Some Thoughts on THE ELECTION

In the wake of the election-- THE ELECTION, in capital letters and with strong emphasis-- I have read many insightful and thoughtful assessments of how we have arrived at the point where Donald Trump was re-elected. I highly recommend the recent scathing essay by my colleague at Marxism-Leninism Today, Chris Townsend, on the crying need for an alternative to the two-party charade and the bankruptcy of the Democratic Party as a representative for working people.

But for every good analysis, there are a dozen awful commentaries that ultimately blame the voters’ judgment or endorse their worst fears. 

However, if pressed for a simple explanation of the election results, one might consider the following:

Once again, offered the odious, devil's choice between two candidates who are rich, elitist, and completely detached from “ordinary” people, the US voter chose a candidate who was rich, elitist, and completely detached from the lives and interests of most people. 

Of course, people want to know why the voters chose this particular rich elitist at this particular time. That question calls forth both a specific, practical response and a far deeper, concerning answer.

Polls and disregarded economic data show that most voters have a profoundly negative and often painful relationship with their economic status-- they are not doing well. They typically punish incumbents when under economic distress. This should come as no surprise. But the highly paid consultants of both parties-- with approaching two billion dollars to spend-- chose to press many other issues as well and deal with the economy only superficially. 

But in the end, exit polls show that economic distress played a decisive role in shaping voters’ choices. Apparently, the pundits forgot how persistent, value-sucking inflation led to the election of Ronald Reagan forty-four years ago. 

Again, like today, the 1970s were a period of realignment. The Democrats had lost the South to the Republicans over desegregation and the Civil Rights legislation. After the Nixonian scandals associated with the Watergate burglaries and other dirty tricks, the Democrats won over suburbanites disgusted with Republican chicaneries-- a demographic thought by many functionaries to be the needed replacement for the lost South.

In 1976, the Democrats swept in with a squeaky-clean, untarnished candidate, James Carter. With the decade-long stagflation coming to a climax, the Carter regime was short-lived; despite a rightward turn on his part, Carter was beaten by an ultra-right movie star turned politician, Ronald Reagan. Reagan was the default choice for voters wanting change after a lost decade.

For those who like their history repeating from tragedy to farce, consider the transition from the self-righteous old red-baiter, Ronald Reagan, to the pompous, supercilious windbag, Donald Trump. History has a wicked sense of humor.

Few pundits acknowledge that Democratic Party strategists decided in the 1980s that the future of the party would be determined by the interests and concerns of metropolitan voters, especially those in the suburban upper-middle stratum who were “super voters,” economically secure, and attuned to lifestyle and identity liberalism. While they represented the legacy of “white flight,” the suburbanites contradictorily espoused the urbanity of tolerance and personal choice.

Coincident with the embrace of the suburban vote, Democratic Party strategists saw no need to attend to past central components of their coalition: the working class and multi-class Blacks. Loyal union leaders would corral the working-class vote and ascendant Black leaders would rally African Americans of all classes.

Besides, it was believed that neither had any other place to go besides the Democratic Party.

Senate majority leader, Chuck Schumer, revealed this thinking in 2016, when he said: “For every blue-collar Democrat we lose in western Pennsylvania, we will pick up two moderate Republicans in the suburbs in Philadelphia, and you can repeat that in Ohio and Illinois and Wisconsin.” Even before that careless remark, both Hilary Clinton and Barack Obama-- in moments of candor-- revealed their contempt for working people outside of the metropolis.

This election stamped “paid” on this program, with nearly all the assumed components of the Democratic coalition drifting towards the Republicans. 

The always insightful Adam Tooze, writing in The London Review of Books, concludes that the Democratic Party failings demonstrate “the high-achieving, insincere, vacuous incoherence that thrives at the top of the American political class.”

There is, however, a far deeper explanation of the Trump phenomenon seldom mentioned by mainstream commentators. Those who cite the specific issues of abortion rights, immigration, trans rights, crime, racism, etc.-- issues that indeed played a role in the November election-- neglect the fact that Trumpism is part of an international trend that infects the politics of such far-flung countries as India, Japan, and Argentina, as well as many European countries for often vastly different reasons. The rise of right populism in virtually all European countries-- Orban’s Hungary, Meloni’s Italy, RN in France, AfD in Germany, Vox in Spain, Chega in Portugal, and similar parties in virtually every other European country-- share one defining feature with the politics of India’s Modi and Argentina’s Milei: a rejection of centrist, traditional parties. 

