has tempered reform and kept the money taps open in order to avoid political instability. As the costs of domestic economic imbalances rise and international pressures to cut excess industrial capacity grow, Xi will have to decide what to do about the bare branches strewn in his way. And that won’t be an easy task.

China’s spending spree

This dilemma has been building for almost a decade, since Chinese leaders responded to the 2008 global financial crisis by channeling massive investments into infrastructure and heavy industry to sustain economic growth and prevent political unrest.

The proportion of China’s economy devoted to investment shot up from roughly a third to close to half — a level unprecedented among modern economies (that compares with only a 20 percent investment rate for the U.S. economy in 2015). Since 2008, for example, China’s crude steel production capacity has more than doubled, reaching close to half of the world total.

This investment has proven remarkably successful, at least in the short term, helping China avoid the economic downturn experienced by Western countries. China’s investment binge also created the world’s largest bullet train network and made it a global leader in solar panel production.

This same binge, however, has also left China with a morning-after hangover that threatens to become a “national financial and economic crisis” unless it implements reforms, according to a group of Oxford-based economists. The report suggests that China focus on fewer but higher-quality infrastructure projects while accelerating a shift in demand from investment to consumption.

Yet China continues to rely heavily upon infrastructure investment to drive growth. Besides steel, the economy also remains plagued by industrial overcapacity in autos, cement, glass, solar cells, aluminum and coal. Recent efforts to close old and inefficient factories have had little effect so far.

This has international consequences as well because all that excess steel, glass and aluminum must go somewhere and often ends up in other countries, hurting domestic markets. Steel exports to the U.S., for example, surged 22 percent from August 2016 to July 2017, prompting retaliatory threats from President Donald Trump.

So why did Chinese policymakers extend the investment spree do long? Why have they been reluctant to close down factories producing excess steel, solar cells or glass or stop funding the development of uninhabited “ghost cities”?

While there are many factors at play, one deserves more attention than it has received: China’s leaders fear the consequences of high unemployment among “bare branches,” a term used in China for young, low-status men who, because they are typically unmarriageable, represent endpoints on the family tree.

Growth of the ‘bare branches’

Bare branches are a result of one of the most skewed sex ratios in the world.

China has 106.3 males for every 100 females, compared with a global ratio of 101.8 to 100. In coming years, the workforce imbalance will only worsen because there are 117 boys under age 15 for every 100 girls. This is a result of extreme gender discrimination favoring males, a tendency exacerbated by China’s one-child policy, which was in force from 1979 to 2015. Typically, unwanted female fetuses, identified through ultrasound, are aborted.

This has resulted in a surplus of young bare-branch males. Bare branches are typically low status, since better-educated and higher-income males have better odds of attracting marriage partners. Lacking either skills or the strong community ties brought on by family life, these young, unmarried men make up a large proportion of the internal migrant population that relocates from rural areas to cities in search of work.

Researchers Valerie Hudson and Andrea den Boer have established that societies with large and growing numbers of bare branches are at risk of rising crime and civil unrest. This is especially true if inadequate employment opportunities are available for unmarried young men. The skewed sex ratio is accompanied by other worrisome trends, including high income inequality and the rising number of elderly that must be supported by each working-age person. The combination may portend trouble ahead for China.

A growing risk of unrest

It’s this fear of rising unemployment and unrest that has caused China’s hesitation to carry out economic reform.

Some economists believe that China’s official unemployment rate of 4 percent understates the reality, which may be more than double that. The rate of unemployment is politically sensitive since unemployed workers are more likely to engage in civil unrest and other anti-regime activities.

And males are overrepresented in the industries that would be hardest hit by reform like construction and heavy industry. On the other hand, females make up a disproportionate share of workers in the service sector, which must expand in order to sustain economic growth as spending on infrastructure and industry slows.

China’s growth model has actually exacerbated the unemployment problem because infrastructure, construction and heavy industry are relatively capital-intensive, meaning that a given level of investment produces fewer jobs than would be the case were the same investment devoted to service sectors (which are relatively labor-intensive). In other words, a greater emphasis on services would soak up more labor overall and reduce dangerous levels of unemployment.

If China shifts to sector-led growth, the risk of unrest will grow as women find more jobs at the expense of men, especially those bare branches. So even if China manages a “soft landing” that increases employment overall, civil and political unrest could rise as well if the proportion of bare branch males among those who remain unemployed also climbs.

This helps explain why Chinese authorities have directed massive amounts of investment into those male-dominated sectors following the global financial crisis. And why, in recent years, they have been slow to implement economic reforms that they themselves acknowledge are needed for the overall health of the Chinese economy.

From the perspective of Beijing, better some inefficient investments than the political risks of tossing millions of unemployed young males into the streets of urban China.

No good options

In his opening address to the 19th Party Congress, Xi made the usual promises about deepening market reforms, reducing industrial overcapacity and shifting the economy from investment-led to consumption-led growth. Given that these promises are not new, there is room for skepticism about implementation.

But even if reform is successful, it will mean large numbers of unemployed bare branches. That is why economic restructuring must be accompanied by generous unemployment benefits, job retraining programs and support for workers who need to relocate in order to find jobs. The gender composition of the service sector must also change in order to absorb unemployed males.

In short, Xi could forestall reform, thus keeping the bare branches busily employed at the risk of an economic crisis and punitive tarriffs from trading partners like the U.S. Or he could cut investment and close thousands of factories, creating a significant risk of domestic unrest and potentially necessitating some combination of a strengthened social safety net and political repression to contain it.

Whichever path Xi picks, bare branches will be part of the journey.

Originally published at theconversation.com on October 19, 2017.

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China’s Role in Resolving the North Korea Crisis

President Donald Trump sees China as the key to resolving the stand-off with North Korea. He is right, but for the wrong reasons.

China is in a position to offer both sides what they most want – North Korea with strategic reassurance against external attack and the U.S. and its allies with a guarantee of North Korean denuclearization. This scenario would, however, require both China and America to play unfamiliar roles – China as the lead and the U.S. as a supporting actor.

Trump demands that China simply coerce its troublesome ally into giving up the estimated 50-60 nuclear weapons that it possesses along with the means to produce more.

