The Political Establishment is Wrong (Yet Again)

The Dutch elections resulted in elation among the political establishment. The reaction is very reminiscent to Alexander Van Der Bellen’s win in the Austrian presidential elections, having defeated the far-right Norbert Hofer. In the Netherlands, Geert Wilders PVV, the right-wing party, only came in second place with 13% of the vote, while incumbent prime minister Mark Rutte’s VVD got 21% of the vote, thus receiving another mandate to rule, very likely without the PVV.

The political establishment consists of people like Angela Merkel, the German chancellor, and for many the leader of the “free” world, because Donald Trump is not establishment enough to be such a leader (though in many ways he is quite a conventional politician given that he has no strong political ideology on his side). Merkel spoke of the victory of the pro-European forces and that the Dutch people had made a reasonable choice (Chambers, March 16, 2017). Italian Foreign Minister Paolo Gentilioni tweeted his approval: “The anti-EU right has lost the election in the Netherlands. All together for change and revive the (European) Union.” The French Foreign Minister Jean-Marc Ayrault tweeted, “Congratulations to the Dutch for preventing the rise of the far right”. (Said-Moorhouse and Jones, March 16, 2017) The implication hereby is that the defeat of the far-right gives some breathing room for the political establishment to continue on their current policies of austerity and growing precarization of labor. I argue here that this is a miscalculation by the political establishment.

Does the political establishment have sufficient reason to rejoice? Let’s look at the results in some more detail. While the liberal VVD is still number one, they have lost 5 points, which is 20% of their voter base from the last elections. That is quite a voter punishment. It is true that PVV has not gained as much as they might have in the past (their peak was 15% in 2010, when they also served in government), but they have restored some of their losses to rank in second place. The splintering of the political party system allows the PVV to be ranked second even with only 13% of the vote. The GreenLeft has been the biggest beneficiary of the election, which shows that progressive forces can also benefit politically, but the most astounding result is the collapse of the Labor Party (PvdA), which lost 19 points or 80% of their voter base. PvdA is practically no longer a political force and they have to be happy that they were able to hold on to any seats at all. Historically, PvdA held 1/4 of the parliamentary seats throughout the post-war period, but they are now a spent force.

Screen Shot 2017-03-26 at 10.01.30 PM

Source: Wikipedia

Some people would say that Social Democrats can no longer retain their vote share because they were too successful. The welfare state which made the people vote left has already been established, it remains vigorously strong, and thus people want to vote for environmentalist parties like the Greens. The standard of living in the Netherlands is rather high, but the erosion process of the Social Democrats cannot merely come from the success of the pro-welfare state agenda. People in formerly Social Democratic counties are quite upset about (1) austerity budgets from the government, (2) the rise of precarious labor especially part-time work (women were dragged into the workforce only since the 1980s and only under the condition of part-time work, which affects 80% of women, Economist 2015), (3) decline in median wealth (from 50,000 euros to 29,000 euros between 2008 and 2011, see Oxfam 2013), (4) the rise of the unemployment rate (at 7% compared to less than 4% before 2008) (5) the diversification of neighborhoods, mainly from Suriname, Morocco and Turkey, but also Iraq, Somalia and Afghanistan. It can never be a happy mixture when economic insecurity is mixed with ethnic diversification, because the local population will blame their economic plight and the decreased subjective sense of physical security on foreigners and immigrants.

That’s exactly what Geert Wilders promised his voters: ban the Quran, shut down all mosques, withdrawal from the EU, assimilation of all immigrants, stop to immigration from Muslim countries (Donald Trump, anyone?), police officers can’t wear veils, repatriate Antilleans (with Dutch nationality) and foreign nationals with a criminal background etc. No surprises here. Wilders does not have good reasons to defend why anti-Muslim and anti-immigrant sentiment will make his voters any better off, but they are hooked, because people feel that he is the only one speaking for the little guy. Politics is about emotions and the populists control emotions really well, while the political establishment that takes the form of Jeroen Dijsselbloem (from the decimated PvdA) can only promise harsh austerity because “there is no alternative” and tell Greeks they shouldn’t waste the bailout money on women and booze (Harrison, March 25, 2017).

There really is no reason for rejoicing by the political establishment. What they were able to say with contempt for the grievances of the public is that they can do the same policies that they had been doing (bailout for banks, austerity and precarity for the masses), and then hope things won’t blow up in the next round.

Europe faces two more elections in major countries, while they are negotiating the Brexit with the British. There are French presidential elections in April and German parliamentary elections in September. Let’s begin with the French. Below you can see the poll values for each candidate.

Source: Wikipedia (as of March 26, 2017)

The figure to worry about is the Front National leader Marine Le Pen, who has kept her vote share about even. She is another political figure to assail the pro-EU and pro-immigration course, and one would think that she would have more support given the recent terrorist attacks that have kept the French on the headlines since 2015. The socialist government under Francois Hollande used the terror attacks to impose a state of emergency, which has been continuously extended even until today. Has that calmed the moods? Le Pen would lose even though she would almost surely make it to the second round. In the first round, she would get about 25% of the vote, and in the second round, she would only bump up to 30 or 35%, which suggests that she is a polarizing figure. Those that vote for her like her very much, and those that do not vote for her, would never consider voting for her. Such fate would make her similar to her father in 2002, who made it to the second round but failed abjectly in the second round, because cordon sanitaire held (i.e. left-wing voters holding their nose to vote for the conservative Chirac). That would create the impression that France might dodge the right-wing bullet, but since Brexit and Trump we perhaps should be more careful about such predictions.

The frontrunner on the right had been Francois Fillon from the conservative party, who prevailed against the oldtimer, Alain Juppe. Fillon campaigns on balancing the budget and bringing in neoliberal reforms, whereby the French workers tend to be the most resistant to labor deregulation. But his polls had been dropping the last two months since his coronation, because he is involved in a scandal, where he hired his family for political work, even though they didn’t do anything for him. That is an example of nepotism, which is regarded as very negatively in France.

Interestingly, promiscuous sexual relations that are frowned upon in the US, are perfectly acceptable in France. The new frontrunner to displace Fillon is the young Emmanuel Macron, who had served as the economy minister under Valls and Hollande. So what about Macron and sex? His wife is Brigitte Trogneux, his former high school teacher 24 years his senior. Trogneux spoke lovingly of Macron, who was her favorite student, as she regularly read his poetry out loud in class. He was the teacher’s pet. Macron’s parents frowned upon the intimacy between teacher and student and sent their son away to another town. Macron spoke with Trogneux about the decision, and she advised him to do what his parents told him. Macron then said to her that they will stay together and when Macron returns they would get married. Indeed, as soon as Macron graduated at 18, Trogneux divorced her husband with whom she already had 3 children and moved in with her young lover Macron. 11 years later the two were married (see Gee, January 31, 2017).

Politically, Macron promises voters to bring fresh wind into the old structures of French politics. En marche (forward, on the move) is what he called his new political movement. He is a progressive, who wants to “transcend left and right”. He favors the free market (read: neoliberalism, labor deregulation, more profit incentive for capitalists) and reducing the public budget deficit (read: austerity). He scores political points by condemning French imperialism, as was the case during the colonization of Algeria. He favors more EU integration, especially in the form of a common EU finance minister with more authority and budget (which in the current configuration strengthens neoliberal power, because of the preference for liberalization and opposition to an integrated social policy). He favors the acceptance of many refugees, and thus runs counter to the right-wing populists.

Macron is the dream come true for the political establishment, and his lead in the polls is again suggesting that the establishment seems to have done everything correctly. He follows along the trails of Justin Trudeau, the Canadian prime minister, who shows his teary face when welcoming Syrian refugees into Canada, greeting people celebrating different ethnic and religious holidays, while signing oil contracts with Texas billionaires to exploit the shale gas in Canada without regard for climate change, proliferating low-wage jobs and offering cheap foreign workers indefinite staying rights. It’s neoliberalism with a human face (Walkom 2016), and that is what Macron can offer his voters. I doubt that most French voters will vote based on some rational calculus, but based on the feel-good atmosphere that Macron vibrates. “En marche”. Let’s march. Let’s do something. Let’s be active. Let’s make France great again! Of course, Macron is not going to tell his voters the social implications of his agenda, but all he has to do is to say that he presents the young, fresh face to end the political gridlock in the country, which has kept unemployment so high. The strategy seems to pay off in part, as he leads the polls and is replacing Le Pen as frontrunner.

