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Insurrection

Tyler Durden's Photo
by Tyler Durden
Friday, Jan 08, 2021 - 06:25 PM

By Philip Marey, Senior US strategist at Rabobank

Summary

  • Yesterday, Trump supporters stormed Congress. The ever increasing polarization of US politics and society has reached a level that poses a serious threat to the stability of the country.

  • The question is now: is this the culmination of the civil unrest in the United States, or is this just another warning signal that the country is heading toward something worse?

  • If we look at the underlying mechanism of polarization, it appears to be self-reinforcing. New events or information will be interpreted through two different filters.

  • What’s more, economic policies aimed at income redistribution will not appease Trump supporters. It’s not the economy, it’s identity.

  • If the US does not find an off-ramp from this route of increasing polarization, we are only going to see a further escalation of civil unrest.

Introduction

Yesterday, Trump supporters stormed Congress as it was debating the ratification of the Electoral College votes. Television showed images that we are used to see in some former second or third world countries. Commentators talked about insurrection, sedition, coup, and even civil war. Meanwhile, President-Elect Biden was explaining on television that America was better than this. Finally, Trump tweeted a video calling for his supporters to go home, but stressed again that the election had been stolen. Today, he stated that there would be a peaceful transfer of power on January 20. However, according to CNN some cabinet members are talking about invoking the 25th Amendment.

As we noted last year in Civil unrest, in a polarized society trust in institutions is vulnerable. We explained how the polarization in the US is a process that has been decades in the making. No matter who had won the elections, the turbulence in US politics and society was not likely to pass. The ever increasing polarization of US politics and society has reached a level that poses a serious threat to the stability of the country.

The question is now: is this the culmination of the civil unrest in the United States, or is this just another warning signal that the country is heading toward something worse?

Polarization

Last summer, in our special Civil unrest, we addressed the protests against COVID-19 measures and against racism. We argued that they reflected a lack of trust in US institutions that has been growing since the mid-1960s. We also noted that trust in institutions is especially vulnerable in a polarized society. We showed that since the Civil Rights Act of 1964 the US political system had become increasingly polarized. At present, political affiliation has become part of someone’s identity. This explains the extreme hostility between the two parties and especially their hard core supporters. However, from a dynamic perspective this poses a problem. How do we get out of this hostile environment? Some would argue that Americans will be shocked by the insurrection in Washington DC and the country will come together after President Biden takes office. However, Trump supporters seemed euphoric rather than shocked. We should not ignore that many Americans are living in one of two very different worlds. Either you are a Democrat and watch the mainstream media, or you are a Trumpist living on alternative facts. The first group will be shocked, the second emboldened by the insurrection. Invoking the 25th Amendment will only reinforce the Trumpists’ view that the elections were stolen. New events or information will be interpreted through two different filters. This will only reinforce polarization.

Economy or identity?

Then there are economists who think this is just a reflection of economic inequality. Four years of income redistribution by a Biden administration would bring back white blue collar workers to the Democratic Party or at least appease them. However, this policy will not work because it is based on the wrong diagnosis. Our statistical analysis in Economy or identity? showed that the data do not support this economic hypothesis. Based on county-level variations in voting behavior, economic conditions and demographic features, we actually found that in 2016 economic factors led to an increased vote for Hillary Clinton. Instead, demographics explained the Trump vote. Therefore, economic policy will not bring back the Trump voters. They have moved to the Republican Party for the same reason that many Southern Democrats changed party affiliation after the Civil Rights Act. Therefore, it is unlikely that Biden’s economic policies will appease the Trump supporters. This is not about economics, although that may be difficult to understand for economists. Americans are living in two different worlds, but they have to find a way to live together in one country. This requires a bipartisan approach aimed at alleviating the anxieties that come with changing demographics. Obviously, this is quite a challenge in this era of extreme polarization.

Conclusion

The question was: is this the culmination of the civil unrest in the United States, or is this just another warning signal that the country is heading toward something worse? If we look at the underlying mechanism of polarization, it appears to be self-reinforcing. And it will not be stopped by economic policies that redistribute income. Americans will have to find a way to live together in one country. If the US does not find an off-ramp from this route of increasing polarization, we are only going to see a further escalation of civil unrest.

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