Right populism rises as a response to the ineffectiveness of the politics of normality. It reflects the dissatisfaction with business as usual.

For hundreds of millions throughout the world, the twenty-first century has brought a series of crises eroding, even destroying their quality of life. Ruling classes have stubbornly refused to address these crises through the indifference of traditional bourgeois political parties. Voters have punished these parties by turning to opportunist right-populist formations that promise to give voice to their anger. Of course, this often takes the form of ugly, reprehensible claims and slogans-- appealing to the basest of motives.

But it is not enough to denounce these backward policies without addressing the desperation that unfortunately popularizes those policies. It is not helpful to righteously raise the alarm of “fascism” if we fail to offer an alternative that will answer the hopelessness and misery that serves as the fertile soil for reaction.     

From the tragedy of the Reagan election to the farce of the Trump re-election, we have suffered from two sham parties taking turns representing the “people,” while neither did. Isn’t it time for an independent people's party-- a party of the working class majority-- that addresses the twenty-first century economic crises and their aftermath, the acute environmental crisis, the broken public health and health care systems, the insidious impoverishment of inflation, the crumbling infrastructure, and a host of other urgent demands, a party dedicated to serving the working people of the US and not its wealthy and powerful?

Greg Godels

zzsblogml@gmail.com

Are We Having an Election in November?

With an important US presidential election-- we are told-- only months away, but one posing two repugnant, disheartening choices, it may be a good time to explore where we are and how we got here.

What we can agree is that most of us, when asked, believe that things are going badly: an October, 2023 AP-NORC poll finds that 78% of those polled responded that “the country is going in the wrong direction;” a January Morning Consult poll concludes that less than a third of those responding “say the country is headed in the right direction; a recent Harvard Kennedy school poll says that less than 10 % of youth 18 to 29 believe that the US is “generally headed in the right direction” and so on with NBC, ABC, Pew, etc. polls. We could quarrel over the exact numbers expressing dissatisfaction, but all polls point to a nation decidedly unhappy with our direction.

Of course, there is room to debate exactly what people mean by the “wrong direction.” They may mean in regard to their own current situation or that of their family or friends; they may mean their sense of security; they may mean their own or others’ prospects. Or they may mean that “society” is heading the wrong way culturally, politically, or economically. No doubt respondents to the various polls have complex, even contradictory reasons for losing confidence in the US trajectory. Moreover, one cannot discount the influence of monopoly media reportage and commentary in constructing the sense of dissatisfaction.

It is fair to say, however, that most people believe that our future will be determined by political outcomes. Whether or not they have confidence in the political system-- polls say they don’t-- they do, in fact, rely on campaigning and elections to determine the future course of the country. Most US citizens have not yet chosen or do not know of other political courses of action beyond voting or indifference.

A fixture of our political system is the two-party monopoly. While it is not unlawful or completely uncommon that there be other parties, tradition, entry-demands, financing, chicanery, and even violence have worked to deny third-party movements access or ensure their lack of success. Popular sentiment is denied by Republican and Democratic leaders and functionaries and those others invested in the two-party system who control the rules of the game. A fall, 2023 Gallup poll finds that “Sixty-three percent of U.S. adults currently agree with the statement that the Republican and Democratic parties do ‘such a poor job’ of representing the American people that ‘a third major party is needed.’” For a poll-based summary of US voters’ overall negativity, see this Pew article.

So ahead of a November election, we face two poles: one represented by a self-styled nationalist-populist promising to “Make America Great Again,” while weighted down with a sordid, vulgar, and elitist history; and the other represented by a corporate Democrat once known as the “senator from MBNA” (the infamous credit card company) for his cozy relationship with the credit card industry, a reliable friend of wealth and power, and a history of supporting legislation hostile to the interests of Black people.

This is where we have arrived.

Do the two-parties offer answers to the negativism expressed in polls?

I don’t see it. 