Yet the reality is that China will not squeeze North Korea so hard as to risk regime collapse, which would bring enormous refugee flows into China and possibly the reunification of an American-allied Korea. Neither outcome is acceptable to Beijing.

The Chinese publication Global Times recently hinted at a deeper Chinese role: “China should also make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral. If the US and South Korea carry out strikes and try to overthrow the North Korean regime …, China will prevent them from doing so.“

While the statement warns of Chinese neutrality should North Korea strike first, it also offers North Korea a carrot. As relations have worsened between China and North Korea, their 1961 mutual defense treaty has become a dead letter. Although not authoritative, the Global Times editorial may signal that China once again seeks to reassure North Korea that China is committed to North Korea’s defense against external attack.

Why is this important? Since the end of the Korean War, North Korean leaders have lived in mortal fear that enemies – South Korea, the United States and Japan – would seek to overthrow the regime. This fear became more acute after the demise of the Soviet Union, which had offered North Korea arms and protection.

America’s vast military power along with a record of promoting regime change abroad has sharpened North Korea’s insecurities. In January 2002, George W. Bush labeled North Korea, along with Iraq and Iran, as part of an “Axis of Evil.” Months later the U.S. overthrew Saddam Hussein’s regime in Iraq.

Particularly instructive for North Korea was U.S. participation in the overthrow of Libyan dictator Muammar Gaddafi in 2011. Gaddafi had, in 2003, sought to win favor with the West by voluntarily giving up Libya’s fledging nuclear weapons program. Instead of bringing security, this step left him more vulnerable.

These stark realities have motivated North Korea’s persistent pursuit of nuclear weapons and the means to deliver them, with brief periods of respite in response to international pressure.

On occasion, the U.S. has recognized that North Korea’s main motivation for possessing nuclear weapons is to deter U.S. efforts to bring down the regime. On August 1, Secretary of State Rex Tillerson stated: “We do not seek a regime change. We do not seek the collapse of the regime. We do not seek an accelerated reunification of the peninsula. We do not seek an excuse to send our military north of the 38th parallel. And we’re trying to convey that to the North Koreans. We are not your enemy.”

But the impact of such reassurances are undercut by contrary statements, such as CIA Director Mike Pompeo’s recent declaration: “As for the regime, I am hopeful we will find a way to separate that regime from this system (i.e., the nuclear weapons program). The North Korean people I’m sure … would love to see him go.” It would be difficult to craft a statement more likely to convince North Korean leaders that a nuclear deterrent is essential to their survival.

This confusion is partly a product of the circumstances that currently hobble American diplomacy: an erratic president, a weak Secretary of State and vacancies in the key positions of Ambassador to South Korea and Assistant Secretary of State for East Asia. Although a diplomatic neophyte, U.S. Ambassador to China and former Iowa Governor Terry Branstad’s close ties with Chinese President Xi Jinping could help in cutting through the tangled messaging.

More fundamentally, however, the U.S. has a credible commitment problem: Even if we promise not to attempt to overthrow the North Korean regime, there is little chance that Kim Jong-un, will consider such a commitment sufficiently believable to bring about denuclearization.

This is where China comes in. With a credible security umbrella extended by China, there is at least a chance that North Korea might be willing to relinquish its nuclear capability, especially if combined with other steps, such as a lifting of sanctions, a peace treaty to mark the formal end of the Korean War and a lowering of the U.S. military profile in South Korea.

This is a long shot. North Korea and China would have to overcome a recent history of mutual distrust. China’s security guarantee would have to take concrete form, rather than mere words. Naval War College Professor Lyle Goldstein has proposed that China station troops on North Korean soil so as to create a tripwire similar to the role that U.S. troops play in South Korea. North Korea could feel confident that the U.S. and South Korea would refrain from attack if doing so meant an expanded war with China.

China would, in addition, oversee the dismantlement of North Korea’s nuclear weapons program and serve as guarantor against its resurrection.

China will be reluctant to lash its security to an unpredictable North Korean regime. But if the alternatives are either war or regime collapse across its border, then Beijing may be willing to take risks to avoid such outcomes. Kim Jong-un will certainly bridle at the loss of independence that Chinese oversight would bring and he would have to give up the dream of reunifying Korea under his family’s control. But if Kim wants a deal that guarantees his regime’s survival and a path out of international isolation, then China must play a bigger role.

Such a solution would thrust China into a leadership position in Northeast Asia, diluting, in some degree, American influence. Perhaps neither Chinese nor American leaders are ready for such a transition. Yet it may offer the best chance for peace.

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Making America Irrelevant

Mark 2017 as the year when the American Century ended and the Chinese Century began. On the U.S. side, President Donald Trump has abandoned American leadership on trade (ditching the Trans-Pacific Partnership), security (refusing to affirm the U.S. commitment to Article 5 of the NATO charter that pledges member states to the common defense) and the environment (withdrawing from the Paris Accord on climate change).

In a barely veiled reference to Trump’s makeover of U.S. foreign policy, German Chancellor Angela Merkel declared on behalf of Germany and Europe as a whole: “The times in which we could completely depend on others are, to a certain extent, over.”

Meanwhile, China recently held an international forum in Beijing to rally support for its Belt and Road Initiative. Under this plan, China will provide financing and expertise to build infrastructure designed to facilitate trade and investment among countries stretching from Southeast Asia to Europe. Some of the financing will be provided through the China-led Asian Infrastructure Investment Bank, which expects to reach eighty-five member countries by the end of the year. Among the new members will be Japan, which recently declared an intention to join after initially rejecting membership under American pressure. The Belt and Road Initiative reflects the confidence and ambition of a rising power, in a manner similar to the U.S.-sponsored Marshall Plan, which helped rebuild Western Europe after World War II.

In pointed contrast with the protectionist winds blowing from Washington, D.C., Chinese President Xi Jinping gave a widely noted speech at the World Economic Forum defending economic globalization. China is also, in the wake of U.S. withdrawal from the Trans-Pacific Partnership, pushing to complete negotiations on the Regional Comprehensive Economic Partnership, a trade accord that will bring many of the same countries into greater dependence upon China.

