The consequence is that Trump could win. I don't live in the US, so I can only go on the basis of the views of US citizens that, here in the UK, we can glimpse from the media coverage, and from the assorted polling data. My best guess, at this point, therefore, is that Trump could win the majority of the popular vote, but not get a majority in the Electoral College. Given Trump's rhetoric over recent weeks that could be very dangerous for the US. It would be worse than the situation in 2000, when the election result was challenged by Al Gore, in relation to the infamous “hanging chads” in Florida.
Then, Gore's argument was about whether he had actually won a majority in Florida. If he had, he would have won all of Florida's votes in the Electoral College, and thereby have won the Presidency. It only materialised later, when all the votes had been collated, that Gore had obtained a majority of the popular vote. This time, it could be clear that Trump has a majority of the popular vote, and yet would still be denied the Presidency. Given his campaign to undermine the vote, by claiming that the vote is rigged, by “crooked Hillary”, and the establishment, such a result would play into Trump's hands, and into the hands of that large mobilised rabble he has gathered behind him. As one survey showed recently, a portion of that rabble also possesses the vast majority of privately owned weapons in the US. It is far from the situation described in the US Constitution, which calls for a “well regulated militia”.
The situation in the US is very similar to that in the UK, and the reasons for the Brexit vote, and for a potential Trump victory are also essentially the same. Both countries are the epitome of that conservative approach that was developed by Thatcher and Reagan in the 1980's, and which has been continued by their successors. It is an approach that confuses wealth with affluence, and capital gains with profits. So, when stock, bond and property markets soared in the late 1980's and 1990's, this fictitious wealth was confused with the real thing. The ability to borrow money against this rapidly rising fictitious wealth, so as to continue buying large amounts of consumer goods, increasingly produced in China, and other Asian economies, or to realise large capital gains from these inflating assets, was confused with the ability to create large amounts of new value, as the basis of revenue.
And, this process was skewed in both places, more so than, for example in other European countries. So, it was those who already owned bonds, shares and property that appeared to gain from this inflation of asset prices. If you owned any of those things, especially in large quantities, you saw your paper wealth rise sharply year on year without any effort on your own part. In relation to bonds and shares, this was most apparent. If your portfolio of bonds and shares (or mutual funds containing derivatives of these financial assets) rose sharply in value, often by amounts exceeding the owner's actual income, it was easy to cash in a portion of your “profit”, and use it to finance your lifestyle. It wasn't so easy for most people in relation to property.
If you owned a house, or at least had equity in it, in excess of the mortgage on it, you might see your paper wealth increase in like manner, but you could not simply sell it, or a part of it, because you still needed somewhere to live, and every other house you might buy had increased by similarly preposterous proportions. But, you could, and Thatcher and Reagan and others encouraged you to, effectively do the same thing, by using the inflated price of the house, to borrow against it, to increase your mortgage, or to use the house as collateral for other types of borrowing.
But, by the same token, the money that workers in general put into their pension schemes in the 1990's and 2000's bought fewer and fewer of these more expensive bonds and shares, and that thereby undermined the potential of those funds to pay out their future pension liabilities. As I've set out in other posts, it is that which is behind the current pension fund black-holes.
There is a common aspect here. High levels of paper wealth in the form of shares, bonds and property enabled those that already owned them to utilise some of the capital gains from them to substitute for actual income. That meant the pressure to raise wages to cover consumption spending was reduced for these layers of society, some of whom already had relatively lower outgoings, because they had bought houses – one of the major elements of household expenditure – much earlier, when house prices were much lower. But, even where this latter aspect was not the case, that same rise in house prices allowed others who only joined that bandwagon later, to be able to borrow to cover consumption.