The real tragedy is that there are two big left-wing candidates. The communists field Jean-Luc Melenchon, and the socialists field Benoit Hamon, a left-wing critic of his party colleagues Valls and Hollande. Hamon has campaigned on a universal basic income and more generous social policy, and Melenchon isn’t that far apart from Hamon. The tragedy is that they are two candidates each with about 12-13% approval rating, which combined would put them up ahead with a chance to snatch the presidency. But no, the left is internally divided, stealing votes from each other and not even having the appearance of a chance to win the presidency. The media makes fun of these two candidates, especially Hamon, who represents the governing party that is so despised by the voters. Hollande promised he would not run for re-election if he could not substantially reduce the unemployment rate, and he wasn’t able to, so he didn’t even bother to run. People seem to equate Hamon with Hollande, even though their political positions are quite different. No matter, the real left-wing alternative is blocked, and French voters are seriously contemplating a neoliberal, presenting himself as a “fresh” face (but same content), and a right-wing extremist. No wonder that old democracies are now becoming the farce!

Germany is considered to be the key anchor of European stability. That has partly to do with their sheer economic strength and also with the surplus-producing function of the German export economy, which lends the Germans the power of the purse that had been used against other southern European economies that cannot remain competitiveness with Germany given the strength of the euro currency controlled by Germany. Germany has been rather peculiar in pushing down the unemployment rate even during the crisis, and they have balanced their budget. Some problems persist like the growth of low-wage work following the draconian social welfare legislation of the earlier Social Democratic government, which now struggles with permanently lowered popular support the last decade or so (holding about 1/4 of the vote).

Source: Wikipedia (as of March 26, 2017)

Until Martin Schulz came along. When I wrote my German politics paper during my undergraduate years in the spring of 2015, I genuinely thought that Merkel would sit in office until she died or decided to retire. Merkel certainly did not decide to retire and announced her candidacy for a fourth term. She is the center of political stability, having been the CDU (conservative party) chair since 2000 and chancellor since 2005. Only Helmut Kohl had been in power longer than her. It is his record that she can break if she can hold onto the chancellorship.

But then the refugee crisis broke out, and people began blaming the CDU for the inundating of the country. Over a million refugees were absorbed into Germany in 2015 and into 2016 until the pathway was blocked, when the EU struck a deal with Turkey to withhold the refugees and prevent them from entering the EU. An apparent success for Merkel, who was subsequently able to consolidate her poll figures (and also led to the decline of the rising star of the right-wing AfD). She did not have to hold the 42% of votes she got in the last elections, but she only had to have more votes than the second-ranked SPD to continue on a grand coalition under her leadership.

The SPD having been part of the Merkel government for the second term now had a problematic optic: in order to beat Merkel, they had to sell themselves as anti-establishment, but as members of the governing coalition they were part of the establishment. On top of that, the SPD had an unenthusiastic leader, Sigmar Gabriel, who loved his SPD chairmanship, but hated the idea of running for the chancellor, which he turned down twice when offered to him: once in 2009, when Frank-Walter Steinmeier became the frontrunner, and a second time in 2013, when Peer Steinbruck did the same. Gabriel apparently hated competitive elections, and not being the leading candidate allowed him to stay on as party chairman and ultimately vice chancellor. The problem is that the lack of charisma and second fiddling does not win elections.

Martin Schulz, the EU parliament president, who had only experienced EU politics and no German domestic politics, was called upon to take the SPD chairmanship. Schulz is not showing his political ambitions for the first time. In 2014, the EU established for the first time competitive elections with figure heads for the EU commission president (which were previously appointed by the EU council). The conservatives (EPP) fielded Jean-Claude Juncker from Luxembourg and the Social Democrats (S&D) fielded Martin Schulz. The TV debates were held in English, French and German, languages that both candidates were all fluent in (Schulz can also speak Italian and Dutch, and Juncker Luxembourgish). But the election was entirely comical, because they both understood each other well, and there wasn’t much of a political contrast. There wasn’t much fervor in the EU parliament elections, because the real power was in the EU council which consists of the prime ministers of the EU countries and also in the national governments themselves that controlled most of the budgets.

Now that Schulz was demoted in Brussels (against the will of Juncker, the commission president, who liked cooperating with Schulz, as EU parliament president), he was seeking for a new political outlet, and so he was given the chancellor candidacy. Now the CDU and SPD are neck on neck, and the SPD has a genuine chance to regain the chancellorship and unseat Merkel. Some commentators already predict the new axis of Macron and Schulz, which will revive the Franco-German axis and deal with the Brexit and any future integration of the EU. Schulz sells himself as a pro-EU, having served in its highest positions. He also brands himself with a more left-wing rhetoric, which is a demarcation from Macron’s neoliberalism. But if we scratch away the surface, we find that Schulz isn’t all that much different from the rest of the political establishment. There are some progressive ideas for Schulz policy. He wants to close the gender pay gap, curb executive compensation and invest the budget surplus in education and infrastructure. But the Hartz agenda, which had earlier brought down his party, shall not be fundamentally changed given that it is partly responsible for the export surplus of Germany (another major part being the euro). He condemned left-wing calls for an abolition of benefit sanctions for welfare recipients not meeting the work requirement.

No matter where we look in Europe, democracies are showing public discontent, but so long as the moderate parties can win the elections, there will be plenty of discontent that the political parties cannot transform into positive energy for more sustainable political-economic solutions. The malaise of economic crisis, investment crisis, inequality, poverty, low-wage work and ethnic diversification cannot be resolved by the political status quo, yet that is all that we are served today. Without a new positive vision, we are doomed.

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Schwarzenegger vs. Trump: A Styrian Oak Resisting The Donald

The big news of the week was that James Robart, a Washington federal judge, lifted the travel ban for seven Muslim countries, whose nationals are now allowed to re-enter the US with their visa and green cards. It was a major victory for the rule of law, though it won’t do much to change the shock and awe type policy orientation which marks Trump policy for the next few years.

On a more entertaining note, Trump (2017) had ridiculed Arnold Schwarzenegger, former governor of California, bodybuilder, movie actor and entertainer on his Celebrity Apprentice show for his low ratings compared to what Trump himself was able to accomplish. Schwarzenegger (2017), himself a person without a small ego, lashed back against the President by proposing in a videotape to switch roles between him and Trump. Trump knows the TV entertainment world so well, while President Schwarzenegger would allow people to”sleep comfortably again”. Who is this bodybuilder/movie star/real-estate investor/governor/entertainer?

I had read Schwarzenegger’s (2012) autobiography in parts and watched a few of his old bodybuilding videos explaining what bodybuilding was, while endlessly promoting it (a small selection of videos here). His strong Austrian accent betrays his heritage, which he always sought to escape. Having also spent most of my childhood in Austria, I may be able to speak about an important personality characteristic that lifts him above the average Austrian and make him have such a strong ego that gets engaged in public conflicts, as is the case with Trump.

Schwarzenegger was born and raised in Thal, near Graz in Austria, in 1947. His father worked for the local police in postwar Austria. At that time, the British had occupied the southeastern part of Austria (it was divided in 4 between 1945 and 1955 under allied occupation, which ended with the state neutrality treaty- the most crucial founding story of the second Austrian republic). The war had just ended. The country was destroyed. Most people had rather meager incomes, as did his parents. His mother administered the family income, which was exclusively earned by his father. His father wanted him to become a police officer like himself, and his mother wanted him to go to trade school, though he was satisfied with none of it.

Showing an early entrepreneurial talent he would work part-time besides school at a young age, so he could buy the equipment for bodybuilding. He was first inspired to take up bodybuilding after visiting a gym. He had also watched a movie about the US, which had big highways, bridges, buildings and roads. He was so mesmerized by the large size of objects in the US that he really wanted to live there, while everything else in Austria became too small for his taste. He began bodybuilding at age 14 and realized that it would get him the entrance ticket to immigrate to the US, which happened promptly at age 21 shortly after he won the Mr. Universe. A talent scout in the US became interested in Schwarzenegger and invited him to train and compete in a US championship (very instructive is a recent 2016 interview with Schwarzenegger, where he laid out his dream to immigrate to the US).

