A possible political resolution for our secular cycle crisis

Previously I considered various ways the secular cycle crisis resolution could happen. I ruled out revolution, large scale civil war, and financial collapse, which were how the resolution of the three previous America crises began. I concluded that as long as rising flows into the stock market continue to support rising prices, a crisis resolution can be delayed indefinitely, and this feeling of impending doom simply continue. I noted that this might not be possible in the event of a great power war, which now seems to be a possibility, providing one, horrible, mechanism for resolution. This post discusses a much more savory resolution mechanism involving a political evolution that might be possible.

A Ph.D. engineer by training, my thinking style is earth-grounded rather than blue sky so I need frameworks to marshal my thinking. I use Peter Turchin’s secular cycle as a framework for thinking about the trajectory of American history and our present era. For thinking about politics, I use Stephen Skowronek’s political time cycle as my framework. I note that as a a dominant party’s dispensation proceeds from the initial Reconstructive president, through a series of Articulative presidents to its end with a Disjunctive president, the historical reputation of presidents from that party steadily declines.

Right now we continue to operate under a dispensation begun by President Reagan, which will continue until he is replaced by a Democratic Reconstructive President.  I note that Reagan saw his party as a “three-legged stool” consisting of three core constituencies: corporate America, neocons, and traditional conservatives (Religious & Alt Right). The first group has been a key party consistency from the beginning of the party. Their top policy prescription has been tax cuts for business and investors, which has been the most consistent “deliverable” from the party.  The neocons policy prescription was hawkish foreign policy, which Republicans delivered until the debacle of the Iraq war. Following the War on Terror and the 2008 financial crisis, the appeal of the policy preferences of business conservatives and neocons to the broad party has been diminished. This has left an opportunity to build a political appeal based on preferences of the third constituency, which Donald Trump did in 2016 with his MAGA program of immigrant persecution, distaste for democracy, and truculent neoisolationism.

As previously described, politicking during the Reagan dispensation has made extensive use of cultural identity politics. This has resulted in a Red vs Blue divide based on culture, unlike the economic class divide upon which the previous dispensation was built. Trump’s MAGA is now dominant in the Republican party. MAGA is fairly friendly to their business constituency as long as it stays in their lane, making money and not delving into cultural politics, but their isolationist turn makes the neocon constituency unwelcome and some of their leading figures have decamped to the Blue side.In order to keep what is left of their coalition, MAGA needs to focus on cultural issues and avoid economics. House Speaker McCarthy is playing a dangerous game in trying to stake out a political win by holding the economy hostage to a debt default. McCarthy’s hand is weak. In the event of a default, Biden can unilaterally end the crisis on his terms using the platinum coin option:

"The Secretary of the Treasury can mint a trillion-dollar platinum coin, purchase $1 trillion worth of debt from the Fed, retire that debt, and then create breathing room under the debt ceiling. It sounds weird, of course, but it’s legal and it would solve the problem of a catastrophic default and potential associated recession.”

A court challenge is not possible because to bring a case to court requires legal standing. There needs to be an injured party. Since it is an entirely internal governmental transaction, there would be no economic effect. The only injured party would be Speaker McCarthy’s political career.

One might ask, if the coin is such an economically painless action, why didn’t Obama use it in 2011? Minting the coin is not politically costless, as Felix Salmon notes:

This is the real problem with the main argument for minting a coin, which is that “yes, it’s a stupid gimmick, but so is the debt ceiling, and the debt ceiling is a lot more harmful than a coin would be”. That’s true, but it’s important to recognize just how damaging the platinum-coin move would be, all the same. It would effectively mark the demise of the three-branch system of government, by allowing the executive branch to simply steamroller the rights and privileges of the legislative branch. Yes, the legislature is behaving like a bunch of utter morons if they think that driving the US government into default is a good idea. But it’s their right to behave like a bunch of utter morons.

