In the politics of economics, overconfidence can be deadly.
One of the few predictions of the past four years that was certain to come true was that the wealth and incomes of Americans were sure to become more unequal than they had been during the past century, though we were already facing the most extreme inequality of modern times. What soaring stock prices and the economy’s still uneven recovery from the Great Recession did to grow the gap between the top 1% and middle income Americans since 2017 was further reinforced by cuts on income and corporate profit taxes and by expansion of the scope of exemption for estate taxes being ushered in starting in 2018. To aid the pretense that the cuts are meant to help the middle class, they provided a short-term tax reduction of around seven or eight hundred dollars a year to a household earning the median income. However, gains to those nearer the top ranged from the tens of thousands to the millions of dollars, and the cut in the tax on profits automatically raised share prices by 21.5%, further exacerbating wealth inequality. While much of the price tag will be paid by future generations, a lot has already been paid for in the form of defunding of social programs, and in that of the two hundred thousand plus deaths caused by our government’s failure to respond as an advanced society should have responded to the Covid-19 pandemic.
Some supposed that the gains to top earners might help to create new jobs for working class Americans. The only problem is that there’s not an economics textbook anywhere that predicts that these kinds of tax cuts help working people. No economic theory or experience indicates that windfall tax cuts lead to new jobs. On the contrary, jobs are created when there’s demand for goods and services, and the swelling of high end wealth creates little demand other than that for a bit more landscaping and mansion construction. It’s been true from the outset that we were more likely to see Donald Trump become immersed in mindfulness meditation and Mike Pence convert to Islam than we were to see any burst of job creation in the U.S. from these cuts. There was no job surge from the Trump tax cuts, and that was true before the worst job losses since the Great Depression kicked in thanks to the administration’s total bungling of Covid-19—a disaster mostly attributable to Trump’s scorn for science and to the absence of the very concept of responsible governance in Trump, Pence, and Mitch McConnell’s mindsets. The administration kept out Chinese citizens to play to its base, but did nothing to start tracing spread of the virus; see Trump has killed his tens of thousands.
Liberals and progressives naturally hope that the 2017 tax changes for top brackets will prove short-lived, or at least that the cut in the corporate profits tax rate—which some think justifiable from the standpoint of global competition—will in the end be paired with higher income taxes for top earners, helping to address the inequality that’s putting the squeeze on living standards for so many. More than a few analysts saw a vigorous 2018 political backlash as likely, and they were right in that case, though the failure to win the Senate led to failure to impeach the President for his treasonous actions against U.S. interests in the world and to a rightward stacked Supreme Court. Even in “red states,” many college-educated suburban Republicans were said to be sufficiently turned off by the President’s thinly veiled racism and misogyny that they were prepared to vote for Democrats over hard-right Republican candidates. More white working class voters had begun to recognize their former hero’s “I’m rich enough to stand up for you” political pitch for what it is, as reports of the sums his policies net for his family and wealthy backers reach even their ears. More millennials and Americans of color who sat out 2016 due to disenchantment with Hillary Clinton may also came to recognize that you have to cast a vote to be counted. Perhaps this wave will continue, with the additional spur of all the Covid dead who Trump feels he helped by sparing them unnecessary alarm.
Strategists hoping to complete this turn-around with the 2020 Presidential and Senate elections need to keep front-of-mind that the prediction that this will happen can be their worst enemy. Part of the paradox of voting is that the motivation to go to the polls is inversely related to the perceived likelihood of your side winning. As discussed in "Why you should vote", rational choice analysis in economics and political science predicts that people will not incur the cost of voting if they see their likelihood of being a “pivotal voter” who turns the tide towards a favored candidate or position as negligible. To win in 2020, anti-Trump forces need to cultivate a “can’t do it without you” atmosphere that constantly reminds voters of how wrong the polls were in 2016.
Failure to recognize self-interest due to misperception and overconfidence, including failure to vote in one’s self-interest or even to vote at all, taking political democracy as a given rather than as an extraordinary historical novelty to be defended and improved upon, is a major reason why democracy hasn’t been more effectively harnessed by citizens to give themselves a fairer shake in the American economy in recent decades. In the Trump era, years of success at portraying government as the enemy rather than the servant of the people, and making government more hapless by defunding needed programs, emboldened the new inequality’s biggest winners to think they could sell an unfettered version of capitalism to enough voters to undo the mixed economy altogether. Given the unpredictable twists and turns of the past few years, it’s anyone’s guess whether either capitalism or democracy will survive. Don’t spend too much time guessing, please. Do yourself and all of the rest of us a big favor. If you hear of or read any polls that show that we’re going to succeed at rescuing our democratic institutions and removing the plutocrats and betrayers of our constitution from office this November, DO NOT let that lull you into staying away from the polls. Put on two masks, a protective screen, and a full body hazmat suit if necessary (or vote by mail if there’s still time). Make sure that you vote. History and our posterity are counting on it.