Schwarzenegger’s immigrant dreams are most clearly expressed via his undiminished praise for America. Consider, for instance, this recent interview in his own Schwarzenegger Institute at the University of Southern California, where Schwarzenegger (2017) said that the US was going through challenges (i.e. a Trump administration) but he was optimistic it could get out of the bind, because America was the promised nation. That is where immigrants want to go to, not China, Russia or the Middle East. In some sense, being a naturalized American he is more obsessively American than native-born Americans themselves. One can glean it from his passion and desire to make a better life than what was possible in Austria. The kinds of cultural, social and economic gains he made were unique to his US immigrant experience and would not be possible in Austria. In Austria, very few people cared about bodybuilding, movie-making (there is a small domestic movie industry, but it’s entirely local and irrelevant internationally) or entertainment (entirely self-referential and local). There is a political life in Austria, but it is also heavily focused on domestic policy, because the country is too small to have much political weight. Austria hosts the UN, claiming its status as a neutral country, but Schwarzenegger’s feet were too big for the small shoes that Austria offered him.

There was also a political element in Austria that Schwarzenegger had deeply disliked. Consider his 2004 speech at the Republican National Convention, where he passionately explained why he became a Republican:

I finally arrived here in 1968. What a special day it was. I remember I arrived here with empty pockets but full of dreams, full of determination, full of desire. The presidential campaign was in full swing. I remember watching the NixonHumphrey presidential race on TV. A friend of mine who spoke German and English translated for me. I heard Humphrey saying things that sounded like socialism, which I had just left.

But then I heard Nixon speak. He was talking about free enterprise, getting the government off your back, lowering the taxes and strengthening the military. Listening to Nixon speak sounded more like a breath of fresh air. I said to my friend, I said, “What party is he?” My friend said, “He’s a Republican.” I said, “Then I am a Republican.” And I have been a Republican ever since.

Source: Wikipedia

Austria was “socialist” in the eyes of Schwarzenegger. I find the comparison somewhat facile given that even the most progressive Democrats are still somewhat more conservative than conservative Austrians. But the point hit home for the cheering American audience. Austrians would never understand why the state does not take the responsibility to address social problems, while US discourse would legitimate more private sector involvement even if that meant not enough poverty reduction or fulfilling other social goals like universal health care. What Schwarzenegger was looking for was an outlet to make money and to make it big, and it is true that the US would provide him an outlet, which he would have been denied in Austria.

In Austria, there is this concept of the “Neidgesellschaft” or society of envy. If you worked harder than a colleague and gained a promotion, it would be looked down on and be part of gossip among coworkers. In that context, there is not much individual advancement. US culture cannot be accused of envy. From my own experience, I was academically a quite reasonable student in Austria, but did not make much out of it. The teachers gave me high marks, though their main attention was on the “problem students” with low marks, and the other students didn’t care or labeled me a ‘nerd’. When I came to the US, the teachers in high school all the way to university had recognized my academic talent and nominated me for all kinds of class best awards and scholarships. By the time I got to UPenn that honor went to other gifted students, who were even more accomplished on outside performance criteria than me. In any case, the recognition for success in US society is unique enough to have the most excellent performers be recognized. (Needless to say, the disadvantage in US culture is the massive tolerance for inequality, which has become so counter-productive that it led to the election of a crazy right-wing billionaire for president.)

In addition, Austria has what is called an “Obrigkeitsstaat” or hierarchical state, which enforced strict division between the emperor, the aristocracy, the bourgeoisie and the working class. The boundaries are not as strictly enforced as the Indian caste system, but a class system remains a class system. Careful observers of Austria will now object that we no longer have a monarch in Austria, but remember Crown Prince Otto’s death in 2011, where the entire political establishment attended his funeral, even though they were supposed to not have ruled for almost 100 years at that point. There is plenty of Obrigkeitsstaat-mentality left in the Austrian society. Another example would be the Austrian use of titles and education qualifications that are attached to one’s name in every correspondence both written and spoken. No such entrenched formality exists in US culture, where people of all ages are addressed with their first name. That facilitates social mobility at least on a cultural level (if not economic level) much more than in European societies. I would often recognize returning home from travel in Europe, when random strangers would start talking with me in the airport in the US. In Europe, it doesn’t happen that often because of the clearer status differences, which increases suspicion to interact with strangers.

Back to Schwarzenegger: at age 21, he got to the US and continued on his stellar bodybuilding career. What is notable is his enormous stamina and willpower to train and work hard every day to grow his muscles and compete in tournaments. He used his bodybuilding and mail-order business revenues to finance real estate. The rental properties (both business and private housing) made him a millionaire. The real success, however, happened when he switched from bodybuilding to acting in movies. He got the role of Conan the Barbarian, apparently a great role for him, because his English was still heavily accented, he didn’t have to speak much and it required a muscular person swinging around the sword. He had long expressed his desire for acting, which was a clever move given that a bodybuilding career has physical age limitations (he retired in 1975 and made a brief comeback in 1980 to win the Mr. Olympia). Schwarzenegger’s most successful movie series was Terminator, where he seemed to have immortalized himself with his famous line, “I’ll be back.” As a clever self-promoter, similar to Trump, who slapped his name onto all kinds of buildings as a branding effort, Schwarzenegger would make sure that he could recycle his famous movie lines in other movies, public interviews or other presentations (see this Youtube compilation).

Whatever movie profits he made, Schwarzenegger kept on reinvesting them into real estate, stocks, bonds and other financial products, thus ensuring that he would have a solid cashflow under any circumstances. If the American Dream meant making a lot of money, he certainly achieved it with different estimates of his net worth ranging from 200 to 800 million dollars. Such a fortune is not impossible in Austria, but unrealistic given that he came from a family with modest financial background. Notice in this list of the superrich in Austria that all of them made their money from a big corporation they have founded and directed (or inherited). There is no movie actor or bodybuilder or any kind of one-man shows among it. You can earn a decent salary as an Austrian actor, but they usually don’t tend to become superrich as Hollywood stars.

Global ranking Name Citizenship Net worth (USD) Sources of wealth
64 Dietrich Mateschitz  Austria 14.5 billion Red Bull
144 Johann Graf  Austria 7.8 billion Novomatic
393 Karl Wlaschek  Austria 4.2 billion Billa
638 Heidi Horten  Austria 2.8 billion Horten AG
771 Helmut Sohmen  Austria 2.3 billion> BW Group
1190 Wolfgang Leitner  Austria 1.65 billion Andritz Group
1367 Reinold Geiger  Austria 1.41 billion L’Occitane en Provence

Source: Wikipedia

Making movies, being famous wasn’t enough for Schwarzenegger. While being in the US, he married Maria Shriver, the daughter of Eunice and Sargent Shriver, who were members of the Kennedy clan, at one point the most powerful political family in the US. Schwarzenegger said he was very inspired by his in-laws’ spirit for public service and giving back, which is what ultimately also motivated him to run for governor of California. Looking back it is hard to ultimately prove whether it was only his dedication to public service that had sparked his political interest. Given his big ego and desire for advancement (remember the 12 year old child in Graz imbibing the glitzy images of New York’s huge buildings and streets during a movie screening?), he must have also been seeking for a new outlet to realize his passions, his need for attention and domination, an alpha-male characteristic that reminds us of Trump. Wendy Leigh, a biographer of Schwarzenegger, quotes his obsession for power,

“I wanted to be part of the small percentage of people who were leaders, not the large mass of followers. I think it is because I saw leaders use 100% of their potential… I was always fascinated by people in control of other people.”

Source: Borger and Campbell (2003)

Schwarzenegger, typical for his show-biz orientation, decided to announce his candidacy for governor of California during an interview with Jay Leno in August 2003. The state’s electricity and budget crisis opened the political opportunity for Schwarzenegger to run for governor. There wasn’t any doubt that he would win the election. Yes, there were political opponents, who tried to bring him down for his sexual molestation of women, another similarity with his nemesis Trump. In a profoundly Puritan US, a sexual molestation charge is quite serious and damaging to a political career. But the governor at that time was also highly unpopular, and Schwarzenegger had a name recognition like no one else given his background as a Hollywood actor. Despite lacking any formal political experience, Schwarzenegger was elected governor in the recall election of 2003.