The Republican Party remains a corporate party wedded first and foremost to the interests of capital. It has a relatively independent wing that is able and willing to force its own cultural and social agenda on the entire party. Parts of that wing recognize that the self-proclaimed “party of labor” -- the Democratic Party-- has long failed to deliver anything of deep or lasting value to working people. Elements of this wing have-- in the twenty-first century-- constructed a faux-populist image to attract working people, with some success. Variations of Trump’s “Make America Great Again” had been used earlier by Reagan and the Clintons to entice workers’ votes.

Trump and others have attracted angry voters with their vocal disdain for the “establishment,” elite arrogance, East Coast condescension, and US leaders’ general superciliousness. While “draining the swamp” is a worthy goal, four years of the Trump administration provided no relief from elitism.

The Republicans historically vacillate between isolationism and belligerence. But at least they vacillate. 

While the Republicans do not want to identify with racism, misogyny and the many other know-nothing-isms, they are not above courting the scum that do. 

The Democratic Party-- the other option that we are allowed by our ruling class-- wears the mythical mantle of “the party of the people.” The sole basis for this claim is dim recollections of the New Deal, a little understood period of US history that brought some benefits to working people as a result of a desperate attempt to save capitalism from itself.

With capitalism on a firmer footing after World War II, US rulers, with the full cooperation of Democratic Party Cold Warriors, dealt a fatal blow to the so-called popular front, purging left-wing militancy from unions, universities, schools, media, and any other area of influence. 

The coup de grâce to New Deal thinking came after the collapse of the Keynesian paradigm/New Deal political coalition in the 1970s. When Reagan ushered in market fundamentalism and ushered out government intervention, the Democrats were not long in jumping on board. Soon, every Democrat saw the wisdom of efficiency, balanced budgets, private initiatives, and entrepreneurial sovereignty. As the Republican Party embraced religious zealotry and medieval justice, many saw the Democrats as the new Republicans, with their stealth attacks on welfare, Social Security, and Medicare.

Today’s Democratic Party is neither democratic nor a party, but a brand. It lives and breathes on money from corporate sponsors. Its contact with its supporters is through advertising, television talking heads, the punditry, and indirectly through various media; the idea of human contact with potential voters is only useful if it can be filmed and included in a television commercial.

Like the Republicans, the Democrats have an activist wing that provides a social democratic veneer to the party’s image. Unlike the Republican counterpart wing, the “progressive” Democratic wing never dares to attempt to impose its views on the party. Without exercising “leverage,” the Democratic Party left wing simply serves as a cover, a safe space for “progressives” to welcome other progressives into the party’s arms.

The truth is the Democratic Party is a corporate party, but a party that has occasionally been forced by social pressure, circumstances, or crises to play a people-friendly role. The pressure is not there now.

Moreover, the Democratic leadership has nothing to offer working people. The class base of the party has shifted. With the loss of the South to the Republicans and the ugly Nixon fiasco in the 1970s, the Democrats captured the suburban petty-bourgeoisie and its aspirants who were comfortable with the shrinkage of the welfare state, lower taxes, and deregulation, yet socially liberal on personal questions. Stable super-voters, active in social movements, and financially generous to the Democrats, they (and their contemporary urban gentry counterparts who share a similar profile) are the new keystone of the Democratic Party. The traditional backbone of the Democratic Party-- minorities, unions, youth, the poor-- are taken for granted. After all, according to the reasoning of Democratic leaders, those groups have nowhere else to go.

This realignment has refashioned its core issues around lifestyle, personal rights, and a hyper-regard for the diversity of individual values. The traditional left's concerns for common social values of equality, community, and material security have been forced into the background. Good jobs, health care, education, and secure retirement are not there for all to have, but for those who earn them.

Democratic leaders celebrate achievers-- those who have broken through glass ceilings-- but have contempt for those fallen or stuck in the basement. Both Hilary Clinton and Barack Obama have arrogantly, and with little forethought for appearances, relegated the heartland of the US to a land of gun-loving, Bible-thumpers-- in Clinton’s unforgettable words, “the deplorables.” Never mind that the Midwest has been ravaged by corporate deindustrialization, leaving cities and small towns depopulated, poor, with shrinking social services, and marginal employment. The “deplorables” have failed to push on, get a late-life STEM education, and rise by their own bootstraps. In the meantime, let’s extend a welcoming, helping hand to those few who merit admission to the highest rungs of elite society. 