As the U.S. abdicates its responsibilities on climate change, Chinese Prime Minister Li Keqiang reaffirmed China’s commitment to the Paris Accord while standing alongside Merkel in Berlin. Although China remains the world’s largest emitter of carbon dioxide, it has also led the way in producing affordable solar and wind technologies for the global market and has plans to fully electrify China’s vehicle fleet by 2030. By contrast, the Trump Administration has acted speedily to remove regulations that discourage coal-fired power plants, open more public lands to fossil fuel drilling and ease gas-mileage standards for America’s passenger vehicle fleet.

Trump’s proposed budget for the coming fiscal year would dramatically cut U.S. contributions to the United Nations. This follows China’s 2015 pledge of $1 billion to a new United Nations “peace and development fund.” China also designated 8,000 troops as a permanent reserve available for U.N. peacekeeping missions and offered $100,000 in support for the African Union to create an emergency peacekeeping force.

In short, as America abandons international institutions and pulls back on the provision of global public goods, China is moving in the opposite direction.

U.S. decline has been accelerated by a series of self-inflicted wounds over the past fifteen years. The unnecessary, costly and failed wars in Afghanistan and Iraq diverted resources that could have been spent rebuilding our crumbling infrastructure or improving a mediocre education system. The 2008 economic crisis was a consequence of unwise decisions to weaken regulation of financial institutions. The most recent misfire was the election of a president whose lack of experience, poor judgment and ignorance of government or policy are unprecedented. China, on the other hand, has spent this period stoking rapid economic growth, building some of the most impressive infrastructure in the world and strengthening its military.

It remains to be seen how the Chinese Century will unfold. As a prime beneficiary of the current liberal international order, China will likely seek to preserve a stable, peaceful and economically integrated global system. Compared with the U.S., China will be a more restrained superpower when it comes to military intervention outside of its immediate neighborhood, although China will seek to carve out a regional sphere of influence surrounding its own borders.

China departs from the liberal order in its rejection of any unifying set of norms or principles. The foundational documents and institutions of the U.S.-led order embraced the values of freedom, democracy and human rights. To be sure, the U.S. has partnered with many regimes that regularly violate those values and America’s own record leaves it open to charges of hypocrisy. Nevertheless, America’s inconsistent but nevertheless significant support for liberal values has inspired many people around the world and served as a source of soft power for American leaders.

President Trump has made clear that the days when liberal values played a role in steering American foreign policy are gone. Instead, foreign policy will be seen in transactional terms – what’s in it for us? In this respect, the United States has adopted China’s view of the world in which no values are universal and states should avoid interfering in one another’s internal affairs, even when human rights and fundamental freedoms are at stake.

In abandoning the notion that the existing liberal order is about something more than the sum of individual national interests, Trump is paving the way for the Chinese Century, which will privilege order and economic interest over some higher purpose. In this new world, it is not only American power that becomes less relevant, but also the American idea.

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The Direction of American Diplomacy: Is the Trump Train Headed Off the Rails?

Imagine your reaction upon finding yourself in the backseat of a taxi driven by Travis Bickle. This is how many Americans feel as they consider the next four years under the leadership of President Donald Trump. While some scholars of foreign affairs share this sense of dread, they also, as social scientists, recognize that Trump’s presidency provides an ideal case for testing the proposition that presidents are less taxi drivers (crazed or otherwise) than train conductors who have little choice but to follow wherever the tracks lead. If such a hypothesis bears out, then perhaps we will all arrive at our destination in one piece.

Contrary to popular belief, American presidents have limited ability to shape United States foreign policy according to their own ideas, interests and preferences. Although presidents may appear to be all-powerful, presidential choice is constrained by broader international and domestic factors, including the institutional checks and balances built into America’s constitutional structure. Even a president such as Donald Trump, who delights in his outsider status and promised to disrupt traditional thinking, must eventually conform to conventional practices and ideas in large degree. As a result, continuity across presidencies typically outweighs change.

Many presidents have entered office with strong foreign policy preferences – sometimes ones at odds with conventional wisdom – only to reverse course under the pressures of international or domestic constraints. In October, 1964, President Lyndon Johnson pledged that “we are not about to send American boys 9 or 10,000 miles away from home to do what Asian boys ought to be doing for themselves.” Only months later, of course, American combat troops were wading ashore at Danang, Vietnam, as Johnson responded to Cold War logic and the fear of appearing weak at home and abroad. As he watched the Vietnam War destroy the prospects for his beloved Great Society programs, Johnson lamented the limits on presidential power: “I feel like a hitchhiker on a Texas highway in the middle of a hailstorm; I can’t run, I can’t hide, and I can’t make it go away.”

Similarly, Jimmy Carter came to office determined to escape the “inordinate fear of communism” that had distorted America’s foreign policy priorities only to embrace classic Cold War policies in the wake of the Soviet invasion of Afghanistan. Ronald Reagan, on the other hand, won the presidency on the back of his criticisms of détente and arms control only to later negotiate away America’s intermediate nuclear forces in a deal with the Soviet Union. George W. Bush ran as a harsh critic of “nation-building” abroad only to later enmesh the United States in two of the longest and most difficult national-building exercises in our country’s history.

Examples such as these suggest that a combination of international and domestic constraints combined with unanticipated events drive presidential foreign policy choices in ways that belie notions of unfettered executive power. Presidents who combine lack of experience with unorthodox ideas about diplomacy are especially likely to suffer from rude awakenings that force them to reconsider their initial inclinations.

Donald Trump’s presidency offers an interesting test of this proposition. With respect to foreign policy, Trump is the least experienced president of modern times. Prior to his recent presidential campaign, he had never campaigned for office, never served in government and had limited international experience. He spent his career as a real estate developer, casino operator and entertainer.

Trump does have a worldview – indeed one that he has consistently articulated over several decades – but it lies far outside the mainstream. Trump scolds allies and embraces rivals (Russia). He praises dictators while showing little interest in the spread of democracy. He spurns freer trade and sets religious tests for immigration. Trump denounces recent wars while promising a major military buildup and rattling sabers over disputes with North Korea and Iran.