It wasn’t the case that he was able to solve California’s chronic budget problem better than his predecessors, especially as he had to manage a great recession which reduced tax revenues. The political system in California made tax increases difficult, requiring a two-thirds supermajority to approve them. The income tax is progressive but limited to a few very wealthy individuals, which suggests more space for untapped revenues. Schwarzenegger oversaw the 2008-9 recession, where he massively pushed for spending cuts while the opposition Democrats wanted tax increases, so not much got done and he left office in 2011 with a low approval rating.

The one area of success as governor was his environmental initiative, which he signed in 2006 under heavy opposition of the oil lobby. He lowered the permissible carbon emissions in factories and prohibited contracting with companies that refused to submit to these carbon rules. Schwarzenegger’s major cause is to fight climate change, which is an issue that many people can get behind. It isn’t something that Trump or most other mainstream Republicans receiving checks from the oil lobby would sign up for.

The one area of controversy in his governorship for Austrians was when he signed the death penalty order for a prison inmate (Stanley Williams) in 2005. Typical of most other Republicans, Schwarzenegger wanted to show that he was tough on crime, but Austria had long ago removed the death penalty, which the EU also sees as a requirement for entry. Peter Pilz, a Green politician in the Austrian parliament, lobbied parliament to revoke his Austrian nationality for “damaging the reputation” of the Republic of Austria. It didn’t go anywhere. I think the judges were more than happy to have such a powerful exponent of their country hold such a powerful political position in the US. Another controversy emerged when people of Graz (his hometown) began protesting the continued naming of the local football stadium after Schwarzenegger. It was a newly built stadium in 1995, which local officials had named after Schwarzenegger, but when the death penalty was decided on during Schwarzenegger’s tenure as governor, local protesters wanted to have his name removed. Schwarzenegger heard of the criticism in his former home town and he sent a letter to the city government in Graz, prohibiting the use of his name for the stadium, thus resolving the controversy. His name was removed from the stadium shortly thereafter.

The Austrians are hereby taking the moral high ground. Of course, the death penalty is wrong, though I doubt that such extreme reactions were warranted. But, clearly, there is a moral dark side to US crime policy, which manages to incarcerate more people than China despite its four times larger population and way more authoritarian government.

After Schwarzenegger’s tenure as governor, he immediately headed back to his movie career, continuing to shoot movies, even though the age wrinkles were clearly visible in his face. He is turning 70 this year. There are still speculations about his political ambitions. He was interested in running for the US presidency, and he would have a good chance given that his foreign background and his celebrity status would make him an establishment outsider, which is what Americans are craving for so desperately. But that was the real problem, because the US constitution prohibited a foreign-born president. Speculations about a legal challenge were quickly quashed in 2013. Would he have been better than President Trump? No doubts can exist.

But Schwarzenegger had virtually accomplished all his goals, making a steep rise from his youth in Austria. But one could sense the restlessness in many of his actions. Success becomes like a drug. Once you have something, you want more because the old dosage is no longer sufficient. Schwarzenegger is no Stoic. Consider, for instance, his 3 minute video advertisement of the Celebrity Apprentice, the iconic TV show initiated by Donald Trump, where famous people compete for the favor of the show host. In this video, Schwarzenegger proudly recounted his career milestones, and it made it seem as if a TV host entertainer was simply the next highest goal to aim towards.

But how did he get to the Celebrity Apprentice? Schwarzenegger eagerly looked forward to a new entertainment venue beyond what he was used to. Schwarzenegger enjoyed watching the Apprentice. Once he found out that Trump was running for the presidency, his agent contacted Trump’s and said that Schwarzenegger could fill Trump’s role, which Trump passionately agreed with. One would think that Schwarzenegger was the perfect fit. He even had his own line. Not “you’re fired”, but “you’re terminated”. No one can steal this line from him with credibility!

One would think that being a US president would keep Trump so busy that he can no longer worry about his former entertainment life. But Donald remains Donald. He lambasted Schwarzenegger for the lower TV ratings, and Schwarzenegger had to hit back. The Donald against the Styrian Oak (or Austrian Oak in the US). Two people with large egos rubbing their shoulders to the great amusement of an amusement-seeking mass audience (and to the terror of seriously-minded people worried about the fate of the country). Schwarzenegger’s suggestion to switch jobs was brilliant even if meant in a joke. But the irony is quite strong here: Trump makes himself ridiculous by wasting his precious attention as commander-in-chief in commenting on a silly entertainment business, while Schwarzenegger’s reaction was comedic on the one hand, but made him more presidential than the president on the other hand. Meanwhile the charge against Schwarzenegger that he wasted his time with a social media war with Trump did not apply. After all, Schwarzenegger acts first and foremost as an entertainer, and he is entitled to engage in silly discourse, because that is what the definition of an entertainer is. Politics is for serious people, entertainment exists for the masses.

It is all the more ironic that the statesmanship then comes from a current entertainer and the entertainment comes from a supposed statesman. In that sense, the close similarity between Trump and Schwarzenegger disappears. Yes, the two men have their large egos in common. Yes, the two of them have shifted from entertainment to politics like chameleons. Yes, they have a strong sense for getting attention, power and control. But while Schwarzenegger is not a narcissist, Trump is. Schwarzenegger has the ego to climb to the top, but that desire does not distort his compassion, composure and dignity, especially when he focuses on public policy. His recent ten-year commemoration speech of the environmental law he signed as governor was on point and had none of the mocking, erratic tone that you would find in any Trump speech.

It appears to be that the semi-entertainer and semi-politician Schwarzenegger, a fellow Austrian emigre, taking on Trump is the next best hope or at least source of entertainment that we have in these deeply troubling times.

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Donald Trump Is Neither a Kantian Nor a Normal Politician

The title of the post may be really obvious to many observers of daily political life in America, but it is still worthwhile to flesh out how the election of Trump ushers in an era of illiberal democracy (Zakaria 1997), where “alternative facts” (or lies in the words of reasonable people not caught up in Orwell’s 1984) rule.

In reference to conflict of interest among politicians, I distinguish between a Kantian politician (very idealized, very rare to find), a normal politician and a Trumpian politician. These three brands of politicians can be distinguished based on the ideal they hold, the public statements about themselves they make and their real actions.

We do have a record of Trump saying that “[t]he law’s totally on my side, the president can’t have a conflict of interest” (Arnsdorf, 11/26/2016). A conflict of interest would be if the president used his presidential office to enrich himself or his family. Trump’s claim may be considered a statement, but it appeared to me that he was equating the law with what is ideal. Here Trump was referring to his many businesses that he refused to put into a blind trust to ensure that he could not continue making deals and enriching himself while being president.

The fact that presidential enrichment can happen is shown by the fact that the Argentinians had been holding up a building permit for a Trump Tower in Buenos Aires until Trump was elected president after which it was approved. At that point, the government of Argentina realized that it was inopportune for Argentina to offend the president of the United States by refusing a building permit to his organization (Stahl 2016). Even if his children are running the business, the fact that he is working closely together with his family means that business interests will still remain front-and-center while Trump runs the federal administration. In addition, the fact that foreign dignitaries prefer to stay in a Trump hotel enriches the president, while the guests hope they can curry favor with the US administration. Trump can claim that they prefer to stay in a Trump hotel because they like the quality of the hotel, but the fact that so many dignitaries now choose the Trump hotel cannot be considered a coincidence, for if they liked the Trump hotels so much why would they not sign up to it before he was elected president? (Carroll 2017)

As far as his statements are concerned, he noted in his press conference that he could have taken advantage of a very profitable deal but did not take the deal, even though, as he said, he could have, because the law did not prescribe anything. Don’t forget that as president, he now has the political clout to demand laws to close the Trump loophole by tightening up legislation on presidential conflicts of interest, but out of self-interest he will not demand such legislation such that it can be presumed that, according to Trump, the current conflict-of-interest law is ideal and shall not be changed. In the press conference, Trump stated,

Over the weekend, I was offered $2 billion to do a deal in Dubai with a very, very, very amazing man, a great, great developer from the Middle East, Hussein Damack, a friend of mine, great guy. And I was offered $2 billion to do a deal in Dubai — a number of deals and I turned it down.

