Eat or Be Eaten

Is it better for a leader to be loved or feared? 

Nicolo Machiavelli, the 16th century courtier and political philosopher whose name has come to mean allowing the ends to justify the means, advised that “because it is difficult to unite them in one person, it is much safer [for a leader] to be feared than loved when, of the two, either must be dispensed with.”  Leaders who expect people to do their bidding out of love, said Machiavelli, are likely to be disappointed, while “fear preserves you by a dread of punishment which never fails.” 

At inauguration, presidents are at the height of their ability to inspire fear in the hearts of other ambitious politicians.  New presidents often bring new Senators and Members of Congress to Washington with them on their coattails, and they often benefit from the magnanimity and willingness of the voters who voted against him or her to give the new president a chance. 

Sometimes a new president’s win is so impressive (think Ronald Reagan in 1980), that not only is it that co-partisans are more than happy to defer to the new president, but members of the other party who survived the election think twice about putting up serious opposition to the new president’s agenda.  

Mr. Trump cannot expect Congress to give him what he wants out of love.  Despite his inaugural claim that he arrived in Washington on the crest of “a movement the likes of which the world has never seen before,” the fact are that he received almost 3 million fewer votes than his opponent, that his party lost seats in the Senate and in the House of Representatives, and that in most cases, the Republican Senators returned to the Senate on November 8 received more votes in their respective states than he did.  

Fear isn’t likely to help him much either.  Despite all of Mr. Trump’s bluster and despite the handwringing of Democrats about the policies the new administration is going to try to push through Congress, it’s unlikely that anyone in Congress is worried about getting on Donald Trump’s bad side. 

President Trump’s current net approval rating—the difference between the percentage of people who rate him favorably and those who rate him unfavorably—is currently hovering at a frosty -8.1.  By comparison, Former President George W. Bush had a net approval rating on February 21, 2001 (the earliest date for which Real Clear Politics had data) of a balmy 38.1.  And despite the partisan warfare that affected his two term as President, Barack Obama left office on Friday with a comparatively warm net approval rating of 17.9.   Anything is possible, but it is more likely that Trump’s approval ratings will go down as his administration begins to grapple with the realities of governing. 

Low approval numbers will make it harder for the president to get his programs through Congress because they cast doubt on any claim that the president has any mandate for change. 

But that's not all.  Low approval ratings and the likely absence of any “honeymoon” period will trigger all kinds of strategic calculations among the ambitious politicians Trump manhandled during his romp to the White House. 

Politicians have all kinds of goals, but first among those goals is either getting re-elected or advancing to higher offices.  Donald Trump is probably not any different.  Setting aside the fact that the longer a president serves, the greater his impact on public policy—and history--is likely to be, one of the key measures of presidential success is his or her ability to win a second term.  Regardless of the fact that Donald Trump will be 74 when he can stand for re-election, it’s all but certain he’d like to see his name added to the exalted list of America’s two-termers. 

Ordinarily, a sitting president has a lock on his or her party’s nomination in the next presidential cycle.  This doesn’t hold for presidents who haven’t elicited sufficient fear.  That’s why Lyndon Johnson, Gerald Ford, and Jimmy Carter faced ultimately fatal intraparty challenges in their bids to become two term presidents. 

With Trump’s current approval numbers, it’s unlikely that, as David Brooks suggested, any politician is going to have any interest in “containing” the chaos likely to arise out of the Trump administration.  In fact, it’s in everybody’s interest to let the new President twist in the wind if he gets into trouble. 

Democrats, as Senate Minority Leader Chuck Schumer has already warned, aren’t going to help Trump out of the mess he is likely to create in his effort to repeal and replace the Affordable Care Act.  Schumer’s ambition is to become Senate Majority leader, and to do that, he’s likely to take a page from current Majority Leader Mitch McConnell’s playbook and prevent Republicans from winning any legislative victories. 

Ambitious Republicans such as Senators Ted Cruz (R-TX), Marco Rubio (R-FL), and Ben Sasse (R-NE) certainly understand that weakening Donald Trump is the only way they’ll have a chance to seek the Presidency before 2024.  A charismatic Donald Trump, complete with celebrity and gaudy trappings of financial success blindsided everyone in the 2016 Republican primaries.  He won’t be the same shiny new object in 2020, particularly if he has only meager accomplishments to boast about by then. 

Even seemingly loyal Vice President Mike Pence doesn’t necessarily have an interest in Trump’s success.  If Trump succeeds, Pence gets another term as Vice President in 2020, and then, at age 65, he’s the obvious frontrunner for the Republican nomination in 2024 if Trump is popular.  But it may make more sense for Pence to find a way to gently nudge Trump out the door if Trump’s numbers are soft, particularly if he can distance himself from the president without seeming disloyal. 

This says nothing about more senior Republicans Trump can’t touch.  John McCain (R-AZ), who is almost certainly serving his last 6 years in elective office, has plenty of reason to humiliate the President if he can.  Donald Trump and Sen. Lindsey Graham (R-S.C.) have been sniping at each other for the last year, and in any event, Graham can’t afford to become entangled with an unpopular president.   