Trump see the US as a victim in a hostile world –

  • rich and ungrateful allies free-ride on US protection
  • terrorists exploit America’s openness and tolerance to threaten our safety
  • trade partners build up surpluses with the US through cheating and unfair trade practices
  • immigrants enter US illegally and take jobs from Americans
  • America spends vast sums in futile efforts to spread democracy and rebuild failed states abroad while its own infrastructure crumbles and our efforts produce hatred rather than gratitude

These views – encapsulated by the slogan ‘America First” – represent a politics of grievance that perfectly suited the rural and white working class voters who made up the base of Trump’s support. They are shared by a small group of outsiders Trump brought to the White House, including Steve Bannon, Stephen Miller and, initially, Michael Flynn.

Can Trump carry through with such an idiosyncratic set of foreign policy views and preferences? On issues that Trump has long cared deeply about or which are central to his political appeal, the new administration has already broken new ground. Examples include the rejection of the Trans-Pacific Partnership trade pact, Trump’s controversial efforts to stem the flow of refugees and visitors from certain Muslim-dominant countries, his tough approach to undocumented immigrants and the U.S. withdrawal from the Paris Accord on climate change.

In many areas, however, Trump’s foreign and defense policies are unlikely to veer as far off-course as his rhetoric might suggest. In fact, Trump has already begun to backtrack from some of the more unorthodox and extreme foreign policy positions taken during the campaign and transition period. Contrary to earlier statements, the U.S. will honor alliance commitments, maintain sanctions on Russia, discourage Israel from building further settlements, continue arms sales to Saudi Arabia, renegotiate rather than exit NAFTA and stick to America’s one China policy. Additional adjustments seem likely.

Why do new presidents – Trump included – find it difficult to carry out or sustain major changes in U.S. foreign policy? The easy answer is that perhaps candidates for the presidency are not sincere about the policy promises they make to voters. Once in office, they quickly abandon vote-getting, but unwise or unrealistic policy positions. While this explanation may suffice in some cases, it cannot explain why presidents often depart from foreign policy ideas that are long- and deeply-held.

A more important factor is that presidents face constraints, both domestic and international, that limit their freedom of action once in office. This is the case even though presidents hold greater authority in matters of foreign affairs than the Congress and the judiciary.

Trump can’t manage U.S. relations with the world without a team of experienced advisers and a permanent bureaucracy to implement his policies. Hundreds of influential positions in the Departments of State and Defense, the National Security Council, the intelligence agencies and other arms of the foreign affairs bureaucracy must be filled. The pool of talent available to staff these positions is limited. Moreover, the number of individuals who share Trump’s own quirky worldview comes down to a handful. While White House Chief Strategist Steve Bannon might encourage Trump’s extremist “America First” inclinations, he will receive more measured advise – and pushback – from the likes of James Mattis (Secretary of Defense), Rex Tillerson (Secretary of State) and Mike Pompeo (Director of Central Intelligence Agency). Trumps’ first choice of National Security Advisor, Michael Flynn, reflected the president’s own eccentric views – and promptly flamed out. Trump turned to a more mainstream choice, General H.R. McMaster, to replace Flynn.

While Trump does enjoy the advantage of united government (Republican control both houses of the Congress), there still remain significant checks and balances. The courts have already stymied his temporary ban on refugees and visitors from seven countries and will likely support legal constraints on the president’s abilities to revive torture as an interrogation tool, reopen black site prisons or expand domestic surveillance (all promises made during the campaign). The FBI and the Congress continue investigations into alleged Russian interference in the recent U.S. presidential election, despite Trump’s objections. Top Congressional Republicans, including Senators John McCain (R-Arizona) and Lindsey Graham (R-South Carolina), have made clear that they will challenge efforts to weaken U.S. alliances in Europe and Asia or to lift U.S. sanctions against Russia. The Congress has refused to provide funding for a wall along the Mexican border and has pushed back against Trump’s proposals for deep cuts to the non-defense foreign affairs bureaucracy.

Resistance to unorthodox policies also arises within the permanent bureaucracy. Trump’s criticisms of the intelligence agencies have been met with damaging leaks of information harmful to the president or his top aides. The CIA even denied top security clearance to a high-level member of the National Security Council. In response to Trump’s executive order placing a temporary ban on refugees or citizens from seven Muslim countries entering the United States, 1,000 State Department employees registered their objections through the department’s dissent channel. There have also been reports of bureaucrats slow-walking implementation of certain policies.

Trump also faces the reality that the United States is not the superpower of his imagination. Other states have the power and resources to resist American bullying and to push back. If the United States unilaterally raises tariffs on imported goods from China or Mexico, retaliation against American exports to those countries will be swift. The White House is already besieged by lobbyists representing Midwest farmers, high-tech firms and big-box retailers, who would be hurt in any trade war. Trump’s efforts to force allies to raise defense budgets against domestic opposition will meet with the same dismal results as experienced by past presidents. The days when Washington could dictate to the rest of the world – especially in such a belligerent manner – are long gone.

Despite all of this, Trump foreign policy will not be wholly normal. Trump’s management of the White House has been chaotic. He lacks the discipline to learn about issues in depth or to avoid pursuing trivial quarrels. Trump spends much of each day watching right wing cable news shows and seldom reads the memos that his aides prepare for him. Staff have taken to making sure that his own name appears in each paragraph in order to capture his attention.

Trump does not respect the statutory autonomy of certain agencies nor the powers of other branches of government. He has left hundreds of top-level positions unfilled in the State Department and other international agencies. Policy decisions are made abruptly with little input from available experts or procedural deliberation – such as the missile strike against a Syrian air base, which was decided over dinner with President Xi Jinping at Mar-a-Lago. Although Trump and his team will likely learn and adapt over time, foreign policy-making under this president will suffer from an unusually high level of incompetence and mistakes.

Trump has also dug himself into a deep hole by failing to offer transparent explanations for questions related to Russia’s interference in the presidential campaign. Rather than cooperating with the various investigations that are underway, Trump has attempted obstruct them. His campaigns against the media and the intelligence community have awakened dangerous enemies who are now out to bring him down. Trump has no true allies among congressional republicans. Although most Congressional Republicans have avoided direct criticism of Trump, they own him nothing and once they conclude that he is an obstacle to passing their legislative agenda and a threat to their reelection, then support will evaporate overnight. If evidence of real collusion with Russia surfaces, then Trump will not complete his term. Even without evidence sufficient for impeachment, he is already badly weakened and is unlikely to fully recover.