I didn’t have to turn it down, because as you know, I have a no-conflict situation because I’m president, which is — I didn’t know about that until about three months ago, but it’s a nice thing to have. But I don’t want to take advantage of something.

Source: New York Times (Jan. 11, 2017)

As far as action is concerned, it is evident that Trump is engaged in conflicts of interest. We now have enough information to fill a table of the three types of politicians and interpret it.

Table 1: Conflicts of interest and the three types of politicians

Politician Ideal Statement Action
Kantian “Conflicts-of-interest are unacceptable.” “I don’t engage in conflicts of interest.” Does not engage in conflict of interest
Normal “Conflicts-of-interest are unacceptable.” “I don’t engage in conflicts of interest.” Engages in conflict of interest
Trumpian “President can’t have conflicts of interest.” “But I don’t want to take advantage of something [i.e. conflicts of interest].” Engages in conflict of interest

The Kantian politician will consider refraining from conflicts of interest as most ideal, will say that in public statements and act accordingly. A normal politician will also find conflicts of interest unacceptable, will make public statements to that effect, but unlike the Kantian politician, the normal politician preaches water and drinks wine. His/her action is driven by conflicts of interest. The list of politicians falling in that framework are too numerous to list, which is why I had called that group the “normal” politician.

As I stated before, Trump’s ideal may not be to explicitly endorse the statement that “conflicts of interest are acceptable” but implicitly he endorses it, because he accepts the current legal framework in which the law does not prescribe that the president has to divest from all his businesses, even though that has been the historic tradition of previous presidents. His statement of not wanting to “take advantage of something” (i.e. conflict of interest) is equivalent to that of the other two politician types, which means that he says of himself that he does not engage in conflicts of interest. His actions (foreign dignitaries staying in Trump hotels; foreign countries approving Trump projects; accepting donations from foreign governments or organizations etc.) indicate that he is engaged in conflict of interest, just like most other politicians.

(NB: One may think of a fourth type of politician, who finds conflicts of interest acceptable on all counts, even for statements. Perhaps there are mafia bosses, who say that conflicts of interest are okay, and that would be as far away from Kantian ethics as possible, or one could say it lines up the most neatly because of the consistency. I have trouble to think of the implications of such a fourth type.)

To state it even more simply, I evaluate the ethics of the three types of politicians. The premise hereby is that conflicts of interest are unethical and no conflicts of interest is ethical:

Table 2: Ethics of the three types of politicians

Politician Ideal Statement Action
Kantian Ethical Ethical Ethical
Normal Ethical Ethical Not ethical
Trumpian Not ethical Ethical Not ethical

Only the statements makes all three politicians the same, which should tell us that we should automatically be wary about anything any politician tells us even if there are a few Kantians among them. The normal politician is what we have come to expect. Great political power translates into great economic power as well. More troublesome in our age is that with Trump rejecting the ideal of the ethical he is getting away with the worst of all lies: “A president is legally allowed to have conflicts of interest, but because I am such a nice guy, I won’t partake in it, but, of course, I will really be engaged in conflicts of interest when the camera is not watching.” With that line of reasoning he is building himself a higher defense wall than he deserves. A normal politician would only be in a position to maintain an ethical stance for the statements, but not on the ideal.

The implication for the public that has the greatest interest in the least amount of conflict of interest and corruption among high officials is that it should challenge the unethical ideals and actions with all might. But with what Trump had denounced as “fake news” it would be difficult to accomplish. Not that I agree with Trump’s Orwellian reversion of the truth, but I do think that journalists (especially on cable news) have treated politics as if it were a soap opera rather than about issues that affect the real lives of people. There are some alternative sources of news media that hold the leaders accountable even during our transition to an administration run by a pathological liar and narcissist, and who can’t wait to diminish any role and influence of the fourth estate.

Steve Adler, the editor in chief of the Reuters news agency, informed his staff that given the anti-press sentiment of the new US administration, reporters should treat the Trump administration as if it were an authoritarian government.

“Get out into the country and learn more about how people live, what they think, what helps and hurts them, and how the government and its actions appear to them, not to us.”

The letter encouraged reporters to “never be intimidated” by the administration.

Source: Raw Story 2017

In very Orwellian times, when what is right is wrong and what is wrong is right, it matters more than ever for journalists to stick to what is right and demand politicians to idealize, speak and act more Kantian.

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Review of Rodriguez-Franco: Internal Wars, Taxation and State Building

Rodríguez-Franco, Diana. “Internal Wars, Taxation, and State Building.” American Sociological Review (2016), Vol.81 (1): 190-213.

I found a fantastic case study of internal wars resulting in state-building in Colombia. The author claims that a patriotic desire and fear for their security because of the danger of FARC rebels make the elites willing to support higher taxes (wealth tax) on them by the state, so it can finance the military to fight FARC. President Alvaro Uribe’s (2002-2010) fight against the FARC apparently worked, as the security fears of the elites diminished. Some troubling aspects, however, deserve remarking on:
(1) the patriotic motives of elites were entirely self-reported and I doubt that many elites would be that patriotic if they could survive on their own private security.
(2) the abatement of non-state violence would reduce elite commitment to the state and would imply their desire to reduce taxation. In the Colombian case, rising tax obligations were associated with rising welfare expenditures, but state taxation has also increased on all levels, not just wealth taxes but also the broader income tax.
(3) What follows is also the premise that it requires elite willingness and permission for the state to raise wealth taxes, suggesting that it is hard to keep up wealth taxes if they oppose it. Austria’s post WW II settlement, for instance, retained the wealth tax until the 1990s, which coincided with a period of austerity and budget consolidation on social programs. The US estate tax is slated for abolition under billionaire president Trump and his billionaire cabinet, while Trump has also surrendered any pretense to maintain Social Security and other welfare programs post-election. Short of a new civil war, there won’t be any elite commitment to wealth taxes, and any mass mobilization tends to obscure the link between wealth taxes and welfare state spending. In the words of our commander-in-chief: Sad!!!

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The Executive Reign of Terror

Critics of the imperial presidency are having their heyday. They would warn against the rule-making by fiat of a single powerful president. To some extent, the great presidential power might have been made necessary by the ineptitude of US Congress to pass more laws to address the challenges the country is facing: universal health care, free higher education, a moratorium on student debt, a massive job creation program, scaling down of the military and covert forms of military aggression (drone warfare, special ops), just to name a few. That was never going to happen under the Obama administration, which by its temperament was moderate in policy. And it certainly wasn’t going to happen in a Republican Congress, which declared its goal to block passage of any meaningful legislation that could benefit the American people.

Yet, here we are. We have a deranged, narcissistic new US president, who has not been wasting any time to sign executive orders in the fulfillment of his campaign promises. I go through it in order, laying out the precise problems with each order, and then reflect on the institution of executive orders. Despite the deranged nature of the current president, I defend the importance of executive orders when Congress makes law-making so difficult, because (1) laws require both chambers’ approval, (2) laws often need bipartisan consensus to pass, (3) the dynamic of wealthy people and corporations influencing the political process in Congress make any populist program a la Bernie Sanders unfeasible to pass.

The discussion of the Trump executive orders does not cover the presidential memoranda, which are also worth remarking on: Trump’s memoranda approve two oil pipelines (Dakota Access and Keystone), falling in line with his love of oil companies (Rex Tillerson, Exxon Mobile CEO, was appointed secretary of state). This bodes ill for the environment and will accelerate the troubling effects of climate change. He banned the use of federal dollars for abortion-related counseling in poor foreign countries, which will have a negative impact on the health and well-being of women of childbearing age in those countries.

He withdrew from the TPP, which I think is so far the only positive policy. The Obama administration had sold the TPP as the US’ ability to write the trade rule in the Pacific as opposed to China. But in this geopolitical game the administration was ignorant of the harm that a trade treaty imposes on people, because the TPP favors investors with an investor-dispute-settlement system. If people consider this “just”, they should think twice because the trade settlement would override national jurisdictions via international tribunals that are run by corporate lawyers. It is like being a thief and have your criminal case be handled by your brother. Generally speaking, there is not much appetite for trade treaties in the developed world, because the mass of workers know they won’t benefit from it. Xi Jinping had recently appeared in Davos to defend free trade, but he knows that the Chinese economy is still most likely to benefit from such trade the most. I don’t support a high tariff policy for the US and generally favor free trade, but thus far the labor losses were concentrated in the high-wage locations.

