On Wednesday, Donald Trump delivered a series of remarks on the economy in a webinar event hosted by The Economic Club of New York.
The talking points were familiar. The economy is coming back, a safe, effective vaccine is coming before year-end, and so on. All you have to do is reelect him.
Some of what the president said was true. Some of it wasn’t. As a general rule, the longer he talks, the more misinformation comes out of his mouth. And not always because he’s consciously misleading anyone. The fact is, Trump likes to riff, and when he goes off script, the narrative invariably strays from reality.
Unlike many of the president’s detractors, I don’t think he everywhere and always endeavors to purposefully lie. Sometimes he does. Maybe even most of the time. But lying (and especially keeping up with one’s lies) is a ton of work. And Trump isn’t one for work. So, when he says things about the economy or the stock market during relatively mundane events like a webcast for the ECNY, I tend to doubt there’s anything particularly nefarious going on. (The same cannot be said for his rallies or his Twitter feed, of course. Those are his platforms for stoking societal unrest, exacerbating racial tensions, etc.)
Remember (and I think this gets lost sometimes), Trump is a man who in some cases believes his own narrative. Not in all cases. He’s not religious, for example, so that narrative is false. And while the president is racist, he’s not a racist, in my judgement. That’s a distinction worth making. Trump’s racism is just like everything else associated with his name — cheap, lazy, and vacuous. That doesn’t make it forgivable by any stretch, but it’s different from the virulent, dangerous strain he not-so-subtly pushes to his base. As I often put it, you won’t find Trump awake in the wee hours of the morning penning manifestos by candlelight. You might, however, find him eating a Klondike bar by the glow of his Twitter app.
But when it comes to business acumen and the economy, he believes it. Or at least he wants to believe it, where “it” means his own balderdash. If he accepts the reality of his business career and economic record, then what would he have to lean on when it comes to positive personal affirmation? The facts (e.g., the figure below, which I use quite often) elude him, in some cases because he refuses to engage with them. And he understandably expects his base to exhibit a similar aversion to the truth. After all, they’ve always had a penchant for suspending disbelief, so why should that stop now?
A common refrain among market participants, economists, analysts, and both candidates for the highest office in the world, is that the economy matters, and it matters quite a bit.
Indeed, when we talk about factors that played a role in Trump’s unlikely 2016 win, we often cite the plight of the American middle-class, stagnate wages, disappearing manufacturing jobs, the decline of labor’s bargaining power, and various other manifestations of the populist economic narrative.
It was always a laughable proposition that Trump was “just the man for the job” when it came to addressing those issues, but that’s part of being a demagogue — you play on people’s fears and emotions with no regard whatsoever for the plausibility of holding yourself up as a problem solver.
But was it (and is it) actually “the economy, stupid,” as James Carville famously put it? Maybe not, according to an interesting new piece from Rabobank’s Philip Marey.
“Trump supposedly tapped into the economic hardship of blue collar Americans who lost their jobs to globalization and technology, and were experiencing ever increasing income inequality,” Marey wrote, in a piece published Wednesday. “Economic narratives can be powerful and internally consistent. However, they may have nothing to do with reality,” he went on to say.
Marey uses the county-level outcome of the 2016 election to investigate the relationship between economic variables and Trump’s victory, and conducts a similar statistical analysis to analyze demographic, sociological, and psychological variables.
I’d be inclined to scrutinize Rabobank’s analysis more than is probably warranted given that it isn’t meant to be published in any academic journals, but I’m going to do everyone a favor and eschew that tendency in the interest of brevity.
The interesting bit is Marey’s assertion that based on the regressions, “the demographic model predicts more counties correctly than the economic model.” Furthermore — and this is highly amusing — he notes that “knowing the percentages of physically inactive white men living in a county is a better predictor of the Trump vote than changes in the unemployment rate, real personal income, and manufacturing employment.”
Marey drives the point home. “The more a population exercises in their leisure time, the less likely they are to vote Republican,” he says.
To be sure, the analysis doesn’t totally write off economic variables as insignificant. Rather, it questions the advisability of relying too heavily on economic factors to explain voting behavior.
Narrowing down the list of economic and demographic variables by choosing only those that are statistically significant produces the model below, which predicted 89% of counties correctly.
There’s much more in the full piece, some of which I agree with and some of which I don’t, but irrespective, it’s a worthwhile exercise.
As usual, Marey delivers the broad-strokes conclusion in a compelling, emphatic cadence.
“While both narratives appear plausible, the data provide more support for identity than for the economy as the decisive factor in explaining the Trump vote in 2016,” he writes, adding that “the ongoing social unrest of 2020 suggests that four years later, identity remains a decisive factor.”
That will either scare you, or embolden you, depending.
