Enabling Trump: The Rise of Resentment Populism — Part I
By: Rich Palmer
Tags: Politics, 2016 Election, Economics, Trump, Donald Trump

Enabling Trump: The Rise of Resentment Populism — Part I

A lasting solution is dependent on knowing a problem’s true origin

While it’s not likely Trump and Milton Friedman would agree on trade policy, Trump should credit Friedman for kindling the movement that put him in the White House. Photo credit: The Chicago School of Economics: Going Off the Rails. The Economist. October 22, 2015.

Donald Trump should complain less about the New York Times. On September 13, 1970, the New York Times Magazine published an opinion piece by Milton Friedman that set the stage for the emergence of ‘resentment populism,’ the force behind the rise of the Trump regime.

The Social Responsibility of Business is to Increase its Profits marked a shift in our collective consciousness from a place of responsible conservatism to a mentality marked by a crude, detached sense of rationalism. Friedman, in this work, along with the whole realm of neoclassical economics that he represented and served, provided corporations with an academic excuse to exploit and plunder. His logic was quintessentially Trump-ian: corporations can ignore their social responsibilities because they’re not people, and only people can have social obligations. Side note: the Supreme Court ruled in 2010 that corporations are effectively individuals as part of the Citizens United v. Federal Election Commission. So while that ruling may be detrimental to democracy, individual liberty, and the electoral process, it does serve to debunk a small piece of Friedman’s position.

The crux of Dr. Friedman’s argument in favor of profiteering rests with corporate executives. By honoring their social responsibilities, corporate executives would in fact be acting as a political agents and imposing taxes on shareholders, employees, and/or employees. In the words of Friedman, this “involves the acceptance of the socialist view that political mechanisms, not market mechanisms, are the appropriate way to determine the allocation of scare resources to alternatives uses.”

Translation: by behaving badly in the name of profits, corporate executives are actually fulfilling a moral responsibility to stand up for the virtuous, always tenable principles of free market capitalism, which is, ergo, putting the interests of shareholders first and foremost and fulfilling the sole purpose of the executive, which is to serve his employer, i.e., the shareholder.

Further translation: greed is good because being good is being greedy and if you’re not greedy, you’re actually a vigilante socialist. This is the type of argument Friedman dresses up in elitist, hard-to-follow prose. It is the type of argument you read and wonder if the person making the argument actually believes what they are putting down on paper.

As I read Friedman’s work I am not only struck by the volume of intellectual engineering needed to make his case, but also by the vitriol and disdain that come forth. He writes to belittle those who either dissent from his opinion or cannot grasp his nebulous rationale. He attacks holistic thought and human decency as fanciful musings of an inferior socialist mind. It is as if he writes with a nefarious purpose that he does not want us to question. The reader must be intimidated before the argument is presented because then he or she will be less likely to challenge whatever is put forth, especially if it is intuitively perplexing. It is worth quoting Friedman’s opening volley at length:

“When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system,” I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

Strong words such as these were used to indoctrinate and distort our economic thinking to favor of a select few. With our minds corrupted — or a least confused by authoritarian, perplexing economic reasoning — a heartless, brutally rationale corporate regime was able to dismantle the American working class. This is ultimately what seeded resentment populism. Animosity towards the liberal elite metastasized as jobs were lost, real incomes went stagnate, and middle America watched the ostentatious consumption and accumulation of wealth by an urban plutocracy intoxicated by their own success. The hate and anger simmered for decades, ultimately boiling over on November 7, 2016.

Three charts succinctly capture the underlying mechanisms that fueled the resentment movement. The divergences we see in real income and wealth accumulation, as well as the dramatic expansion of the cerebral economy, correlate well to the publication of Freidman’s work and the emergence of the jacked-up, Chicago-style rendition of neoclassical economic thinking. And yes, correlation does not imply causation, but it certainly presents a powerful association.

Source: A Guide to Statistics on Historical Trends in Income Inequality. Center on Budget and Policy Priorities. November 7, 2016

Source: A Guide to Statistics on Historical Trends in Income Inequality. Center on Budget and Policy Priorities. November 7, 2016

Source: Doug Short. Advisor Perspectives.

It should come as no surprise that a man who struggles with empathy and is arguably the antithesis of decency and soulful conduct (Trump not Friedman) was put into power; he embodies the sentiment of those left behind. Why should someone in a once thriving small town believe in decency when ostensibly more decent leaders presided over the upending of non-urban America without much remorse? How do they feel heard when small-town sentiments never seem to gain traction in the popular discourse? After all, the idolization of wealth is far more popular in urban culture than the plight of flyover hillbillies; did you see last week’s episode of the Real Housewives of Beverly Hills? Or what about Real Housewives Atlanta, or New Jersey, or New York City, or Orange County? All of those are actually real television series to which people in cities pay far more attention relative to what happened to Bill and Edna when the factory closed down and moved abroad.

The aforementioned questions (and language) are obviously rhetorical, but they highlight why many hard-working, good Americans voted for Trump. He is uncouth, full of anger and disdain, and he wants to tear down an elitist establishment — the members of which only pay mind to the middle of the country when their iPads die at 30,000 feet. Never mind the fact that Trump could once be classified as an elite New York City Democrat, his Trump Collection is manufactured outside the US, and the bankruptcy of Trump Hotels & Casino Resorts laid waste to employee retirement accounts. Resentment begets the desire for revenge and that desire can be a blinding force.

The trouble we now face is that resentment populism has installed a regime that, with its lust for power and control, seems intent on despotic rule. The establishment that needs to be uprooted is not our democratic process, Constitution, and de-centralized government. The core tenants of our Government did not fail the vast swaths of red counties that now occupy the electoral maps. Those left behind by the economic growth of the past 50 years were failed by the conduct of our corporations and the shareholder first-and-always mentality. Perhaps many of those occupying the Government were complicit in the corporate and special-interest exploitation, but to eliminate a cancer, you do not attack the body in which it resides; you target the tumor of origin.

The neoclassical economic doctrine championed by Friedman is a key node in that tumor of origin. It opened the door to disconnected profiteering under the guise of “good business,” and many of the large institutions and corporations of our country could not resist the urge to step through, either voluntarily or under the coercion of Wall Street. With the election of Donald Trump we paid a steep price for heartless actions in the pursuit of maximum profits. We will continue to pay until we understand that human beings and the sustainability of our lives are more important than shareholder returns and egregious wealth accumulation.