Presidents who are weak at home often look abroad for victories. These may take the form of diplomatic breakthroughs on difficult problems or military action that addresses a threat. The one decision that brought Trump bipartisan praise was his attack on Syria in response to Syria’s use of chemical weapons. When the question of whether to use force arises in the future, Trump is unlikely to forget that his previous use of force proved politically popular.

Trump will not carry through on many of the radical shifts in American foreign policy that he promised during the presidential campaign. Donald Trump’s presidency will certainly bring much bluster, confusion and unpredictable swings in policy. On the whole, however, the combination of domestic checks and balances and international constraints are likely to force the Trump train back onto the well worn tracks of American diplomacy, despite the inexperience and unsteadiness of the conductor.

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Ditching TPP

President Trump wasted no time in ditching the Trans-Pacific Partnership trade deal. Trump’s move brought rare praise from Bernie Sanders and labor leaders. Anger about the impact of trade deals on workers in rust belt states likely played a role in Trump’s electoral college victory.

The TPP was no doubt flawed. It should have been more inclusive (including China and India), less intrusive (focusing on lower trade barriers rather than forcing states to harmonize regulatory standards on matters such as intellectual property), more transparent (less secrecy and more public input during negotiations) and less tilted in favor of corporate interests (the infamous investor-state dispute mechanism that bypassed national courts). Still, the TPP agreement would have brought modest gains from trade for participating countries and did include labor and environmental provisions that improved upon past trade deals.

By acting unilaterally without consulting other parties to the negotiations, Trump has undercut America’s standing as a good-faith negotiating partner. Moreover, without any attempt to renegotiate the agreement or to envision alternatives, many of the countries that signed the TPP will instead gravitate to the Chinese-led Regional Comprehensive Economic Partnership, which offers a no-frills trade deal that excludes requirements for improving labor or environmental standards.

The TPP stood at the center of the Obama Administration’s Asian pivot as an answer to China’s rise and more assertive behavior in the region. Without the trade deal, America’s rebalancing efforts will rely more heavily upon military means – assuming, of course, that the US continues to seek a major role in Asia under President Trump. Missing an economic leg, America’s leadership in Asia will be imbalanced and its tools for managing China less effective. Beijing has already begun to position itself as a champion of globalization and a rallying point for those states that fear a protectionist tide (but see Elizabeth Economy’s counterpoint).

The Obama Administration was perhaps mistaken in their approach to a trade deal that would further economic integration across the Pacific Rim. A different type of agreement would have been less divisive within Asia and at home. But to negotiate and subsequently abandon the TPP agreement was certainly the worst outcome. The deal itself antagonized China and may have swung the presidential election to Trump while its’ final rejection has now undermined American leadership throughout Asia and beyond.

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Branstad to China: Iowa Nice Only Goes So Far

You’re hired! Even as he celebrates his selection for the world’s most important diplomatic apprenticeship, Terry Branstad should also steel himself for plenty of headaches ahead. Iowa’s long-serving Governor earned selection as U.S. Ambassador to China by virtue of his long-standing personal ties to Chinese President Xi Jinping, which stretch back three decades. But how far does friendship go in managing relations between the world’s two most powerful countries? Branstad will soon find out in his new role.

Whatever warm feelings Xi Jinping may hold toward Terry Branstad are secondary to his assessment of Branstad’s soon-to-be boss. During the presidential election campaign, many Chinese commentators expressed a preference for Donald Trump. Partly, this stemmed from perceptions of Hillary Clinton as a hawk who, as Secretary of State, championed the Obama Administration’s Asian Pivot strategy and aligned the U.S. against China on the South China Sea issue. Trump’s harsh rhetoric toward China, on the other hand, was dismissed as campaign bombast.

Chinese leaders also welcomed Trump’s rejection of the Trans-Pacific Partnership (TPP). Instead of Asian economies oriented toward an American-centered trade order that excludes China, those same countries will now sign on to the China-centered Regional Comprehensive Economic Partnership agreement, which excludes the United States. If Trump holds to his pledge to do away with TPP, Beijing will consider this a welcome gift from the new administration.

Weary of American leaders who insist that China abide by Western principles of democracy, human rights and international law to which Chinese leaders do not subscribe, Chinese leaders see Trump, by contrast, as a tough but pragmatic deal-maker who will avoid challenging the legitimacy of China’s one party political system.

Trump’s recent phone conversation with Taiwan’s President Tsai Ing-wen – a breach of understandings that have prevailed since diplomatic relations were restored between the U.S. and China in 1979 – has upset this hopeful attitude to a degree. Yet Beijing responded with restraint, blaming Taiwan for taking advantage of Trump’s supposed naiveté about the sensitivities surrounding the U.S., China and cross-strait relations.

The Chinese leadership will view Branstad’s appointment as reassuring. Given Branstad’s early support for Trump and his son’s involvement with the Trump campaign, Beijing likely assumes that Branstad will have access to the Trump White House. The choice of a political appointee who enjoys such close ties with Chinese leaders will be interpreted as an indication that Trump seeks to cultivate a direct and personal relationship with Xi, mediated by someone trusted on both sides.

Branstad’s long advocacy for strong U.S.-China economic ties will give Beijing hope that Trump will renege on his campaign promises to declare China a currency manipulator and to slap high tariffs on imports from China.

Yet Branstad will also face some difficult headwinds. Although Ambassadors do not, by and large, make policy, they do help implement policy on the ground and serve as sometimes-crucial intermediaries. While Branstad knows a great deal about agricultural trade with China, he has no experience with the broad range of issues that make up the most complex great power relationship in the world.

Trump, himself a novice at international affairs, has so far shown little interest in tapping the deep well of expertise that presidents have at their disposal through the State Department, the intelligence agencies and other bureaucratic arms of the U.S. government.

Operating without knowledge of history, precedent or prior commitments, is a recipe for confusion, error and misunderstanding. Much will depend upon whether Trump’s choice for Secretary of State is someone who will respect the value of formal policy-making channels and seek the guidance of professional diplomats.

