Trump and the Inflection Point

President Trump? Sweet Christmas! The Cubs in the World Series and the end of world must be near.

The GOP managed to keep the Senate and the House, making for an absolute disaster for the Dems. Hillary Clinton is done as a politician, and the press is beginning to reveal just how incompetent her campaign was. The Sanders rebellion was a sign of disaffection in the core, and the normally reliable get out the vote by the Democratic machines seemed to have stalled (just based on the turnout numbers compared to President Obama’s victories).

Burgett Capital believed the polls. Last night was stunned disbelief.

Was the GOP establishment even more disappointed? One can suppose there will still be divided government, but there’s enough political connection to take care of business on healthcare and tax reform. Still, it is hard to see how this is going to be a smooth four years for the United States and the rest of the world. Trump’s platform is awful — popularism aimed at the worst aspects of the American political mind. Needless to say, the anti-trade, anti-immigration, law and order, and military tough-talk made Trump look unelectable. Of course, the left is already making with Hitler comparisons (and as they say, once you invoke Hitler you lose the argument). President-elect Trump is an awful manager and his supporters are the peasants who want to storm the castle. The media and pollsters succumbed to groupthink (as did Burgett Capital), as if saying, “This man cannot be President!” — but all of the miserable and angry people in the south and the midwest had other ideas.

The Tweets and press conversations from Election night were entertaining. Burgett Capital will admit to the guilty pleasure of watching all of the smug, Millennial hipsters at Hillary’s rally in New York crying and looking disgusted as the returns came in; yet, truth be told, there is more commonality and sympathy with them than the average Trump voter. There is also all of this noise about Clinton winning the popular vote but still losing; the problem with this ‘injustice’ is everyone knew the election is won on electoral votes, and so the campaigns needed to be waged to win electoral votes. So 5 million more Californians and New Yorkers voted for Clinton; they mean nothing after the last vote that put her on top of the electoral college. If you do not like it, start another amendment to the Constitution.

The third party voters are already getting it. Burgett Capital supported Gary “Aleppo” Johnson as the Libertarian Party has a platform closest to current ideology. Perhaps a Clinton victory was just assumed, so the desire to say, “Hey, don’t blame me, I voted Libertarian for national offices and Republican for state offices.” Besides, there was no chance Illinois would have many people wanting to “Make America Great Again” as this is a state that seems to relish bad government. But, in all seriousness, scapegoating third party voters is unfair. Ballot access laws make it next to impossible for third parties to get a foothold in this country. The only way they stay on ballots is through getting votes in elections. Third party voters want something that is better than what the GOP and the Democrats offer. Someone who truly believes in a party’s platform should not be shamed into being a ‘tactical’ voter, forced to vote for the lesser of two evils. If you want someone’s vote, present a platform of ideas that appeals to that person. “Wasting your vote” was probably what the Whig Party spokesmen said about Republican voters in the 1850s. Maybe the Whigs will make a comeback … Hillary may want to review their platform now that she’s done with the Democrats.

The rest of the world has to be puzzled. It is amazing how much goodwill this country can accumulate and then waste. Post 9/11, we have the world’s support and admiration, and then blow it on Iraq, Katrina, and the 2007-08 Financial Crisis. President Obama is elected and credibility is somewhat restored, as there is more multilateralism and respect for international institutions. The War on Terror is waged more sensibly with special ops and drones (though Burgett Capital still opposes military intervention). The US stays out of Syria. The US comes close to trade deals in Europe and Asia. The 2016 election cycle starts and there’s the GOP’s freak show of way too many candidates. The money falls behind guys who would just lose to Clinton, and they all sound the same. Except one — the one everyone thinks is just trying to keep his celebrity alive. This felt like protest votes that builded upon angry voters, and when the last ‘establishment’ guy was gone the GOP was stuck with Trump.