This contempt for the non-coastal residents came forth most recently in a New York Times bestseller, White Rural Rage, by Schaller and Waldman, who depict small town USA as backward and infected with racism. Like so many in the Democratic Party intelligentsia, they see this as a threat to “our” democracy. That is to say, the authors worry about contempt for the democracy of the “successful,” but care little for the democracy of the “losers.” For a tightly argued, thoughtful rejoinder to this dose of elitism, read Les Leopold’s Wall Street War on Workers, though I wish Leopold would have as a sub-title “and the Two Parties’ War on Workers.”

For the forthcoming election, the Democrats will once again hope to corral those left-of-center with Trump’s alleged threat to “our” democracy. They will go so far as to raise the specter of fascism. Ironically, the closest move against democracy that resembles the realities of life under fascism is the recent bipartisan passage of an expanded section 702 of the infamous FISA, an act that permits warrantless spying on US citizens. The ACLU comments that it is a “bill that gives the government more ways to secretly surveil us.” Even more ironically, Trump-- the alleged enemy of democracy-- denounced the entire FISA act.

Leftish Democrats will again raise the old canard about divisions on the left in Germany opening the door to fascism in the 1930s. According to this historical reconstruction, the failure of the Communists and Social Democrats to unite against Hitler allowed him to take power. It is an ill-informed, simplistic take on a complex situation. But suffice it to say, it excuses the real causes of Hitler’s rise: the draconian Treaty of Versailles, discredited centrist politics, compromised industrialists and business people, a profound economic crisis, displaced workers whose voices were not heard, their desperation, and-- yes-- a rotten, broken capitalist system. 

The Democrats face an enormous problem with poor management of the economy and support for unpopular wars. Some say the Democrats are the war party. But that is not fair. Both parties are war parties, each with its own badges of shame.

But Biden and the Democrats will pay a price for enabling the bloodletting in Ukraine and, especially, for complicity in the massacres in Gaza. The intensity of the outrage against the genocidal slaughter in Gaza will only increase.

Regardless of which of the two parties wins in November, we are in for a rough patch. While the candidates are different, they are different in equally despicable ways.

I will follow the wise council of most of my fellow citizens who say that “a third majority party is needed” and cast my one vote towards that goal.

Greg Godels

zzsblogml@gmail.com

October Surprise: Market Apocalypse?

Volatility!

That’s the word that Wall Street uses when investors are getting nervous. And Wall Street and the financial pundits should and are getting nervous now.

The major US equity markets-- the Dow Jones, S&P, and NASDAQ-- have enjoyed a strong, and, to many, a paradoxical recovery since the pandemic shuttered much of the productive economy. While unemployment has soared and is only slowly reversing, while growth has collapsed, and while earnings are challenged, stock markets are marching forward, restoring nearly all of their previous losses by the end of August.

To many of us, it is not unusual to see stock performance far outpace the general economic welfare of the people. That is a commonplace of the capitalist economy.

Nor is it unusual for investors to expect that the stock market will outperform the economy in general. After all, that was the point of Piketty’s celebrated, thorough historical study of capital which showed that, all things being equal, the rate of return on investment will grow faster than the rate of economic growth. As a result, capitalism necessarily generates what we Marxists insist is exploitation.

But equity markets are not free floating, independent systems; they must intersect at some point or some time with the real economy. Stock performance must reflect the underlying ability of its associated corporation or enterprise to produce something of worth to the investor: profit. 

So if stock values in the five or six months of the 2020 pandemic seem dissociated from the economy, what is going on?

The Wall Street Journal offers a useful, if incomplete, explanation of the anomaly. How Stocks Defied The Pandemic (September 15, 2020) suggests five factors: 1. Stimulus from the Fed and Congress, 2. Expectations of a strong recovery, 3. The dominance of the tech giants, 4. The return of individual investors, and 5. Momentum trading.

Certainly the Federal Reserve and the two parties’ elected officials acted swiftly in the wake of the pandemic shut-down. Absorbing the lessons of the 2007-2009 crisis, they cranked out trillions of dollars’ worth of stimulus, they sanctioned easy loans, and they collapsed interest rates swiftly. 

