The Center Can?t Hold: all dressed up with nowhere to go

Anyone watching the pre-nomination political hysterics this year can sense a great deal is not right in American Politics. The campaigns come after nearly 6 years of virtual gridlock in the Congress. National political rhetoric is incendiary and inflammatory. The extremes dominate. The center is not merely not holding. It has vanished. Politics in America is different from the past. The question is whats in the future for a system that depended upon an active center

The Democratic Party has moved steadily to the left, emphasizing political correctness and redistribution. It excoriates bankers and CEOs making substantial salaries. It vows to tax what is not yet taxed and redistribute the proceeds in some fashion to supposedly downtrodden masses. It promises to re-do trade agreements that are part of the international liberal order. It promises to extend claimed benefits delivered by the State and regulate American business even further. It is undaunted by the uncertainty this has created which prevents private sector companies from investing. Low rates of private business investment strangle our growth rate and low growth portends an immense budgetary crisis not too far down the road. To paraphrase Rahm Emanuels famed quote about never letting a crisis go by, it seems as if Government has never met an industry or a service it cannot improve with more regulation.(His precise quote was “Younever leta serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”)

One wonders what to make of a Republican party about to be captured by a non-Republican businessman The fact that Trump has not been in the political arena before has not stopped his shrill condemnation of immigrants, Muslims, women who endure abortions, and foreign trade partners, among others. His rhetoric approaches hysteria and he regularly tweets and trills we is being robbed by a set of Republican rules he does not like. The fact that some 60-65% of Republicans voting in the primaries dont like him, does not silence the 35-40% who are prepared to shout down his opposition. His supporters are a noisy bunch that responds to hyperbole. Sadly, creating hysteria in political campaigns has a bad track record for countries wishing to retain their liberties. We last experienced this kind of indelicate sloganeering in the 1950s with the anti-communist hysteria. Abroad, hysteric politics has often ushered in undemocratic regimes. Think Germany and Italy, but lately the French seem to like it as well. This is a genie that once unleashed will be very hard to put back in the bottle in democratic societies.

Nearly always, hysterical extremism occurs when the Center seems to vacate the political arena. Representative democracy doesnt function well when the Center disappears. Policy is gridlocked; the public gets mad and the appeal of the extremes grows exponentially. Some countries are forced into coalition governance; and, in others, it is possible for there to be a ruling party which holds the reigns of executive power even though it is not a majority party. What we observe in our fractured two-party system seems to be replicated even in parliamentary systems with many parties. Legislative action is emasculated or otherwise totally paralyzed there as well, even for systems that have a well-defined majority party, because extremes can hide within each of the majority and minority parties. This is a dangerous outcome for democracy, but also for rational policy choice, whether it is in economics, domestic or foreign policy

In Europe, the migration problem has created a multiplicity of extreme views. Europe is becoming more like America with regard to the decreasing relevance of the Center. The growth of the welfare state in America indicates America is becoming more like Europe, leading to a budgetary problem in the future that will be insoluble if current politics continue.

In the original design of the Founding Fathers, our political system carried within in it both formal and tacit restraints on potential abuses by majoritarian government. The Federalist Papers are filled with devices to slow down majorities from commandeering the Government. Our checks and balances are explicit recognition by the Founders of the historical failures of democratic systems that fell prey to majoritarian dominance. The Founders feared the collapse of the center, and the empowerment of the extremes. The classic answer of the Federalist Papers to Montesquieus critique of ancient direct democracy was a clever appeal to the existence of thirteen separate and sovereign states that were to be a unique bulwark against capture. Unfortunately, it has not worked out as well as our 18 century political geniuses believed. Thats not really surprising. They had no idea how big and how powerful we would become.

Colonial America was small in population, and the activities of Government were restrained. Government today is far more extensive. Less is left to individual or municipal or state action, and more has been accreted to the Federal Government. There is scarcely an area of human activity in the US not covered by some regulatory apparatus. In the past, economists judged the extent of Government, by the fraction of GDP that was generated in the Government sector. The Regulatory State makes that metric irrelevant. It is the scope of regulations on all aspects of our lives that poses ta growing threat to our enterprise and growth.

Federal actions in Europe have been similarly attached to the politics of the EU and less to its individual component members. The Brexit controversy in the UK is only the first of what may become the central political problem of the EU-exit. These somewhat parallel developments in Europe and the United States suggest something fundamental is wracking the body politic on both sides of the Atlantic. Local, close to home governing activities are eroded. National and Supra National authority becomes vested in permanent bureaucracies that seem to have missions, never chosen by the populace who are governed or taxed, and whose costs are never evaluated prior to their imposition.

One implication of this growth in Federal function is that the spoils of (political) wars, are now much larger. Political power is lost by the political units closest to the people and gained by Federal authorities farthest from the governed. The politicians gain power over the purse and local communities are rewarded or punished by that purse.

Thus, there are two drivers to this collapsing center: the extension of Federal power and elevation of principal Government actions to the Federal level. There is now much to be fought over and more extreme views on desirable policies rise out of that melee. Federal Government gains more responsibility for individuals and creates less room for private solutions. Once established, it becomes very hard to slim down the Regulatory State. Pogo was right. I have seen the enemy. It is us.

Assuming that both Democratic and Republican parties have now essentially chosen their nominees, there is a significant chance that both houses and the Presidency will be captured by the Democratic party. Will it rule in extremis Will it thoughtfully recognize that moving too far in one direction is likely to cause an even more violent and noisy reaction by the current minority The first two years of the Obama Administration shows that mandate, is a broad political term that can license extreme solutions. Obama was once quoted to say Elections have political consequences. I won. Will it be different in another sweep There is likely to be much less moderation in a sweep which will give rise to a further erosion of the Center.

Much of the problem of remedies for current problems comes from faulty diagnoses. Nothing illustrates this more than the current zeal for the regulation of the environment or of our financial system. The majority applauds, but the dangers grow. The science behind many of these proposed regulations is mostly supposition, not sound logic and it is devoid of any consideration of the costs of implementing these restrictions. Sadly, hysteria creates a fog in which the loudest voices win over those that reason. We are on a very dangerous path.

We are all dressed up with nowhere to go.