Oh, how the media laughed. Thank you, Democratic Party, for Hillary Clinton’s campaign, so safe, poll tested, and middle of the road it stood for nothing new. Nothing new at all offered to a country full of malcontents who were trained to think life only can get better, and can never get worse. Sander’s rebellion, fought almost to the convention, was a sign the core was not behind Clinton.

Trump and all of the damage he will do in the next four years falls squarely on the political elites running the Democratic Party and the Republican Party. These two parties are unraveling, with every two to four years seeming like a ‘mandate’ election only for the tables to turn again. The platforms of both parties are pasted together agendas from special interests who probably do not want to be in bed together. The question Burgett Capital asks is, “Is 2016 going to be recognized as the real inflection point for the major US political parties?”

Like World War One trench warfare, the Democratic Party and the Republican Party have fought a war of attrition since the early ‘90s: Clinton is rebuked in the 1994 midterms with GOP majorities in Congress after winning a landslide in 1992; Clinton is re-elected in 1996 and the GOP slowly loses seats in Congress in that election as well as 1998; in 2000 the Presidential election ends up being a tie decided for President Bush, with some more losses by the GOP in the House and the Dems taking back the Senate; post 9-11 in 2002, the Republicans end up picking up seats in Congress and win the Senate; in 2004, also a ‘war time’ kind of election, John Kerry losses to Bush in a fairly close election, but the GOP runs the table with majorities in both chambers of Congress; in 2006, Bush’s political capital is gone, and there is sweeping victory for the Democrats in the House of Representatives and the Senate (not to mention a majority of governorships and state legislatures). By 2008, the table is set for President Obama, who beats John McCain in a landslide and further strengthens the Democratic Party’s positions in the House and the Senate. Commentators called that election ‘historic’ and a ‘new alignment’ similar to Roosevelt’s coalition of special interests under the Dems in the 1930s. Yet, not even two years into Obama’s presidency, we have the 2010 election where the Democrats suffered massive defeats, with Tea Party Republicans taking the House and expanding in the Senate. In 2012, President Obama is re-elected over Mitt Romney in a landslide, with the Democratic holding the Senate and the GOP holding on to the House against gains by the Democrats. That success only lasts two years, as once again the GOP made huge gains in the Senate, House, and in numerous gubernatorial, state, and local races. In 2016, we have Trump and the GOP losing seats in the House and the Senate, but the GOP holds on to majorities in both.

If any pattern can be detected, it is that in stable times there seems to be an equilibrium between the parties, working under a divided government that does not do much except maintain the status quo. Times when one party appears to make gains over the other seems to trigger a rebuking in the next election, especially if national setbacks and political mistakes can be used as campaign issues. That neither party can hold a majority even after major electoral successes suggests very strongly that voters do not really align with those parties politically, but rather opt to simply vote for change when given a reason to do so. The seesaw, back and forth between the parties are just nonpartisan voters picking people they like (or voting against people they do not like). For example, look how Trump stole blue collar workers, suburban women, and even Spanish-speaking voters away from the Democrats. In 2018, it is likely the GOP losses the Senate and seats in the House as people react to the Trump presidency. In 2020, if Trump really makes a hash of his presidency, many of this supporters from 2016 will go against him.

In economics, the concept of a market structure following ‘perfect competition’ is one where incumbent firms come and go having no barriers to entry or exit, with each firm offering the same fungible product, each firm operating with access to all relevant information about its market, and each firm making $0 economic profit because, in the end, each firm is a ‘price taker’ — it sells its product at whatever amount the consumer is willing to pay. Does this state sound like the position of every card-carrying Democrat and Republican politician? They come and go, they offer the same ideas so not to be seen as a radical outside of the party, they are completely attuned to voter information, yet success (measured in political power) is short lived, with voters going for another option the minute more is asked of them.

The election of Trump could signify the end of one or both parties, and if it does the next four years will be worth all of the pain and aggravation. Unfortunately, Burgett Capital thinks the most apt comment for the 2016 election is a quote from H.L. Mencken: “No one ever went broke underestimating the intelligence of the American public.”

Copyright © Burgett Capital : 2007-2018

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.