On to the executive orders: On his first day in office (January 20), Trump signed an executive order (#13765) to declare his intent to repeal the Affordable Care Act, which currently provides health insurance to 20 million people. The order also prescribes that the health secretary has the right to block any provision, which would add costs to the states and to the people insofar as it does not subvert the law. But we can imagine how the order will subvert the law.

The ACA is a rather fragile law, which requires the full determination of the administration for it to work. If any funding for the subsidies were restricted or if the website on which the exchange operates did not work so smoothly, then people’s health insurance access would become limited. That may increase the ire among the population and might make them, ironically, support an ACA repeal, but the bigger problem is that the Republican Party really has no intention to create a new health care plan. The dilemma is they can’t really say they want to return to a status quo ante, where the denial of coverage for pre-existing conditions and a lifetime limitation on insurance reimbursement would come back. The only positive way out is a single-payer system, which is, however, not even being debated. In the mean time, the ACA is piecemeal dismantled without any more positive prospects. The Republicans don’t have better ideas on health care, because the ACA comes from the Heritage Foundation and the Republicans themselves (Reich 2013).

The next executive order (#13766) was signed on the 24th and intends to expedite the environmental review process for public infrastructure projects. The process of approvals by the federal administration shall be limited to only 30 days. This might be considered a positive executive order, but one shall think carefully what the impact on the environment is going to be. The order does not say anything about increasing funding for the agency responsible for implementing the environmental reviews, and to the extent that administrators will now be forced to expedite the review process, they will be less likely to be careful in safeguarding the environment.

The next two executive orders (#13767#13768) on the 25th mandate an expedited process for the deportation of illegal or undocumented immigrants, especially those committing acts of violence or felony. Any federal funding for sanctuary cities (local jurisdictions that refuse cooperation with federal officials to identify undocumented immigrants) shall be “reviewed”. 10,000 federal officials shall be added to enforce the expedition of deportations. The first order sets up the southern border wall with Mexico. The deportation of undocumented immigrants has the precedent in the Obama administration, but is unfortunately stepped up under the Trump administration. A more rational solution would be to create a path to citizenship for undocumented immigrants, who are easily scapegoated, because they currently do not have any voting rights (though their US-born children do, but they are too few and many of them still not voters).

The more troubling part is the Mexican border wall, which the Mexican administration has repeatedly refused to pay for, but has been part of Trump’s campaign plank. The trouble is not only on the human level (e.g. the difficulty of reuniting separated families), but also on an international relations level. It is troubling that the US administration would risk to deteriorate economic and political relations with Mexico, the closest next-door neighbor, by building this inhumane wall. The administration had also suggested that Mexico will pay for the wall, and that shall happen via a 20% import tariff on Mexican goods. This may affect Mexican producers, but it will also affect US companies deciding to build their products in Mexico and bring it back to the US. More importantly, it will affect US consumers through the higher prices they will pay in the market. These higher prices will more than offset any gains of protectionism, which might help only a few domestic producers.

On the 27th, Trump signed another executive order (#13769), which banned his highest federal staffers from taking on any lobbying position for five years, but critics already say that this order is a weakening of ethics standards for federal officials because it strips a public disclosure requirement, which makes it difficult for the public to determine whether the stricter guidelines will be enforced (Gold 2017). They probably won’t be. It is also hard to think that a cabinet of billionaires and lobbyists will be able to disassociate itself with any conflicts of interest. Trump’s cabinet has more wealth than the bottom 1/3 of the US population combined (Calfas 2016), so much for “taking care of the forgotten men and women” and “draining the swamp”.

In the newest executive order also signed on the 27th (“Protecting the Nation from Foreign Terrorist Entry into the United States”), which has been the most controversial, the US suspends the refugee program for 120 days and bars nationals of six countries (Iraq, Iran, Libya, Somalia, Sudan, and Yemen) for 90 days and from Syria indefinitely, regardless of visa. Initially, the Department of Homeland Security (DHS) included current green card holders as well, which was just reversed earlier today. The ban does not affect dual nationals of those seven countries and the US, but does affect dual nationals of those seven countries and any other country. Trump must have thought that the Muslim ban would really work well with his white working class supporters, many of which have no sympathy with foreigners and refugees that they either perceive to take their jobs and benefits or simply don’t know anything about.

But this time the country was no longer silent. People gathered around airports to carry out mass demonstrations against federal officials, who held hostage the affected people and denied their entry into the US. Don’t forget that international airports tend to be located in the larger cities that overwhelmingly vote Democratic and oppose Trump vigorously. The cities are the base for anti-Trump resistance, which will be way more grassroots than the billionaire-funded Tea Party. Liberal Congress members, governors and mayors showed up at the airport to join the protests. Social media feeds are filled with a passionate condemnation of the new president’s executive order. The ACLU and other civil rights organizations filed a lawsuit on the eve of the 27th. The next day, New York federal judge, Ann Donnelly, issued an order to release the held-up refugees (though DHS continues to insist on executing Trump’s order).

The morality is easily stated: how fair is it in the name of “protecting against terrorists” to target innocent refugees fleeing from a civil war and other civilians (students, scholars, business people, workers), who have nothing to do with terrorism? How can the US claim it is the land of the free and the home of the brave, when it excludes people, who have been playing by the rule? (NB: it takes 2 years to receive US security clearance for refugees.) How much is the US guarding against terrorism, when rejected individuals return to their country, develop distrust against the US and might become receptive to the terrorist preachers?

The US administration is setting a dangerous precedent of excluding people based on their religious belief and their country of origin. For the latter case, we unfortunately know that there is a precedent with the Chinese exclusion act of 1882, which barred the entry of Chinese nationals into the US and was not loosened until the Magnuson Act of 1943. For the former case, I have not heard of any religious ban, even though for most of its history, the US did tend to favor immigrants from Christian-majority countries. For that reason, the Trump administration defended the order by saying that the ban had nothing to do with religion, but it was about ensuring national security procedures were in place before resuming the entry of such nationals (Schultheis 2017).

The administration can also claim that not all majority-Muslim country nationals (e.g. Turkey, Malaysia or Saudi Arabia) were banned from entering the US. What is interesting to note, however, is that those Muslim countries were exempted from the ban, which the Trump organization does business with (Painter and Eisen 2017). It shows that Trump is incapable of separating himself from his business interests, speaking of ethics standards. The Bush and Obama ethics lawyers (Painter and Eisen, NYT, Jan. 29, 2017) write, “It appears that immigrants from countries that can afford to do business with the Trump organization are free to come and go from the United States. Immigrants from countries that cannot afford such transactions may very well be detained at the airport and sent home, where some may perish.”

There is no doubt that the administration is specifically targeting Muslims, because Trump noted his preference for Christian refugees (Schor and Kim 2017). He is making partially good on his campaign promise, which is driven by fear and hatred of Muslims and refugees. The bigotry is massively escalating under the new Trump administration that does not offer much social protection for what he had called “the forgotten men and women” (Killian 2017), but instead words of resentment against the outsiders, who are easy prey as they are not numerous or influential enough to defend themselves. To ban any Syrian refugees from entering the country is irresponsible insofar as American bombs and gun exports to Syria have contributed massively to the violence and civil war in the region (see the “Assad must go” line by Obama, Clinton and Kerry), and taking on even just some of the displaced civilians is the fair albeit insufficient compensation for the carnage that the US had helped to create in the Middle East.

Instead, the Europeans (who did their fair share of bombing) have been held responsible for accepting many of the refugees, while an even greater share ended up with Syria’s immediate neighbors: Jordan, Lebanon and Turkey. I understand that the new administration is not responsible for the mess in Syria, but given that Trump had authorized continued bombings in Yemen (Ackerman 2017) there is a tremendous amount of policy continuity from the old administration. The US bombs the Middle East and takes no refugees, which is the most hypocritical foreign policy position of all countries.

