Joseph Stiglitz writes:

As the shock of Donald Trump’s victory sinks in, pundits and politicians are mulling what it means for the future of the US and global politics. Understanding why such a divisive, unqualified figure won again is crucial for the Democrats. Did they go too far left and lose the moderate Americans who make up a majority? Or did centrist neoliberalism – pursued by Democratic presidents since Bill Clinton – fail to deliver, thus creating a demand for change?

To me, the answer is clear: 40 years of neoliberalism have left the US with unprecedented inequality, stagnation in the middle of the income spectrum (and worse for those below), and declining average life expectancy (highlighted by mounting “deaths of despair”). The American Dream is being killed, and although President Joe Biden and Vice-President Kamala Harris distanced themselves from neoliberalism with their embrace of industrial policies, as representatives of the mainstream establishment, they remained associated with its legacy.

The economics of the moment mattered, but monthly employment and inflation indicators need to be understood in a broader historical context. As the Biden administration stressed on the eve of the election, the economy looks strong, especially compared with others in the G7. But this wasn’t good enough. Americans haven’t forgotten that the Democrats let loose the financial sector (Clinton), then bailed out the banks while homeowners and workers who lost their jobs in the Great Recession carried the cost (Barack Obama). Moreover, it was Clinton who unleashed globalisation, tacitly believing in a trickle-down economics that would ultimately benefit everyone. The only real difference between Democrats and Republicans on this score is that Democrats claimed to feel the pain of those who were losing out.

The tragedy is that Americans seem to have voted for mere disruption more than anything else. Stalked by economic precarity and the spectre of downward social mobility, tens of millions of Americans voted for Trump as a way of “sticking it to the establishment”, and because many seem to believe that he has their back.

He doesn’t. Trump’s first term and his 2024 election campaign made it abundantly clear that he has no intention of enacting the types of policies that ordinary Americans need. He favours tax cuts for billionaires and corporations; an end to the Affordable Care Act (Obamacare); and sweeping tariffs, which are effectively a tax on US consumers and businesses. Most likely, the tariffs will be riddled with corrupt exceptions bought by campaign contributions; and in any case, they are sure to provoke retaliatory measures and a loss of American jobs. [Continue reading…]