In the same way, pension funds utilised rapidly rising prices, of the existing assets they held, to cover pension liabilities by cashing in the capital gains on those existing assets. In both cases, what is occurring is a consumption of capital rather than revenue, and this inevitably undermines the capital base from which future revenue is created. The same thing has happened with companies, and largely because of this latter factor. As firms saw large capital gains from financial speculation, they put their efforts not into real capital accumulation, but into simply blowing up the prices of these financial assets even further. The necessary corollary of that, is that as asset prices rise, any given amount of revenue produced by them forms an ever falling yield. Because, the speculation simply inflated the asset prices, rather than accumulating additional capital, which could have produced additional profit, out of which additional revenues could have been paid, an ever widening gap opened up, and in order to try to preserve yields, the representatives of this fictitious capital, on company boards, have simply pushed the proportion of profit paid out as dividends to ever higher, and unsustainable levels.
And, this diversion of money-capital into speculation, as opposed to real capital accumulation, is the reason that growth has been so sluggish – alongside the similarly conservative policies of various governments to undermine aggregate demand, by ridiculous policies of austerity. On the one hand, we have economies in which the top 0.001% that owns the vast majority of fictitious capital, has seen its paper wealth expand astronomically. Even as the yield on this fictitious capital has cratered, the revenues produced, for this tiny minority, have been beyond the wildest dreams of most citizens.
Then we have those, amongst the baby boomers, who may have already owned some of these assets. Followed by those who only acquired some of these assets in the last two decades of the last century, but who have been able to finance their consumption, in an environment of sluggish wage growth, via borrowing against those assets. Then we have those who were never able to acquire any of these assets, during that earlier period. To the extent that they have been able to buy a house, it has been at massively inflated prices, way out of line with the historical norms. They massively over borrowed to buy such massively over priced houses, and it was only a further inflation of those prices, in the first decade of this century, which enabled them to borrow yet further against their houses.
This same group has had little disposable income to be able to acquire savings, to put money into those other rapidly inflating asset classes, such as shares and bonds, which the previous two generations had been able to do. A look at the US itself indicates that position. In order to get into the top 10% of wealth holders in the US, you need nearly $1 million of wealth (about £800,000), including the value of your house. By far the greatest proportion of people that fall into this category are the over 55's, and the over 60's form a proportionally greater chunk. Its one reason that, in the US, the number of workers who are out of the labour market, but not seeking employment is large. It is workers, and sections of the middle class, who were able during the post-war boom to build up such assets, and can now live off them in retirement, or semi-retirement, only choosing to re-enter the labour market, to boost their income, when required, or when wages are high enough to persuade them.
But, in both the US and UK, where conservative policies were adopted from the 1980's onwards, the other consequence has been that a large section of the population had neither rising asset prices to fall back on to finance their expenditure, nor a rapidly growing economy, to provide them with secure, well paying jobs. Instead, both in the US and UK, the consequence of the conservative policies adopted by Reagan and Thatcher, by Clinton and Blair/Brown was the de-industrialisation of those economies, and the decay of the urban areas that previously depended upon those industries. The only renewal of such areas, came as a result of a process of gentrification, whereby those that had been enriched on the back of rapidly inflating financial asset prices, or because they had found high-paid employment in those areas of the economy that grew on the back of it, pushed out the existing residents.
For thirty years, there was effectively no difference between the message given out, or the solutions offered by the Republicans as opposed to the Democrats in the US, or by the Tories as opposed to Labour in the UK. And, it is no wonder, when such a condition has existed for so long, that the superficial pundits, see it as normal, and permanent for all time. Elections can only be won from the centre-ground, is the conclusion that they draw. Yet, what the process of depasokification in Greece, the replacement of the PSOE by Podemos in Spain, the rise of the Left Bloc in Portugal, the collapse of Blairism (and annihilation of the Liberals), and rise of Corbynism in Britain, together with the success of Bernie Sanders in the US demonstrates, is that the political centre has collapsed. Nor has it collapsed, simply because voters have for no good reason got fed up with the centre-ground politicians, and “the establishment”. It has collapsed because the conservative political-economy upon which it rested has collapsed.
