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How to Save the Country From Trump: A Free-Market Welfare State

Demagogues like Trump can arise only when the system isn’t delivering. It still can—but only if we create (yes) freer markets and a more generous welfare state.


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Opposition to the Trump presidency has thus far been almost entirely reactive. And understandably so: Responding to the incessant outrages and provocations is an exhausting, full-time job.

But over the longer term, righteous indignation isn’t enough. We need to recognize that Trump is a symptom of deeper ills. While containing the damage he causes is absolutely necessary, we also have to look past him and address the root causes that made his political rise possible.

There’s only one sure way to chase the dark forces of authoritarianism, demagoguery, and division out of positions of power and influence. And that’s to demonstrate convincingly that our system of government can still work to make life better—not just for the rich and powerful, but for all of us.

Success in that task is going to require fresh thinking and a new policy vision that defies prevailing ideological orthodoxies on both sides. Specifically, we need bold moves to the right and the left at the same time, embracing both freer, more competitive markets and a more comprehensive and generous welfare state.

The case for a new policy vision begins with the recognition that Trump’s appeal, and the appeal of any populist demagogue, is fundamentally negative. Support for a demagogue means rejection of governing elites and established institutions. If elites are respected and trusted, and the institutions they run are seen to be in good working order, there is no opening for a populist insurgency. In the United States today, though, trust in government has been eroding for decades, as has respect for Congress, the central institution of American democracy.

We are working to identify and enact policies that simultaneously pursue two goals typically considered to be in conflict: a freer, more dynamic private sector and a bigger, more effective public sector.

In this gathering crisis of legitimacy, voters who have lost faith in the established system are easily drawn to unqualified and irresponsible outsiders who could never dream of attaining high office in better-ordered times. The lack of conventional qualifications, the scorn of the establishment, become badges of honor. In the present case, Donald Trump’s political persona is the perfect antithesis of America’s highly educated, cosmopolitan meritocracy: thuggish and anti-intellectual, racially divisive, utterly unqualified, and tragicomically incompetent.

Accordingly, a political response to Trump limited to condemnation fails to address the source of his appeal. Elite contempt and disapproval are political assets for Trump, not liabilities, so the constant barrage of anti-Trump rhetoric does little to dent the core of his support. This shouldn’t come as a surprise. When Trump supporters feel that they personally are being attacked as “deplorable” racists and xenophobes, they are highly unlikely to respond by joining political ranks with their abusers.

Furthermore, since political opportunities for demagogues arise only when the legitimacy of the established order has badly eroded, the emergence of a populist insurgency is a clear indicator of elite failure on a massive scale. Responding to that failure by denouncing populists amounts to blaming the messenger and ignoring the message that the system is in disrepair.

The most effective way to defend liberal democracy in a crisis of legitimacy is, first of all, to acknowledge the crisis. In other words, to recognize that the current rules of the game aren’t working well for everybody and that, therefore, the rules need to change in important and far-reaching ways. To respond to the crisis once acknowledged, it is necessary to advance a coherent and compelling vison of effective liberal democratic governance—one that promises bold improvements and can actually deliver on its promises.

The focus of that policy vision should be the great, encompassing interest that unites all Americans across lines of race, class, gender, and religion: restoring economic dynamism and broadly shared prosperity after years of slow growth and high inequality. So far in the twenty-first century, economic growth has crawled along at half the rate it averaged throughout the previous hundred years. Meanwhile, the benefits of this diminished growth have been heavily skewed to favor a relative few at the top of the socioeconomic scale.

Put these two trends together, and you’ll understand why, on election night in 2016, only 30 percent of Americans told pollsters that they expected their children to be better off than they are. And when you recognize just how many people have come to believe that the American Dream is now out of reach, you’ll understand why trust in our democratic institutions is now so badly frayed.

Meeting the great challenge of reviving the American Dream requires us to stake out new and currently unoccupied territory on the ideological spectrum. At the Niskanen Center, a think tank in Washington, D.C., my colleagues and I are doing just that. We are working to identify and enact policies that simultaneously pursue two goals typically considered to be in conflict: a freer, more dynamic private sector and a bigger, more effective public sector. What we’re aiming for, in the words of my colleague Will Wilkinson, is a “free-market welfare state.”

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Concerns about boosting growth, unleashing entrepreneurship, and removing barriers to competition are usually associated with the political right, while support for strengthening the safety net and social insurance is strongly identified with the left. Yet we need to make progress on both fronts if we are to break out of our current predicament.

Although more market dynamism and greater social support are treated as competing, even irreconcilable objectives in today’s political environment, pursuing both goals together is actually the best way to make progress on either. As the continued aging of the population drives up spending on Social Security, Medicare, and Medicaid, it will be difficult to maintain the welfare state we have—much less improve it—if growth remains so anemic. Yet revving up the “creative destruction” of economic growth will be a tough sell politically so long as people feel so exposed and insecure in the face of downside risks.

Unfortunately, both parties these days are galloping off in the wrong direction. Republicans, convinced that a healthy economy requires low tax rates (and thus comparatively low levels of government spending), are intent on slashing the welfare state, not upgrading it. Their conviction is fundamentally mistaken. The connection between tax rates and growth is far more modest than they claim, and in fact there is a strong positive correlation between big welfare states and free, prosperous economies.

On the Democratic side, much of the energy and passion at present comes from people inspired by Bernie Sanders, a man who only a few years ago held up Venezuela as a model for the United States. The hot new idea on the left is to revive the trust-busting populism of yore and unleash it on the tech giants Apple, Amazon, Facebook, and Google—even though the information technology sector is one of the few bright spots when it comes to innovation.

The current state of thinking in both parties only underscores the desperate need for a new approach. Moving past the false alternatives of Red and Blue, it is possible to chart a path out of the mess we’re now in. To stop Trump and the forces that propel him, those of us who oppose him must make good on his slogan. It’s our job to make America—both its economy and its democracy—truly great again.

Brink Lindsey is vice president and director of the Open Society Project at the Niskanen Center. He is the author, with Steven M. Teles, of The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality.