Thursday, August 13, 2015

Reagan Democrats and Trump Democrats and the End of Free Stuff

In the fall of 1979, writes Jeffrey Lord, nobody took Ronald Reagan seriously. “The American people are not going to elect a seventy-year-old, right-wing, ex-movie actor to be president.” said Carter chief-of-staff Hamilton Jordan.

But in November 1980 Ronald Reagan won the presidency by nearly 10 points over Jimmy Carter even though liberal Republican John Anderson ran as an independent. How did Reagan win? With the "Reagan Democrats." They were "Blue collar, working class, largely Catholic and ethnic" that had voted 20 years earlier for Jack Kennedy.

The Reagan Democrats were pissed off. And why? Because all the free-stuff promises the Democrats had been using to buy their votes for the previous 50 years were crumbling into dust Stagflation, they called it. So they were angry. So they voted for the Eevil Republicans.

Jeffrey Lord cites a poll showing Donald Trump doing well in Iowa.
But as in 1980 with Reagan, it doesn’t take much imagination to think that Trump’s overwhelming lead in categories like those with less than a college education or those earning less than $50,000 bodes well for his ability to win Democratic votes in considerable numbers.
 In other words there's a good chance that a lot of Democrats are really pissed off this election cycle. So there's a good chance they will vote for the Eevil Republican.

It makes sense, because it's hard to see the genuine Republican base -- national security conservatives, economic conservatives, and social conservatives -- getting excited about Trump.

But really, what did those Trump Democrats think would happen when Obama went ahead with a job-throttling Obamacare, a job-throttling payoff to state and local governments with the stimulus, a job-throttling Dodd-Frank regulation of the banks, and a job-killing green energy agenda?

Kevin D. Williamson puts the question squarely in a piece on the China meltdown. He talks about how the Ex-Im Bank lent money for top employees of China's biggest bank to fly executive jets built by a company owned by Goldman Sachs.

The way the game works is that
Money is lent on concessionary terms to make transactions happen for politically favored businesses and investors on the theory that the resulting economic activity will be worth the costs.
As in student loans and Chinese apartment blocks and 100% mortgage loans to sub-prime borrowers and solar power and wind turbines and solar roof collectors and farm subsidies and so on.

The point is that eventually any market distortion is going to bite someone in the butt. Hard. And it is not rocket science.
There isn’t any way around this: If you distort markets, you will, eventually, discover that everybody has taken out second mortgages on their Chinese ghost-town vacation condos to invest in tulip bulbs.
And then everybody gets really pissed off and demands that the government Do Something.

When it was the Doing Something that caused the problem in the first place.

Hey, people, this is not that hard. Everything the government does, everything, is a distortion of the economy and will damage people and their livelihoods. Especially when the music stops and it turns out that their aren't enough chairs to go around. 

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