The American Challenge

In its early stages it appears that the American presidential race stars two unique personalities — Bernie Sanders for the Democratic Party, and Donald Trump for the Republicans. From the left and the right, both represent the populist current underlying North American politics since the end of the 20th century, one which has emerged at various points throughout the country’s history. For the Democrats, populism has in the past been defined by attacks on “the dictatorship of money” and the demand for redistributive policies. For the Republicans, it has been characterized by a desire to return to an idyllic and utopian past now threatened by modernity and by a world hostile to American values. Both proclaim themselves representatives of a silent majority who embody the true essence of America, as opposed to the elites who supposedly control them. In practice, coming from opposing ideological positions and for different reasons, they share the same diagnosis — America is going in the wrong direction.

Populism has reemerged in America for a combination of interlinked reasons. For the Democratic left, the American dream is in danger because prosperity is not reaching all sections of society – it is being experienced by those with the highest salaries, while average wages are stagnating. For the populist right, the cultural factor is dominant. White Christians now find themselves in the minority. Immigrants are invading the U.S. and reducing both wages and opportunities for natives, and the outside world, with the rise of China and jihadi terrorism, puts the very fabric of North American society in danger. Within this context, both forms of populism turn to isolationism in order to focus on the internal rebuilding of the U.S. The exploitation of fear and doubt over what the future holds is the hallmark of American populism on both the right and the left.

Erosion of Principles

A populist candidate has never won a U.S. presidential election, neither with the nomination of one of the two main parties nor as an independent. Democrat William Jennings Bryan failed three times in his attempts to become president. McGovern was thwarted by Nixon in 1972. Pat Buchanan never managed to become the Republican candidate for the presidency and the independent candidacy of Ross Perot in 1992 served only to lose Bush Sr. the election. This means that it is unlikely either Sanders or Trump will gain the nomination of their respective parties, and that neither would win the election against any moderate candidate, be they Republican or Democrat.

Prophecies about American decline have been almost constant since the country’s foundation. In the last 80 years, the Great Depression and the political, social and economic crisis of the 1970s were, in their time, considered evidence of the inevitable decline of the country; obviously, none of these negative predictions came true. Once again, one of the causes for concern for many North Americans is uncertainty over the nation’s economic future and, therefore, over its position of leadership in the world. The 2008 financial crisis, the deep recession that followed, and subsequent lower economic growth than experienced in previous post-recession periods have generated a fear that this will become the new economic norm of the 21st century.

The problems that the U.S. is facing are the consequence of a betrayal, or rather the erosion, of the principles on which the country was founded — economic freedom, the rule of law and small government. This erosion isn’t anything new. In the past there have been periods in which the U.S. has moved away from this ideological and institutional framework for years at a time, such as the 1970s, and other periods in which it has returned to them, like the 1980s. History shows that when politicians embraced these fundamental ideals all was good, and when they moved away from them it was not. This assertion seems oversimplified but it is backed up by fact and by a wealth of academic literature. In the U.S. there is, in fact, a very high degree of similarity between the economic cycle of the time and the country’s politicians.

Vulnerabilities

During the presidencies of George W. Bush and Barack Obama there has been, in the words of writer John B. Taylor, a “Great Detour” away from the principles to which America owes its success. In the words of John Cochrane there has been a “Great Forgetting” of policies that work. However, history shows us just what these policies are: reducing taxes on individuals and businesses to encourage a desire to work and invest, reforming regulations which cost more than the benefits they bring, opening up the markets to international competition, reforming social programs to prevent an unsustainable increase in debt and to improve incentives to work, and making people and companies stick to contracts while establishing a framework for monetary and budgetary stability so that the very same families and companies are able to make decisions with at least a minimum level of security.

The North American economy is not condemned to secular stagnation. Quite the opposite; a change in policy could remove its current vulnerabilities and generate a rapid acceleration in growth and general wellbeing. As GDP has been rising at below pre-crisis rates there is an untapped gap of potential that could be translated into much quicker growth — this is the reality of the situation. America isn’t suffering from some sort of incurable disease, it is suffering from bad policies introduced since the start of the millennium, and these problems will obviously not be resolved with the socialist proposals of Sanders, nor with the headstrong Putin-ism of Trump.

The U.S. is the biggest economic and military power on the planet by a long way; in neither of these two areas does it have any direct rivals who threaten its supremacy in the short term. When compared with the U.S., China has the GDP of a developing country and its armed forces are light years away from those of the U.S. There is no real risk to America’s leadership, save the risk that is poses to itself. That is, a lack of confidence and a failure to observe the values that made it great.