What’s the way forward? What makes me quite hopeful is that the enormous public pushback against the Trump administration galvanizes the pushback against the Trump administration in the coming months and years. Continuous mass mobilization might result in calls for impeachment or other forms of expression to prevent the negative excesses of the current administration. There is a natural danger and fear that not much will happen as time goes on, because Trump might hit the heavy targets early on in his administration, but then rule quietly. That could, in fact, be the best prospect for the country if that were to happen. I doubt it, though.

What to me is the most scary is that while the media and the public will be so obsessed by the outrageous statements and actions of Trump, his billionaire cabinet and the Republican Congress can quietly work on their real objectives: to defund the last pillars of the New Deal social safety net and empower billionaires with more tax breaks and favorable policies. The rather dystopian vision for this country is that income inequality will become larger, while the common people are so distracted by either attacking a minority group or having to waste their energy to defending this group. Historically, only a civil war or a foreign war can mitigate this powder keg.

The question as it stands from a constitutional viewpoint is whether the president should have such latitude in executive power. I would still say yes, because the constitutionality of particular decisions would still have to pass the test of judges, virtually all of which had not been appointed by the Trump administration (which will change as time goes 0n). But given that most federal judges stay for a long time (there is no term or appointment limit), Trump will not be able revamp the entire judicial system all at once (there are over 3,200 federal judges). In addition, the country does have a need for a powerful president if legislating in Congress is made complicated by the three obstacles I had outlined, i.e (1) laws require both chambers’ approval, (2) laws often need bipartisan consensus to pass, (3) the dynamic of wealthy people and corporations influencing the political process in Congress make any populist program a la Bernie Sanders unfeasible to pass.

I know there will be people, who will attack me for sponsoring a “benevolent dictator”, when our dictator is everything but benevolent. In countries, where authoritarian rule is way more harmful for individual freedom, expression and dignity, the dictatorial powers are so bad that constitutional limitations on their power would make sense (though it would remain inefficacious if the norms and traditions of a country are stacked against a free and democratic order). But I should remind people of what the alternative is to weaken the powers of the president: to have a system that makes it really difficult to change the country for the positive. A Sanders presidency, for instance, could have changed the political dynamic massively even with a Republican Congress. While much of what Sanders campaigned on are spending programs that require Congressional approval, he could sign executive orders that tilt the balance in favor of working people without the xenophobia that we see with our current president. In that sense, the flaw is not exclusively to be found in a given institution, but in what individual is put into the position of responsibility.

We can see today all the negative implications of an imperial presidency with a leader, who questions the foundations of US values and norms like few previous presidents. But it is the immorality of the leader and not the institution that poses problems to us. The country can only hope to fight back when mass mobilizations don’t abate. We have no other choices in these dark days ahead.

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The Politics of Populism: Technology and Inequality

The politics of populism is what marks the contemporary political period. In every single election, where the working class is given the opportunity to punish the establishment with a vote that goes against the ruling view, it happens. Brexit, Trump, the Italian referendum. There are elections in France and Germany this year. The authoritarian countries like Turkey, Russia or China are becoming more so. Directional liberalism becomes directional authoritarianism.

The contemporary capitalist period is marked by fragility. Global debts are bigger than before the crisis. High debts imply that means for refinancing become restricted, which can slow down investment and economic growth. Rising debt level also reflects the inequality between nations and the wealth gap between rich and poor. Oxfam says that rather than 62 people owning as much wealth as the bottom half of the world population (about 3.6 billion people), it is now only 8 people, in whose hands the wealth becomes concentrated. The rather high level of inequality predicts political instability, which then justifies some authoritarian and nationalist-protectionist sentiment on the political front.

Unemployment is stagnant at a rather elevated level, while the technological boom develops largely unhindered, eating into previously stable middle class professions. So far retail and low-skilled workers are most affected by automation, but advancements in artificial technology do not preclude that even bankers, lawyers or educators will be affected by automation. It is probably correct to make the objection that automation won’t happen quite this fast, because the institutions of the labor market, political regulations and other social norms might slow down the adoption of technology, though I doubt it will hinder such adoption.

The technological effects on inequality should not be underestimated. Let us take the 8 rich faces and see what pattern emerges:

8richest_people

Source: New York Times (2017)

Bill Gates is the founder of Microsoft, a tech billionaire. Amancio Ortega, founder of the Spanish fashion and design company Zara. Warren Buffett, the CEO of a financial/ investment firm. Carlos Slim, the monopoly owner of Mexican telecom. Michael Bloomberg, is the founder of a media and financial data firm. Larry Elliot, the CEO of a technical firm, Oracle. Mark Zuckerberg, the founder of the tech social network Facebook. Jeff Bezos, the founder of the online tech retailer Amazon. 4 of the top 8 in the list are clearly part of the tech industry. Bloomberg should perhaps also be considered part of the tech giant industry, because providing financial data to clients is made possible through the internet and other computer data. Buffett is the only American on the list, who does not clearly belong to the tech industry, though he is in a supporting role as his company holds 11% of its shares in technology companies (otherwise, it has a bigger portfolio in finance, e.g. Wells Fargo, and general consumer items like Walmart, Coca Cola or Kraft Foods, see Nasdaq as of 9/30/2016). The Latino billionaires (Ortega and Slim) are also clearly not in the tech sector, but in retail and telecom, though political relations granting their monopoly status matters at least just as much as global market penetration.

The technological boom has created obvious winners. If we look at the most valuable companies here, the top five are all tech firms:

  1. Apple ($appl): $570.7 billion
  2. Alphabet ($goog): $560B
  3. Microsoft ($msft): $434B
  4. Amazon ($amzn): $365B
  5. Facebook ($fb): $354B
  6. Exxon Mobile ($xom): $351B

Source: Business Insider (2016)

Why would technology have the impact of increasing inequality? The answer is not too difficult. It takes massive investments and technological know-how in order to create and develop tech products. This is definitely the case for hardware producers like Apple and Microsoft and software producers like Oracle. For the internet companies (Amazon, Facebook, Alphabet or Google), there is a massive advantage in having a large centralized network, which makes it more difficult for smaller firms to offer their services. When the internet came out, the people were celebrating the possibility for an evening out in the market sphere. Lower costs imply lower entry barriers to participate in the market when using the internet. But that is only true for the provision of personal services. My brother, for instances, regularly orders pizza online, though using a central platform (which probably makes the most money from the pizza shops and advertisements), and more pizza shops now have the opportunity to offer their pizza.

But here there is a limitation to the pizza analogy (and other services like hair dressers, accountants and so forth), because the really big tech giants provide the platform and are guaranteed to make the most money. It is their service that we all collectively use. When we watch a video on Youtube, the money flows to Alphabet. When we do a google search, the money flows to Alphabet. The traditional argument in free market capitalism is that a competitive marketplace facilitates a dynamic market, but the opposite is true for these big networked tech firms. I have recently done searches on Yahoo and found the quality of the search results much worse than in Google. The reason why Google produces “better” search results is because they have developed a more refined way to search items. They have more ad money, better engineers, better algorithms, better variety of data etc.

Similarly, we would not want people to turn away from Facebook not despite but because of the more than a billion worldwide users. While I do not think that social relations have become better because of Facebook we have benefited from being able to stay in touch with friends that we otherwise had not been able to meet for a long time. The importance of face-to-face relations, which is the most natural form of social relations in human history, is not smaller than in the past, but to the extent that Facebook is a supplement of communication it is better than not having it.

But if we really do appreciate the control and domination of our tech overlords are we not also legitimating the current capitalist system that then benefits one of these faces that we see above? Absolutely. We are trapped in a conundrum, but only because we believe in the fallacy that accepting the services of tech giants means that we automatically accept the given level of income and wealth distribution. If we are interested in maintaining social stability and economic justice, it would be only fair to massively increase taxation on these giant tech firms or at least their owners.