Obama’s party had just experienced a historic defeat to the party holding the House, losing 63 seats in the House and 6 in the Senate (equivalent to 26 in the House) for a total of 89 equivalent seats. He had no business interfering with the right of the Republican Congress to behave like adolescents. In contrast, last year’s election saw a loss of 9 seats in the House and a gain of one for a total loss of just 5 equivalent seats, an excellent showing for the president’s party in a non-presidential year. Biden’s political hand is much stronger that Obama’s. Biden is likely to win on the politics and so has no reason to take the Speaker seriously. Nevertheless, should not go ahead and deploy the coin if McCarthy remains obdurate for the reasons Salmon gives. Like a good parent, Biden must give the adolescent Congress the opportunity to fail the nation. That is, if it is the Speaker’s will that the country go over the fiscal cliff, Biden must allow a default to happen to give Congress one last chance to rectify the situation before intervening with the coin.

I don’t think any of this will happen. My point is that McCarthy playing games with the world’s financial system while a major Republican presidential candidate wages war on the Disney corporation will not warm the cockles of the business wing’s heart. Unlike the factions on the political extremes, Corporate America is a highly sought after constituency who can find a home in either party. Corporations and investor constituencies may come to prefer Democrats simply because they don’t try to blow up the world economic system.

Can Reagan’s three-legged stool stand on one leg? That is, can Republicans win at the national level without their business or foreign policy hawk constituencies? Or, will the Reagan dispensation collapse? Dispensations end with formerly dominant parties losing the presidency for three or more successive terms, at which point their last president becomes the Disjunctive president ending that dispensation, and his successor from the opposition party a new Reconstructive president.

At present, both Donald Trump and Joe Biden are running for president. Polls suggest Trump is the prohibitive favorite for the Republican nominee, making a Biden-Trump redo likely. Trump got between 47 and 48 percent of the vote in 2016, and the same in 2020. This puts an upper limit on what Trump can get in 2024. Another year of the Trump show and the Republican Congress in action might lower that, making the road to victory in 2024 even harder for the Republicans.

If Republicans do end up losing in 2024, MAGA will have led to four successive defeats after its initial victory in 2016 and Trump will be a two-time loser. Furthermore, Democrats will have a second opportunity to actually do stuff if they win back congress as well as the presidency. Furthermore, should Biden resign due to health concerns during his second term, he would leave a sitting president able to run for re-election, who if victorious, cements Trump in as Disjunctive and Biden as Reconstructive in Skowronek’s scheme.

What I am arguing here is Democrats might build a dispensation based entirely on not being MAGA. The Democratic situation would improve over time: Figure 1 shows an estimate the number of Blue relative to Red voters since 1990 (open symbols) and the ratio of Northern versus Southern elites in the decades before the Civil War secular cycle crisis resolution (closed symbols).  As long as the alternative to Democrats is MAGA, the Democratic share of the electorate should rise with time.

Figure 1. Balance of power shifts over two period in American history. Figure from chapter 2 of America in Crisis

A bigger Democratic party means a more conservative party, one that fully occupies the political center. As the threat of MAGA recedes, disenchanted leftist factions can leave to form third parties, much as the Free Soilers left the antebellum Democrats and the Progressives left the pre-Depression Republicans. Frustrated Republicans might seek to restructure their party by trying to appeal to disaffected “Blue” constituencies. After losing much of their business and investor class constituency, they could try to appeal to working class people of color alienated from the now fully neoliberal Democratic party while keeping much of their white working class base by moving to the left on economics. To do this, they would need to give the racists and fascists the boot, who might then go on to form a fascist version of the Know Nothings or the Dixiecrats. Or, perhaps, a Progressive Labor party might emerge from former Democrats who draw working class whites from the Republicans. There are many ways various factions of the two parties could realign, the key takeaway is no realignment can happen as long as the two parties have roughly the same strength, that is, a Democratic dispensation is a prerequisite for any realignment.

The creation of a Democratic dispensation does nothing to resolve the secular cycle crisis, however. The core problem of excess elites, the counter-elites like Trump who arise as a result, and the conflict they engender remains. Political restructuring leading to the creation of a politically viable party willing to sacrifice the interests of the investor class for the common good in order to implement policies, like steeply progressive tax rates and fiscal inflation control, needed to shift economic culture back to the stakeholder variety. Doing this will solve the excess elite problem by reducing elite wealth and influence.

I don’t think something like this is at all likely, but it suggests one way that America could achieve a crisis resolution while remaining a democratic country and without mass-casualties.