But it is telling that equity markets appear to have been bolstered more significantly than other aspects of the economy, including those aspects protecting or promoting the fate of those most vulnerable to the catastrophe. In short, the investor class seemed to reap the greater benefit of their actions.

Though maybe unintended, the bailout encouraged hungry investors to devour stock market opportunities, with bond yields decimated and other interest-generating instruments foreclosed by the Federal Reserve’s actions. Capitalists must land their capital somewhere in order to preserve the accumulation process-- the system’s blood flow; the impact of institutional intervention by the Fed left them few promising alternatives outside of the equity markets. And that is where they put their money.

As for “expectations” of a quick recovery, any notion that such expectations could be built on anything more solid than hope and faith must be discarded. This singular event-- a crisis of public health, economics, politics, and racial conflict-- generated profound fear more than expectations.

The WSJ correctly located the outsized influence of Tech stocks-- principally, Apple, Amazon, Microsoft, Alphabet (Google), and Facebook-- in the stock boom. Without the investment flowing into tech stocks, mainly the big five, there would be no notable market rally. Apple, alone, has gained 57% in 2020 and now has a valuation greater than the FTSE 100, an index of the top companies on the London Stock Exchange. At the same time, the frenzy for tech stocks frightens pundits and advisors. Apart from Amazon, tech stocks play in a virtual universe that challenges real-world valuation. Moreover, they have been notoriously volatile. And the gains have been concentrated in the Big Five, with other companies far less successful. 

Past stock market collapses have been preceded by a dramatic increase in individual investors bent on taking advantage of an overheated market. The return of the “rubes” has always been a signature benchmark of an impending decline. From the casual dabbler before the Great Depression to the day trader and dilettante of today, the engagement of “amateurs” is always a harbinger of market disaster. 

Some would be surprised to learn that in the modern era, individual investors-- day traders and the like-- only account for roughly one in ten trades. The rest are made up by institutional investors, funds, etc. But, in 2020, the number of trades by individual investors has doubled, accounting for about 20% of equity market action. 

With social media tipsters and discussion boards, the born-again investors have accounted for many stock valuations that puzzle and concern wiser investors. Tesla, for example, has gained 438% this year, establishing the maverick car company as the highest valued auto company in the world and the eighth largest corporation in the US by market value.

Fed by social media gossip, investors jacked up share prices of Eastman Kodak by as much as 614% before losing most of the gains! This kind of euphoria-driven investment has mature investors and advisors shaking in their boots.

Creating momentum through bets on overheated valuations only generates greater momentum. Easy money and the fear of missing a surge amplifies the momentum. Add the attraction of derivatives and the likelihood of a market bubble increases dramatically. 

Stock options-- the purchase of a contract to buy a stock at a price fixed before the actual purchase of the stock-- have exploded in 2020. They are attractive to investors who want to risk their capital on a bet of future gains and increase the potential return on the bet by spreading the capital over more, less costly options. Goldman Sachs reports that the volume of option trades exceeded the volume of stock trades for the first time this year. Three years ago, option-trading volume was only 40% of stock volume. In August, option trading topped 120% of stock trading. Small investors bought half of a trillion dollars’ worth of options in August alone, five times the amount bought in any previous month, as reported in the WSJ.

Much of this market craze is occurring against a backdrop of over three weeks of net decline in the US stock market indexes. Moreover, the employment recovery is stagnating, with new unemployment claims remaining at an historic high, and the pace of retail-spending growth slowing. Earnings-- the crucial factor in capitalist behavior-- is expected by some to fall by as much as 22% in the third quarter. 

Conditions are ripening for another market crisis not unlike that brought on by the 2000-2001 dot.com collapse. Billions, if not trillions, of nominal value stand to disappear.

Likely such an October Surprise would be fatal to Donald Trump’s reelection prospects, since most polls show that respondents see the economy is his greatest strength against Biden.

But whether Biden or Trump wins, the depth of the emerging crisis will make it almost impossible for either to rule effectively. Neither offers a way out. Only a profound, radical political realignment will blaze a path forward.

Greg Godels

zzsblogml@gmail.com