Despite everything that the Labour Right, the Tories, and the Tory media threw at Jeremy Corbyn in the months after he was elected leader, the fact was that under his leadership, Labour was rising in the polls from the position it was at under Ed Miliband at the 2015 General Election. Under Corbyn's leadership, and despite all of that opposition, the party grew like topsy, and it increased its majorities in by-elections, won elections for mayors, and did at least as well as Labour had done under Miliband in the local elections.
However much the Blair-rights continue to plead for a return to the centre-ground, its clear that it could not be a winning strategy for Labour. Just look at what happened in Scotland where Labour was replaced by the SNP, which at least rhetorically, adopted a position not in that old Blair-right centre, but much closer to the social-democratic positions proposed by Corbyn. Look at what happened to the epitome of that political centre-ground, and triangulation, the Liberals, they have been annihilated. Look at what happened in the EU referendum, in all of those old urban constituencies, like Stoke, with centre-ground/Blair-right MP's, where the vote for Leave was frequently as high as 70%.
And the same forces are at play in the US. Almost any other Democrat candidate would today be looking at a landslide victory over Trump. Certainly, that would have been the case had the Democrats chosen Bernie Sanders. But, the Democrats machine, steeped in those old conservative ideas that developed from the 1980's onwards, just like the Blair-rights in Britain, cannot conceive that things have changed, and that it is possible to provide some different set of solutions to those they have adopted for the last thirty years.
As I wrote some weeks ago, that should not affect the attitude of socialists to this election. Indeed, it should underpin that attitude. This is not like the situation whereby socialists oppose voting for a “lesser-evil” bourgeois candidate in an election, for example, a Gaullist, as against the FN, in French Presidential Elections. The reason for socialists in the US getting involved in the Democrats election campaign, is the same as that for socialists getting involved in the Labour Party in Britain. Our aim is to build a mass Workers Party, and to do that we have to start from where we are, not where we would like to be. In Britain, the closest approximation to a Workers Party, is the Labour Party, and in the US, it is the Democrats. The starting point, is the workers who already relate to those parties.
Whether, at some point, the workers in either of those parties, or relating to them, break away decisively is another matter, that we will have to deal with if and when it happens. It would be stupid for example, to argue for staying in Pasok, just because it was historically the Greek workers party, now that it has been supplanted by Syriza, and it is increasingly the same case with the PSOE in Spain, in relation to Podemos.
The most important thing arising from this election cycle, as with any other, should have been the ability for socialists to use it to get the ear of workers on a much wider scale, to begin to draw wider layers of those workers into activity, and into structures that can further enhance the voice of workers in general. As with Momentum in Britain, the requirement is to build grass roots organisation that can directly engage with local campaigns and communities, and turn that back into greater political organisation within the labour movement. On the back of a much larger, much wider base of working-class involvement, more politically conscious and clear in its aims, can be built the structures to replace existing politicians first at a local, and then at a national level, and along with it, a transformation of the political programme of the party, which thereby becomes ever more adequate to the workers' needs and interests.
If that is done, in the US, the question of who actually wins the Presidency becomes secondary. The fact is that whether Clinton or Trump becomes President, for workers interests to be advanced, it will require that those grass roots organisations are in a position to take action within the communities, workplaces and parliamentary chambers. One of the most important things will be for more radical Democrat politicians to win majorities in state and local government legislatures, to win governorships and so on, and of course, within Congress.
The fact is, that if Trump becomes President, he will find himself constrained as others have been. The US ruling class, and its state, have their own brutal means of ensuring that anyone, including Presidents, who seriously challenge their interests, are neutralised. Its likely that in just the same way that Bojo never expected to win in the Brexit referendum, and was somewhat lost having done so, the same applies for Trump. He is more of a boorish oaf than Bojo, and he seems to have done all in his power to act as such in order to lose, whilst in the meantime obtaining a great deal of self publicity. Unfortunately, as with Brexit, it is very hard to underestimate the intelligence of large sections of the population. Remember that Alf Garnett was supposed to be a parody, and not the role model for bigots that he became.
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