Trump’s unusual and erratic communication style also presents a challenge. If diplomacy by tweet continues once Trump enters the White House, then Branstad will have his hands full putting out fires caused by his own boss.

The policy questions that confront the leaderships of both sides are certainly difficult enough. The U.S. interest in freedom of navigation bumps up against China’s desire to control nearby seas and the rich resources they contain. America’s need to deter North Korea’s nuclear threat potentially conflicts with China’s fear that the collapse of China’s exasperating ally could lead to chaos and uncontrollable refugee flows along its border. Trump’s skepticism about climate change threatens to undo the joint initiatives that the U.S. and China have launched to tackle that problem. The list of complex issues is daunting: cyber security, intellectual property rights, military transparency, imbalances in trade and many others.

Having spent his entire career in Iowa, Terry Branstad faces a steep learning curve in preparing for a high profile diplomatic posting in the capitol city of an emerging superpower while reporting to a new and inexperienced president. With personal friendships as his calling card, the Governor will soon find out how well “Iowa nice” travels under such circumstances.

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Explaining Trump’s Victory: It’s All About Trade, Stupid

David Skidmore, Professor of Political Science, Drake University

Michael Moore called it: this election was a referendum on neo-liberal trade policies, which were rejected by working class voters in the industrial Midwest. In his pre-election film “Michael Moore in Trumpland,” set in Wilmington, Ohio, Moore adopts the voice and perspective of a typical white male worker to explain their anger and why Trump’s message hit home with this group. Although he later castigates Donald Trump as a charlatan who offers no answers to the problems of the white working class while praising Hillary Clinton, Moore’s extended recitation of white working class grievances was so convincingly rendered that some interpreted it (erroneously) as an endorsement of Trump.

In an election decided by razor-thin margins in a handful of swing states, any number of factors could be cited as crucial to the outcome. Yet as Moore anticipated, international trade policy must certainly rank at or near the top of the list. While some manufacturing jobs have returned to the U.S. in recent years, overall manufacturing job losses since 2000 have totaled around 5 million. The outsourcing of jobs to China since that country gained World Trade Organization membership in 2001 accounts for roughly half of this total. On top of the effects of international outsourcing and import competition, productivity gains since the mid-seventies have benefited capital and top executives rather than workers. As a result of these painful economic realities, white males with only a high school diploma have experienced a 20% drop in real income on average over the past quarter century.


The institutions that white male workers in the past relied upon to serve their interests have shrunken or turned their attention elsewhere. Private sector unions are a shadow of their former selves. The Democratic Party, traditionally allied with blue collar workers, has become dominated by higher income, white collar professionals and corporate interests tied to Wall St. and high tech sectors.

The sense of abandonment by the Democratic Party grew in the nineties during Bill Clinton’s presidency. Having run for office in 1992 as a critic of NAFTA, Clinton turned around and pushed that agreement through Congress after attaching some weak side agreements as a sop to labor. He then negotiated, signed and guided the World Trade Organization treaty through Congress. The next Democratic President behaved in a similar manner, as Barack Obama concluded negotiations on the TransPacific Partnership (TPP) agreement – one chockfull of goodies for corporate interests – and sought a similar deal with the European Union.

These deals – past and future – were especially threatening to blue collar workers of the industrial Midwest who had built middle class lifestyles around well paying factory jobs. Still, the Democratic Party could take the electoral support of these workers for granted as long as the Republican Party remained even more enamored of free trade agreements.

Donald Trump, however, turned Republican orthodoxy on its ears by calling for the rejection of TPP, threatening to raise tariffs on Chinese goods and denouncing corporate outsourcing. Trump’s rejection of the neo-liberal, free trade dogma of corporate elites and their Washington friends won him decisive support among the white working class voters of the Midwest.

Meanwhile, Hillary Clinton’s own criticisms of TPP proved unconvincing. As mentioned, her own husband had, as president, shifted to support NAFTA after running against it and Clinton herself praised TPP as it was being negotiated during her stint as Secretary of State. In any case, no Democratic presidential candidate could credibly present themselves as a critic of liberal trade deals while a Democratic president continued to seek Congressional passage of the same.

The evidence for this interpretation of Trump’s victory is strong. Exit polls revealed that whites without a college degree swung strongly in the Republican direction in the 2016 presidential vote as compared with the three previous elections. The same was true of all voters with incomes below $30,000 (though the swing was still not enough to give Trump a majority among the latter group). Trump won around half the votes of union households, a much better showing than previous Republican presidential candidates.

In 2016 as compared with the 2012 election, five states flipped from the Democratic column to the Republican column. Four of those states – Pennsylvania, Ohio, Wisconsin and Iowa – belong to the industrial Midwest (the remaining state to flip was Florida). As of this writing, Michigan appears likely to join the same list, though absentee ballots could change that result. Majorities in Pennsylvania, Wisconsin and Michigan voted for Democratic presidential candidates in each of the five elections from 1996 through 2012. Iowa voted blue in four of these five elections while Ohio sided with Democratic candidates in three of these five elections.

What changed in 2016? The most obvious factor was a Republican candidate running on an unabashedly protectionist platform combined with a Democratic candidate whose criticisms of free trade policies were unconvincing, to say the least.

Clinton’s troubles were foreshadowed during the primaries when Bernie Sanders, a lifetime critic of trade deals, won a majority of pledged delegates in the upper Midwest states of Michigan, Wisconsin, Minnesota, Indian, Illinois, Ohio and Pennsylvania.

Exit polls taken on November 8 confirm the centrality of trade to many voters. Those who believed that international trade created more jobs in the United States, Clinton was favored over Trump by a margin of 59% to 35%. Those who thought that trade cost jobs, on the other hand, favored Trump by 65% to 31% for Clinton.

Note that in those states that flipped, the Democratic majorities prior to 2016 were never large and Trump’s margins of victory were small. So any significant shift in the white working class male vote that can be attributed to trade policy might have made a decisive difference at the margin.

