“Imagine if Hitler had liked Jews,” I told an Israeli politician recently who asked me to characterize the Republican frontrunner. The comparison seems more apt every day. The title of this note refers to Bertolt Brecht’s 1941 satire, “The Resistible Rise of Alfonso Ui,” portraying Hitler as gangster in the mode of Al Capone.
Donald Trump has tapped an ugly mood in America’s middle class, whose prospects have dimmed noticeably since the 2008 financial crisis. For the first time since the Great Depression Americans are losing ground that they cannot regain. Median household income fell by nearly 10% from 1999 through 2011 and remains fall below previous peaks. Home ownership is down from 69% in 2008 to just 64%. The rate of participation in the labor force has fallen from 66.5% before the crisis to just 62.%, the lowest since the 1970s. A generation of young people has graduated from college with mediocre earnings prospects and mountains of student debt.
Jobs are to be had flipping burgers, emptying bedpans or driving a UPS truck.
The last two generations of American entrepreneurs–the dot.com bubblers of the 1990s and the mortgage manipulators of the 2000s–got carried out in body bags. The great mortgage scam sucked tens of millions of Americans into the bubble. Late entrants lost their homes, with 4 million homes under foreclosure by 2012 and another 6 million at risk. It’s not just that Americans are earning less, but that their path back to financial security is cut off.
A lot of Americans are looking for someone to blame, and Trump is there to point the finger: It’s Mexican illegals. It’s the Chinese dumping goods on us. Deport 11 million illegals! Slap a 40% tariff on Chinese imports! Never mind that there aren’t 11 million Mexican illegals in the US, and a trade war with China would blow the world economy to piece. Neither China nor Mexico has very much to do with America’s economic woes. There are fewer illegals in America today tha in 2008 and the growth rate of Chinese imports has fallen to next to nothing.
The authoritative Pew Research Center estimates that the number of Mexican illegals peaked at 6.9 million in 2008 and fell to 5.6 million in 2014. That’s a problem, but it’s a diminishing problem.
As for China: imports from China were growing at 15% to 30% a year through the 1990s and 2000’s up to the financial crisis of 2008. After 2008 the growth rate (calculated below as an annual average over each 5 year period) fell to just 5%. The impact of Chinese imports on American manufacturing jobs is a ten-year-old story.
Trump is simply wrong. Whether he is lying or believes that he says, or simply says whatever comes to the top of his head without determing whether it is true or not, is irrelevant. It sells in Louisiana, as my friend Rod Dreher wrote Jan. 23 in his blog at the American Conservative:
When I would go back to south Louisiana to visit my family, I often got into (friendly) arguments with people about conservative principles and policies. I noticed that we were at loggerheads over many things. It frustrated me to no end that reason was useless; “ideologically unmoored cultural passions” weren’t just something, they were the only thing. This was a tribal conservatism, one that had very little to do with ideas, and everything to do with nationalism and a sense of us-versus-them.
America’s embattled middle class doesn’t want charts and graphs, facts and statistics. It wants a leader who will identity culprits and take ruthless action. It’s a different electorate than I remember. My business partner in the late 1980s, the supply-sider Jude Wanniski, liked to say that the American people in its wisdom wanted a nice guy as president. They knew that the American president was the most powerful man in the world, and if he acted out of rancor the consequences could be terrible. Not any more. Americans want a nasty president.
Reductio ad Hitlerum is a bad sort of argument, as Leo Strauss used to say, but there are exceptions to every rule. There is a touch of Weimar in the air. The Germans of the 1920s didn’t understand why they were impoverished and humiliated. Germany was Europe’s fastest-growing economy before World War I, its center of innovation, its greatest military power. How could it have lost the war, swallowed painful reparations payments, and given up huge swaths of its territory? The Germans were in a mean mood and they wanted the nastiest attack dog in politics. Hitler accomodated them. Even worse, the German Establishment, led by Franz von Papen, thought it could use Hitler, and invited him to form a government in January 1933.
We’re a long way from Germany in the late 1920s, to be sure, but the parallels are disturbing. The Republican Establishment shouts from the rooftops that it prefers Hitl–, er, Trump to the horrible Ted Cruz. As Bob Dole put it, Trump could “probably work with Congress, because he’s, you know, he’s got the right personality and he’s kind of a deal-maker.” Robert Costa at the Washington Post, David French at National Review, Paul Mirengoff at Powerline, and other commentators too numerous to mention have weighed in on the same theme.
Why does the Establishment hate Cruz so much? He threatens their livelihood, unlike Trump, whose real estate and casino business has required friendly dealings with politicians of all stripes for half a century. Permit me an anecdote: a couple of years ago I attended the annual dinner of the Jewish Institute for National Security Affairs where I was then a Fellow, and had the honor to sit next to Allen West. Col. West had just lost his Congressional seat in Florida to a massive Democratic campaign to dislodge him. We were discussing supply-side economics. Sen. Lindsey Graham sauntered over and flashed a smile with more teeth than a Great White. West and I stood up. I told Sen. Graham, “We should make this man president.” Graham showed even more teeth and declared, “First, we’re going to make him rich.”
The Amerian economy is cartelized and monopolized to an extent we haven’t seen in two generations. Why is this so-called economic recovery so miserable? The entrepreneurs are gone. In all previous postwar recoveries, new businesses led employment growth. This time around, companies in the S&P 500 accounted for virtually all of the employment growth. Almost half the job recovery since 2009 involves flipping burgers and emptying bed pans. New companies aren’t creating jobs. Facebook has 10,000 employees. McDonalds has 440,000.
Corporate America wanted nothing to do with Ronald Reagan in 1980. Not a single Fortune 500 CEO backed him–all of them supported George H. W. Bush or John Connally in the primaries. When informed of this (Jude Wanniski, who was at the meeting, told me), Reagan said that he didn’t need them–he would be the candidate of the entrepreneur, the small businessman, the farmer, the workingman. Cruz wants to be Reagan redux. The Establishment remembers Reagan; in particular, it remembers that the corporate powers-that-be of 1980 were dwarfed by the entrepreneurial newcomes whom the Reagan reforms unleashed. It didn’t like Reagan the first time, and the last thing it wants is a younger incarnation of him.
Without a return to entrepreneurship, America’s economy will stagnate and America’s middle class will continue to lose ground. Donald Trump represents the triumph of resentment over hope. I don’t know what American voters will do. But I’m frightened.