The argument for social stability is not so difficult to present, because the ever-growing rift between rich and poor provides the fertile resource for populist politics. Aristotle himself had argued that only a broad and vast middle class can retain overall political stability, because the middle class can serve as citizens and rule as rulers and because everyone has a stake in society. In a society, where a few people own most of the wealth, the wealthy can only rule and the poor can only serve and lack any stake in society. They are then easily susceptible to demagogues of different forms, who themselves usually want to concentrate power in their own hands. Political uncertainty then undermines the free capitalist society itself. Relatively greater economic egalitarianism also provides the purchasing power, which feeds into economic growth.

The argument for economic justice is harder to understand in ideologically more capitalist countries. Defenders of tech billionaire wealth say that if the tech owner provides services that everyone wants to buy (e.g. Microsoft products), they deserve all of the wealth. But is that really the case? It is certainly true that Bill Gates is the pivotal figure in Microsoft, because without his will to put the firm together, it would not exist, though we could imagine that someone else would have done it if it were not him. What matters, however, is that any tech company can only hope to develop its products as a result of hundreds of years of innovative capacity of many different human beings. The government had massively invested into the defense-industrial complex, which created the early forms of the internet and the computer. These tech innovations were then gradually privatized as commercial applications became available. So if we are really concerned about “just deserts”, we would have to pay off some of our dead ancestors, who developed the previous forms of innovation that served as the basis for today’s innovation, and we have to pay off the government in the form of higher taxes. The former case is harder to make, but the latter case is much more justifiable.

We should also not underestimate the importance of the contributions of current tech workers, as the graphic below of revenue per employee of leading tech firms show:

Screen Shot 2017-01-14 at 11.31.11 PM.png

Source: Statista (2015)

In four of the above listed tech companies, the revenue is more than a million dollars per year. Most people will say that because of the high productivity of these tech workers (which really reflects the higher sale value that is possible for tech products, e.g. a Youtube video can be downloaded millions of times), they receive higher than average wages anyway, which is true, and the sky-rocketing real estate prices in the Bay Area is clearly evidence of that (which pushes out low-income residents there). But I have never heard that an Apple engineer earns nearly 2 million dollars, even though productivity would justify it.

The revenues are not wages, because the company owners get to decide what happens with the revenue, so it is not surprising that the biggest beneficiaries of the revenues are the tech company owners. In a traditional Marxist account, the workers would not only get paid more than they currently do (which would make the handsome faces above much less wealthy than they currently are), but they would also control the company’s surplus. But I would claim, that even such statement is besides the point. Even if an Apple worker were paid 2 million dollars, it would still be massive theft from downstream workers (like manufacturers of Apple products, who operate in a more competitive market and have much smaller margins of profit). That illustrates that we can’t really solve the inequality problem by strengthening the case for a labor aristocracy, while the uneducated, untrained, underemployed and unemployed rabble can vote for Donald Trump and otherwise screw themselves.

The tech industry is at the heart of growing inequality, and it is inevitable that if we want to have a claim for social, political and economic justice it is necessary to renew the social contract. That would first require an expansion of social policy. The masses cannot merely be fed resentment against weaker groups that are not to be blamed for our social problems (i.e. women, minorities, immigrants etc.). They need to have social policy that actually helps them, which may include the expansion of traditional programs like a higher minimum wage, social insurance, universal health care, free higher education, free child care, generous family leave policies and higher pensions. There is a limitation to such an approach as well, because it does not do enough for people, who are pushed into unemployment. The old institutions insist on the laborist political economy, which centers on wage work as a primary means to survive. The new institutions have to sever the tie between wage work and survival. The universal basic income would help as well, but I doubt it will be enough.

Max Weber gave us the brilliant insight that history can provide us with nothing more than struggle. There is no doubt that the immediate future will be rife with struggle despite all the economic abundance that could make our life quasi stress-free.

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(Not) Draining the Swamp

Donald Trump had promised his voters that he would drain the swamp, which means that he would ensure that lobbyists and other special interests would not prevail in his administration and that he would place the interests of the whole nation before that of the special interests. With only a few weeks to go before inauguration, it is time to call him out on what turned out to be a non-promise.

The Trump Cabinet

Let’s start with a small selection of the people he had decided to appoint to his cabinet: Betsy DeVos, a billionaire, campaigning for the privatization of the public school system to use public dollars to benefit education investors like her and other buddies, became the secretary of education.

Steven Mnuchin, a high-level executive of the much detested Goldman Sachs bank, became the Secretary of Treasury, following in line with the tradition of appointing Goldman Sachs bankers to the manage the nation’s finances (after Robert Rubin serving under Clinton, and Hank Paulson serving under Bush; the former advocating for Wall Street deregulation and the latter throwing tax money after Wall Street following the great crash).

Wilbur Ross, a leveraged-buyout investor and billionaire making a fortune from buying up bankrupting companies, loading them with debt and then selling at his own profit, is going to become the Secretary of Commerce, ensuring that similarly shady deals will be performed under a Trump administration.

Andrew Puzder, a chief executive of a fast food company, who railed against minimum wage laws and favored accelerated automation of jobs so that pesky workers can’t bargain or strike for higher wages or better working conditions, becomes the Secretary of Labor.

Rex Tillerson, chief executive of Exxon Mobile, a giant oil corporation, who is very interested in making profitable business deals rather than maintaining balanced foreign policy, will be the Secretary of State.

Ryan Zinke, Montana Congressman, who voted for oil and gas drilling, will be Secretary of Interior, which is charged with overseeing federal land that might be tapped for oil and gas drilling despite the criticisms of environmentalists.

Scott Pruitt, Oklahoma attorney general who led lawsuits against the EPA for the Clean Power Plan (setting carbon limits for power plants) and Clean Water rule (limit pollution in the nation’s rivers, lakes, streams and wetlands), will become the Administrator of the Environmental Protection Agency.

Tom Price, Georgia Congressman and critic of the Affordable Care Act, will become Secretary of Health and Human Services, which is tasked with overseeing the implementation of the Affordable Care Act, especially the smooth running of the exchange.

Carl Icahn, multibillionaire investor, will be Trump’s special advisor to “cut red tape” and government regulations, which usually implies the same barriers that hinder investment profits, like worker safety or environmental standards. He advocates for a tax holiday for companies stashing their earnings overseas in the hope that the cash will be repatriated. (It is safe to assume that Icahn will benefit from such a move.)

Peter Navarro, a University of California Irvine economist raging against trade deals with China and the rest of the world for undermining US production and increasing US trade deficits, was selected as director of the National Trade Council.

Evaluation

The pattern of Trump’s appointment is that most of his appointments tend to be businesspeople, who will benefit themselves or their industries substantially by working directly for the government, or politicians, who have a vested interest in helping various businesses make more money. All of these efforts are likely to intensify the swamp. Remember that the reference to the swamp was about a broadside attack against a politicized (crony) capitalism, where the state helps lobbyists and special interests enrich themselves at the expense of taxpayers and the general public. But to appoint the very same special interests to become part of the cabinet is actually even worse than the current corrupt political culture of politicians currying favors with their donors. Cut out the middle man.

Taxpayer/ public-politician-business/ special interest

gets simplified to

Taxpayer/ public- business/ special interest

If your initial thought is that the Trump administration mean that the rich will get richer, and the working and middle classes that put Trump to power will be neglected again, there is strong reason to believe that this is exactly what will happen. Bernie Sanders and some other progressives are already calling for mass mobilization to ensure that social programs like Social Security and Medicare get defended (Fernholz 2016). Trump has not made it clear that he wants to slash entitlement programs, though he might ultimately not be opposed to it given that he did not invite any social policy academics or other left-wing representatives into his cabinet and staff of advisers.

“Speeches are in poetry, while governing is in prose”, is one of the proverbial pieces of wisdom in Washington politics. What this means for us is that the people have appointed their shiny charismatic leader, who is a skilled con man and TV celebrity, but this leader cannot govern without his bureaucracy. The bureaucracy then turns out to be drawn from the military, the Republican political establishment and the elite business community. People’s anger was targeted at the elites, but what they get back are the very elites, who can’t care less whether working people have struggle to afford their rent. The next four years will be a hell of a ride.

Now, it turns out that Icahn and Ross were major Trump donors, and they helped him stave off bankruptcy in the 1990s, when his businesses were in trouble. He is repaying his wealthy friends by appointing them to the cabinet. Trump is as much beholden to the big donors as Clinton, Bush and all of the other establishment figures.

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