Trade, as economists love to remind us, produces net benefits to the society as a whole even as the costs are concentrated with those who lose jobs or businesses to imports. In theory, the winners from trade could compensate the losers to ensure greater fairness and to buy off potential opposition to freer trade. In practice, the winners seldom feel a need or desire to share their gains and so the losers from trade and the communities in which they live have little choice but to make do with a few miserably inadequate and ineffective job retraining programs.

Of course, trade is not responsible for the entirety of the problems facing the white working class. Inequality has grown and social mobility has declined for other reasons as well, including technological change and demographic shifts. The devastating effects of the 2008 financial crisis linger, with housing prices still depressed in many parts of the rustbelt. In the minds of working class voters, trade serves as a proxy for the myriad of social, political and economic changes that have hollowed out the middle class in much of the former industrial heartland.

Protectionism is not a real solution for the groups that swung this election to Donald Trump. Neither are policies that encourage more corporate outsourcing. More effective would be investments in human capital (skill-based education) and infrastructure that could attract investment to those regions that have borne the brunt of negative economic trends over the past quarter century.

Still, from a political standpoint, the Democratic Party can no longer afford to ignore the white working class, despite the latter’s declining demographic weight. When Obama pursued corporate-friendly trade deals abroad against the objections of the Democratic Party’s traditional labor allies, he effectively placed a heavy anchor around Hillary Clinton’s candidacy and handed Donald Trump a winning issue. As the Democrats go about recovering and rebuilding from an historic and gut-wrenching loss, a rethinking of how to deal with the distributional effects of globalization and economic change must take center stage.

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Trump and the Crisis of the Republican Party

In a previous post, I outlined the ways in which Donald Trump’s policy positions deviate from those of central Republican Party stakeholders. An important question, then, is how a figure such as Trump managed to take over a major American political party? Adding to the puzzle is that he did so while raising and spending little money, without significant organization, with no experience in public office and without a serious team of policy advisors.

One set of factors concerns the rules of the Republican nomination contest. Traditionally, candidates who do poorly in the early nominating contests lose the ability to raise the money necessary to continue. This serves to narrow the field. The Supreme Court’s Citizens United ruling, however, made it possible for less viable candidates to remain in the race by finding one or more deep-pocketed sugardaddies. In the recent nominating contest, the establishment candidates – Jeb Bush, Marco Rubio, John Kasich – had the money to stay in the race despite poor performance. This divided the moderate Republican vote, allowing Trump to squeak out victories in a number of close contests.

Also, the GOP adopted winner-take-all rules in hopes of advantaging frontrunners. A candidate who won only a plurality of the primary vote in a state – perhaps only one third in a crowded field – was awarded 100% of the convention delegates.

The establishment candidates focused their fire on one another rather than Trump, in hopes of eliminating rivals for the position of Trump’s last remaining opponent. This allowed Trump to remain relatively unscathed in the early contests while his competitors weakened one another. Yet the field failed to narrow until deep into the spring. Trump also did especially well in states with open primaries, where he racked up votes by independents. These factors allowed Trump to pile up victories and delegates despite seldom winning an outright majority of votes in any given state.

While Trump was able to take advantage of these rules of the game in unexpected ways, the problems for establishment Republicans go much deeper. Americans are increasingly choosing to live in areas where neighbors share their partisan and ideological inclinations. Moreover, Republican-dominated state legislatures have gerrymandered congressional districts to advantage Republican candidates. They have also used voter suppression laws to disenfranchise Democratic-leaning groups. There are, as a result, fewer states and congressional districts featuring competitive general election contests. In heavily Republican areas, moderate GOP incumbents face a much stronger challenge from more conservative candidates in the primary than from the Democratic candidate in the general election. A number of mainstream Republican Senators and Representatives – including House Majority Leader Eric Cantor – were swept from office in 2014 by Tea Party challengers within their own party.

While establishment Republicans retain the ability to raise money from business supporters, they have increasingly lost control of the party’s base, which has allowed insurgent forces – whether Tea Partiers or Trump’s populist-nationalist supporters – to challenge the establishment.

Three factions have jockeyed for power within the modern Republican Party in recent decades: neo-conservatives, social conservatives and business conservatives. All three have been weakened or discredited. Neo-conservatives (e.g., George W. Bush, John McCain, etc.) led the country into two costly and unwinnable wars (Afghanistan and Iraq) that have proven unpopular even among many Republicans. Social conservatives (Mike Huckabee, Ben Carson, Rick Santorum, etc.) have lost clout as increasingly fewer young American identify as fundamentalist/evangelical Christians or align with social conservatives on lifestyle issues. Meanwhile, the anti-regulatory, pro-Wall St. stance of business conservatives (Jeb Bush, Marco Rubio, John Kasich) has been discredited by the financial crisis and its lingering effects.

In short, a hollowed-out Republican Party is a shell of its former self. At the national level, the GOP has no ideological center. It has instead become a regional party focused on the South and the interior West. Demographically, the party rests upon a shrinking base of white males. It continues to enjoy built-in advantages in many states and localities due to years of gerrymandering and voter suppression laws. It also does relatively well during mid-term elections when turnout is lower. But changing demographics, ideological incoherence and successful court challenges to voter ID laws suggest that the Republican Party is no longer viable in presidential campaigns and will, over time, weaken at the congressional and state levels.

The ease with which Trump brushed aside the Republican establishment is evidence of the party’s underlying weakness. Trump’s candidacy itself has further divided and undermined the party. Some party leaders have withheld support from Trump, even exploring the possibility of cohering around an independent candidate for president or backing Libertarian candidate Gary Johnson. Others have endorsed Trump in a reluctant and pro-forma manner, while being forced to disavow his inflammatory language on a weekly and sometimes daily basis. A few – mostly marginal figures (e.g., Newt Gingrich) – have jumped on the Trump bandwagon.

To be sure, some aspects of Trump’s success arise from idiosyncratic factors, such as Trump’s celebrity, his financial independence, his skill at attracting media attention and his instinct for tapping popular sentiments – especially anti-elite and nationalist feelings – that establishment candidates have been slow to exploit.

Nevertheless, Trump’s nomination signals a grave crisis for the Republican Party. His undisciplined campaign itself and the prospect of a crushing defeat to a weak and unpopular Democratic candidate in November will only add to the GOP’s woes.