Brings to mean Dean Wormer’s trenchant advice to Flounder in “Animal House.”
“mind”
The model is either scary good demographic research or is a project in cynicism that could be leveraged by political operators. I’ll take it as somewhere in the middle.
So, we can continue to hollow out these counties, suppress prices of soft commodities, slowly take their jobs away, and slowly foreclose on their properties. Obviously there would be limits. But, for an organized autocrat, of which Trump is not, but which Trump does show the path for, more economic pain won’t cause the white underclass to rise up.
A variable that would be interesting to add is the net of tax revenues to state coffers generated by a county minus the tax spending in the county from state coffers. My hypothesis is that counties that have a net minus, i.e., receive more state taxes than they return to the state, have a positive estimate of effect. This is not a demographic variable and would be an extension of the model to include tax policy.
Those who can’t see through the madness and vote out their lobbyist elected overlords remind me of the frogs that start out in a room temperature frying pan and never jump out even as they are cooked to death.
I think the other data point that supports this narrative is the number of people who still think Trump, or Republicans more broadly, are better at managing the economy. Sure, if you’re in the top 10%, your pocketbook might be slightly better off (although even that is debatable), but for the vast majority of people, Republican policy is almost certainly not better for your economic situation let alone your health and happiness. It’s laughable when Republicans accuse Democrats of identity politics when the Republican party’s strategy is based on appealing to one or two very specific demographics in order to funnel cash to their donors.
Right, the very rich essentially trade long term growth and stability for instantaneous accumulation of wealth. Even for the wealthy the question has to eventually become one of… exactly what are you going to accomplish? Extracting all the wealth to the top while keeping incomes flat for the bottom 80-90% means eventually… you don’t have consumers. What then? By then I mean now. Millennials aren’t killing industries because they are electing to forgo things for no reason. They are struggling in a world where they have roughly 1/17th the wealth their parents had at age 30. Gen Z is not fairing any better.
Ahhh….econometrics! Predicting the past with greater and greater accuracy!
This supports my growing conviction that support for Trump and other populist republicans is strongly based upon the notion of victimhood.
For many years the GOP and right wingers have blamed biased media for any electoral failings. It’s the messenger, not the message. IT”S NOT OUR FAULT! Trump merely brought this talk radio notion of victimhood to a new level.
Listen to Trump blaming our national economic decline on voracious and “unfair” foreign competitors. Stagnant wages? Why it’s because of illegal immigrants and subsidized underpriced imports! “IT’S NOT OUR FAULT!” *
It’s the same thing at a personal level in Trumpland. It’s “NOT MY FAULT” that I am not hirable due to a lack of modern work skills or, increasingly, the inability to pass a drug test.
It’s also the fault of foreigners and immigrants AND because liberals give “them” (minorities) everything while neglecting us. My eyes were opened to this a few years back when a musician friend on returned from a visit to the social services department and complained “Those Somalis are getting everything while we can get nothing!”
This natural sense of resentment merges with the comfort of blaming others for out own failures. I say “natural” because there are so many experiments where chimps, dogs and crows will stop performing a task which rewards them with a treat if they can see another creature getting something better (say a grape rather than a pellet) for performing the same task. It seems that some kind of genetic sense of fairness is evident in many species, not just humans.
The GOP has long tapped into that resentment starting with the sainted Ronald Reagan talking about “a woman on welfare in Chicago who has five Cadillacs parked in her yard.”
When it comes to Medicaid and Medicare, the GOP always rolls out the notion of “personal responsibility” do cut benefits. Otherwise. IT’S NOT MY/OUR FAULT. Like children.
And like children, they are reassured when daddy promises to make things better.
*It’s great for business. Rarely are US companies blamed for moving everything offshore to cut costs and boost share prices. Now & then some talk radio blowhards will gently lambast US businesses for hiring those immigrant hordes
I know, I know, the Hitler metaphor is so overused. But, there are quite a few similarities. In particular, aside from the gift of firing up the masses at rallies, and the internal vacuousness; Hitler was able to motivate much of the population around the idea of the “unfairness” of the WWI loss, and their mistreatment by others via the Treaty of Versailles. Perception of mistreatment, righteous indignation, scapegoating, and a few carrots bring more people to your side than fear and power alone.
derek, just want to say i almost always read and enjoy your comments. There’s no like button, but I want you to know you”re appreciated.
Wow! Thank you.
There are many insightful commenters in this group. Our Dear Leader has assembled an interesting readership. But most of all, Doc Heisenberg continues to astound me by how quickly and frequently he generates thoughtful content. It’s really amazing.
I just hope that Canuck is not a Habs fan!!!
I’ll bet “exercises in leisure time” is just a proxy for “works at a desk.”