December 10, 2016

MEGAN MCARDLE: Those Pesky Principles.

Trump’s bid to keep Carrier from moving jobs out of the country was terrible economic policy. Naturally, voters love it.

That sounds cynical and biting. But I think there is actually a powerful underlying logic to this dynamic, one that we classical liberal, market-loving folks are going to have to contend with in the years ahead. I think there’s little question that rules-based, transparent systems are in the long run best for everyone, including the fabled “little guy.” But the results they produce, and the way they produce them, can undercut the political support they need to survive.

Consider the financial crisis and the recession of 2008. Looking at the disruptions in the U.S. and Europe over the last decade, the Wall Street Journal’s Bret Stephens says:

In other words, the “system,” with its high-toned rationale and its high-handed maneuvers, struck millions of people as unaccountable and unjust. It might have been a good thing that the sky didn’t fall on everybody, but shouldn’t it at least have fallen on somebody?

It did, of course; it fell on a lot of folks who had unwisely paid bubble prices for real estate. What Stephens is asking — what a lot of voters have been asking for years — is how come the guys at the top seemed to get off scot-free. . . .

This is the nature of principles-based systems. They are cold and impersonal, and ostensibly neutral machinery often produces results that look grossly unfair by any common-sense moral standard: rich people getting better treatment from the legal system than poor ones, bankers who gambled on mortgage bonds getting a safer retirement than truck drivers who gambled on an overpriced house. If the “fairness” of following principle departs too widely from the “fairness” of following our intuitions, then people are going to start asking what’s so great about those principles.

In truth, there are great things about those principles. Countries unbound by such principles, where the leaders run around browbeating and cajoling and subsidizing companies into doing what they want, are not great places to live or work. They stagnate, harming consumers and the majority of workers who are not lucky enough to have jobs at the favored companies.

Two points: First, we haven’t lived by those principles in the Obama era, and the electorate’s response is not to neutral principles and the harm they do, but to a system of cronyism and “waivers” and the stagnation that it has brought. (Remember Obama preferentially targeting Republican-owned car dealers for closure in the auto bailout? Remember the Chrysler bondholders? Remember all the special favors in ObamaCare?) Second, to the extent that “neutral” principles seem to always let people at the top get off scot-free, people may become suspicious as to whether they’re actually neutral at all, especially when the process of applying them isn’t transparent.

And it’s even worse when the people at the top treat the people at the bottom with unconcealed — even smugly displayed — contempt:

To be honest, it took me many months — I went to these 27 communities several times — before I realized that there was a pattern in all these places. What I was hearing was this general sense of being on the short end of the stick. Rural people felt like they not getting their fair share.

That feeling is primarily composed of three things. First, people felt that they were not getting their fair share of decision-making power. For example, people would say: All the decisions are made in Madison and Milwaukee and nobody’s listening to us. Nobody’s paying attention, nobody’s coming out here and asking us what we think. Decisions are made in the cities, and we have to abide by them.

Second, people would complain that they weren’t getting their fair share of stuff, that they weren’t getting their fair share of public resources. That often came up in perceptions of taxation. People had this sense that all the money is sucked in by Madison, but never spent on places like theirs.

And third, people felt that they weren’t getting respect. They would say: The real kicker is that people in the city don’t understand us. They don’t understand what rural life is like, what’s important to us and what challenges that we’re facing. They think we’re a bunch of redneck racists.

So it’s all three of these things — the power, the money, the respect. People are feeling like they’re not getting their fair share of any of that.

Of these, I actually think it’s the contempt that’s the most toxic, and that will be the hardest thing for Democrats to undo.