Given that the structure of the American political and electoral systems strongly favor two dominant parties, it seems likely that the Republican Party will survive in some form, but only after a period of bruising internal combat among competing factions. Trump himself is unlikely to remain a major player after November, but the populist, nationalist constituency to whom he appealed will remain available to future candidates.

As the Republican Party seeks to redefine itself through this sorting-out process, two factors are worth considering. First, Ronald Reagan, who led Republicans out of the wilderness and into the center of American politics offered a sunny, optimistic charisma. The contrast with the dark, angry emotions represented by Trump and the Tea Partiers could not be greater. There is no question that anger can be a powerful motivator. But it cannot provide the basis for a sustainable governing majority. The tone and image of the party must change if is to broaden its appeal.

Second, the Reagan coalition was built upon a coherent intellectual foundation focused upon deregulation, supply side economics, free trade and a strong military. This core program emerged from a two decade process of conceptual work among policy intellectuals who debated ideas within a constellation of think tanks, magazines and academic programs. With the Reagan consensus now shattered, a similar process of updating the intellectual foundations of the Republican brand must now take place before the party can hope to rise again.

Once a coherent and broadly appealing intellectual message is available, a charismatic and skilled presidential candidate must emerge who can articulate these ideas and provide a rallying point for the various constituencies to whom the message is directed.

This process of reconstructing the basis for a nationally competitive Republican Party is likely to unfold over several election cycles. During the interim, the Democratic Party will have the opportunity to consolidate its national-level dominance for a generation or more. Much will depend, however, upon whether the Democrats can manage their own internal rifts. Under Bill Clinton, the Democrats became a party of interest groups held together by transactional politics. The emergence of a much more ideological left-wing of the party as represented by Bernie Sanders and Elizabeth Warren serves as a challenge to the Clinton formula. If the Democrats manage to win both the House and the Senate in November, along with the presidency, then the most significant political cleavages that shape the coming four years could center around the struggle not between conservatives and liberals or Republicans and Democrats, but between ideological and transactional elements of the Democratic Party.

Political parties are constellations of interests and ideas. At some moments in history, these constellations cohere and consolidate. At others, they splinter and break apart. After a period of relative coherence beginning with the Reagan presidency, the Republican Party has entered an era of internal division and redefinition. Trump is but a symptom of the GOP’s deeper maladies.


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The American Working Class and Donald Trump

In the 1960s, American workers constituted a labor aristocracy on a global scale. The United States led all other countries in global manufacturing. Productivity levels and thus wages were higher in the US than in other leading economies. Even without a high school degree, male workers could make a middle-class income in an auto or steel plant. Income inequality was at an historic low after half a century of decline and social mobility was high. Roughly one in three workers was a union member.

How things have changed. Consider, for instance, the automobile industry. As the chart below illustrates, US auto production dwarfed that of any other country in the 1950s and 1960s. Today, however, US-based auto production remains about where it was six decades ago while production elsewhere around the globe has skyrocketed. China now produces twice as many vehicles as the United States. It is similar in other industries.

Once lucrative manufacturing jobs have disappeared not only due to the shift of production overseas but also due to automation and rising worker productivity.

Yet since the 1970s, productivity gains have been captured not by American workers, but by the owners of capital.

Real wages and income have therefore stagnated for most workers.

This is especially true for men. While female income has continued to rise – thus gradually reducing the gender pay gap – average male earnings have actually declined over the past half century.

Changes in the fortunes of men and women are also evident in trends in labor force participation. Fewer men are entering the workforce while the opposite is true for women.

Meanwhile, virtually all of the income gains of recent decades have gone to those at the top of the income distribution, thus widening the inequality gap and reducing social mobility.

The chart below shows that the income of males without college degrees has fallen sharply over the past quarter century while the biggest winners have been women with a bachelor’s degree or higher.

The current level of income inequality rivals that of the 1920s and far exceeds the relatively equitable distribution of the middle of the 20th century.

The declining share of income that goes to the middle class has been closely correlated with a declining union membership rate.

In a sign of growing social distress, the death rate among middle-aged white males in the US has risen over the past decade, in contrast with the usual pattern of falling death rates (see red line in chart below).

All of these trends help us understand the success of Donald Trump. Trump draws his strongest support among middle-aged white males who are less affluent and less educated – precisely those Americans who have suffered a loss of relative economic and social status over the past half century. This same demographic group was, relatively speaking, prospering in the 1950s and 1960s. But the manufacturing jobs that supported this prosperity have either moved overseas (Chinese imports alone may have cost 2.4 million American jobs between 1999 and 2011) or been eliminated through productivity-enhancing technological change. The latter trend might have led to rising incomes for those who managed to maintain jobs in the manufacturing sector, except that the returns to capital have risen sharply relative to the returns to labor. At the bottom of the income distribution, an influx of low-skilled immigrants over the past several decades combined with the failure of minimum wage rates to keep up with inflation have depressed wages for the least educated. What few gains workers have been able to eek out have gone mostly to women, who have joined the workforce in higher numbers while also managing modest improvements in compensation (though the gender wage gap nonetheless persists). Globalization has also allowed capital to seek out cheaper labor and higher returns in developing regions, thus undermining the bargaining position of North American and European workers. As a result, private sector unions have practically disappeared in the US. Without unions to provide some direction for working class discontent, a populist figure such as Donald Trump can harness this anger by bashing immigrants and imports.

On a global scale, the following chart situates the American working class within the global income distribution. The income of those at the top – the owners of capital – has grown rapidly as globalization has provided capital with access to cheap labor outside of Europe and North America. Incomes have also grown rapidly in emerging economies – such as China – where previously impoverished workers have gained access to the kind of factory jobs that Americans enjoyed in decades past. The group that has experienced no gains are the workers of North America and Europe. While this group remains well off in both absolute and relative terms, it has fallen behind, over time, in comparison with the highly educated global elite and the rising working class of the developing world.

The brand of populism and nativism that Trump offers working class American males provides no real solutions to the downward mobility that this group has experienced. But until mainstream politicians and parties address the real grievances of American workers, one can expect more disruptive politics.

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