And Senators Susan Collins (R-ME), Jeff Flake (R-AZ), Cory Gardner (R-CO), Dean Heller (R-NV) and Mike Lee (R-UT) have already shown that they aren’t afraid of Donald Trump by publicly refusing to support him when he was the Republican nominee.  

Public approval arms a politician with the weapons he or she needs to keep his or her rivals at bay. With his low approval rating, Trump is already bleeding enough to interest the Republican sharks who could benefit from his demise.  Without an ability to instill fear into the hearts of his rivals, Trump is likely to get a lesson on the law of the political jungle.

People are Not Paper Clips: How Progressives Need to Think About Economics

           

          Businesses exist for one purpose and one purpose only: to generate income and wealth for the people who hold stakes in them.  Those stakeholders include the owners, but managers, landlords, workers, suppliers, and lenders are also stakeholders.

            Businesses are not social welfare organizations.  They are not organized to provide jobs, education or anything other than the goods and services for which they receive compensation.  To maximize profitability, businesses cannot be expected to incur costs for anything—including labor—that they do not need in order produce the goods and services they sell or to manage their operations.  Consuming more than they need for their key functions (broadly defined) is a wasteful use of resources that could be better utilized by other nodes of the economy.  Successful businesses devote a good deal of attention to cost containment so as to maximize profit.

            That is why Progressives should not be looking to government to “reward” businesses for “creating jobs” by doling out tax breaks.  Smart businesses optimize their operations so as to create the most profit per unit of input, and they only hire people when they figure that additional workers will help them maintain or increase profit.  It makes no sense for a business to make a commitment to a worker that depends on the availability of an artificial and potentially temporary economic factor such as a tax break if the level of expected profit does not justify the hire.

            This is particularly true for the small businesses that provide the bulk of the jobs in the American economy.  A person who operates a small business is likely to prefer doing all the work—sales, marketing, producing, packaging, distributing and administering--operating the small business entails and keeping all the profits.  A person operating a small business is not likely to hire a new worker until it becomes clear that the new worker will enable the business operator to increase sales to a level sufficient to cover the cost of the worker and return additional profit.

            While we should expect businesses to manage their costs aggressively, there is a limit.  Nothing less than the outcome of the Civil War established the principle that businesses cannot manage the cost of people the way they manage the cost of paper clips and other overhead. Since the end of the Civil War, we have insisted that while business may vigorously seek profit, those profits may not be earned through, among other things, the employment of children, the neglect of worker safety, the degradation of the environment and the payment of wages below what society considers to be fair and decent.

            In every one of these cases, society imposes additional costs on businesses for the welfare of the society as a whole.  Businesses sometimes complain that such costs make their products less profitable, requiring them either to raise their prices in order to recover costs and profit or, in the extreme case in which costs and profit cannot be recovered, discontinue production entirely.  Both of these, they argue, hurt the community at large.

            In the former case, a business must decide whether to absorb the additional cost imposed on it by social policy or pass those costs on to the society as a whole in the form of higher prices.  Higher prices will affect demand or they won’t.  When demand is not affected, the circle closes.  Society demanded certain standards and agreed to pay for them. 

            When the circle doesn’t close and prices don’t rise in line with cost, consumers are saying that the increased cost exceeds the value of the product or service. In that event, the business must decide whether to stop providing the product or service or to allocate the loss among its stakeholders.  Assuming that the additional cost merely reduces the business’s gross profits, the business must decide which of its stakeholders must bear the loss. 

            During the New Deal era of the last century, social policy tried to ensure that workers would get a fair share of the profits their labor generated by encouraging the creation of unions and the use of collective bargaining.  At the collective bargaining table, a union’s function was to protect workers, as much as possible, from having to absorb the lion’s share of any loss.

            Unions still have that function today, but they are far less powerful and can’t shield workers from loss to the extent that they once could.  Today, we privilege capital and management, and the result has been a huge increase in the level of income and wealth inequality over what existed until about 1980 and the beginning of the “greed is good” Reagan era.

            Progressive economic policy begins where the union movement of the last century left off.  It seeks a fair division of business profits among all stakeholders by neutralizing the role that trade policy, tax policy, labor policy, and antitrust policy have played in shifting power and wealth from the many to the few.

            Progressive economics focuses on demand and not supply as “greed is good” economics does. Increasing demand encourages businesses to hire more people, and as more people get hired and the slack in the labor market disappears.  As businesses compete for employees, wages increase, automatically shifting income and wealth back into the hands of the poor and the middle class.

            Progressives call for government to increase demand by investing in things we all need, such as infrastructure, health care, research and development, education and social insurance.  That’s why Progressives are never ashamed to call for more government spending and the taxes required to pay for it.

            Over the next few years, if Progressives want to take power back, they must do it by advocating for a fairer economy.  Progressive policies such as higher minimum wages shift more of business gross profit into the hands of the people who actually do the work.  Smarter tax policy could make it more advantageous for businesses to divert resources away from bloated executive pay packages and toward innovation, business expansion, and employee financial security.

            Conservatives insist that Progressives want a Soviet-style command economy.  Nothing could be farther from the truth.  Progressives believe in the capitalism described in The Wealth of Nations and they want to channel it towards building a society that rewards work, encourages innovation and levels the playing field. Progressives must be clear that, unlike conservatives, they would use government power to ensure that people cannot be treated like paper clips.