The writer, Emilio Ocampo is an economist who holds an MBA from the University of Chicago and taught emerging markets economy at NYU Stern. He is also the writer of several books on historical, political and economic issues.
Most of the world and a majority of Americans are watching the first weeks of the Trump presidency with a mix of dread and incredulity. The new president of the United States not only has shown complete disregard for the informal rules, conventions and traditions that go with his office but has also openly attacked two of the foundations upon which the American republic was built: press freedom and an independent judiciary. There are good reasons to be concerned. But Trump is not the real danger. The real danger is what will come after him.
Trump portrayed himself as the candidate that would “drain the swamp” in Washington and make America great again. He will do neither. Instead he will make the world a more dangerous place and delay the day of reckoning for America’s plutocrats.
Let’s not forget that Trump won the presidency with 3 million less votes than his rival. He owes his victory to an archaic and undemocratic electoral system. And with this system he won by the thinnest of margins, only 70.000 votes in three key swing states.
During the primaries, Trump and Bernie Sanders presented themselves as the anti-establishment candidates of their respective parties. Both argued that for most voters the fabled American dream was over. The data proves them right. For the last three decades, middle income Americans have been falling behind. They feel much closer to the poor than to the rich. This is what relative inequality means. I call it the frustration gap, which is the fertile ground in which the seeds of populism grow.
It is important to emphasize that populism is not an ideology but a way of doing politics. Depending on a society’s demographic, cultural and social idiosyncrasies, populism can be articulated from the right or from the left. Hitler and Mussolini were populist leaders of the right wing variety. Peron tried to ape them but later opportunistically veered to the left and praised Fidel Castro. Chavez took Peron’s mantle, setting the model for the modern Latin American leftist populist caudillo.
Even though Sanders and Trump offered a similar diagnosis of what was wrong with America, the solution they proposed was quite different. Sanders wanted to close the frustration gap with massive income redistribution at the expense of the top 1% and Wall Street. Trump instead focused his tirades on foreign culprits (China, Mexico, Muslims, etc). There is no better definition of plutocracy than Trump’s cabinet. Goldman Sachs is in charge of the Treasury so the fat cats will be safe for now.
But since Trump’s mercantilism will not make America great again, the frustration gap will continue to widen. Under his presidency, a greater polarization of American society is inevitable. Demographic trends are against the Republican Party. The pendulum will swing back in the other direction with even more momentum. Many Sanders supporters who voted for Trump will soon regret their decision. Those who always opposed Trump will become increasingly energized and motivated. Both groups only need a young, charismatic and truly anti-establishment politician who can interpret and embody their discontent. And in politics like economics, demand creates its own supply. When such leader appears, neither the Electoral College nor low voter registration will prevent him or her from reaching the White House.
By then, Trump will have significantly degraded America’s institutional fabric and set a high water mark in American politics. Whoever succeeds him will also ignore those conventions, traditions and unwritten rules of behavior and defy the formal institutions that until now have limited the power of the executive. Trump will not only trigger a dangerous political reaction but also pave the way to a brand of populism that once in power could seriously undermine the foundations of the system that once made America great.
There is a lesson to learn from Argentina. In the 1930s, fearing communism, conservative elites supported a military coup and electoral fraud. During the following decade, relative inequality increased. A widening frustration gap set the stage for populism. Peron ably interpreted the growing discontent of the majority and once in power, he gave the coup de grâce to Argentina’s already degraded institutions. Under his misguided leadership, the country started a long and painful decadence. The 10th wealthiest nations in the world when he took power, today it stands 60 or lower in global GDP per capita rankings. Yes, the United States is different, very different. Maybe. But Trump’s presidency has shown that what was once unthinkable is now possible.