Harris's Missing Voters

2024 11 11

Kathleen Weber’s analyses the election.

“Vanished Into Thin Air: Where Did 12 Million Democratic Voters Go?”

I do not know how good the politics is; I’m an economist.  It seems pretty plausible.  I do have some economic observations about the proposed reasons for the disappearance. 

“Biden’s 2020 voters hoped that he would address the country’s problems, but 12M of them were disappointed.  They reacted against his incremental and long-term approach to addressing the problems of those left behind by the global economy.”

If being “left behind” means feeling the effect of a decline in the relative prices of tradeable goods like manufacturing compared to services, the main thing Biden failed to do was reduce the fiscal deficit. Deficits draw in foreign capital, drive up the dollar, and thereby encourage imports and discourage exports. People working in import competing industries are relatively disadvantaged.

Now if deficits were being generated by investment in productive projects that have a net present value >0, things that will yield high benefits in the future, the trade deficits would be worth it.  Those left behind would benefit like everyone else. But I don't think that is the case.  I'm prepared to believe the infrastructure bill has a NPV > 0 (although it will not be positive if too many projects are like the NYC subway line extension), and CHIPS (although larded with cost-increasing mandates), but not all of IRA.  Subsidizing _investment in_ CO2 emissions reduction technology instead of in _reduction itself_ is an open invitation for projects with NPV < 0. (And yes, < 0 even after counting the reduced emissions as a benefit.) If the benefits to the places where the NPV < 0 projects will be located were not well communicated, that just adds to the malfeasance.

But we know a big part of the deficit is the failure to raise enough revenue to pay Social Security and Medicare benefits. This failure goes back to financing these programs with a tax on wages which is, reasonably enough, hard to increase. The full social insurance package -- Social Security, Medicare, Medicaid, ACA, Unemployment Insurance, Child Allowance when we finally have it -- should be financed with a VAT that replaces the wage tax. Social Insurance

But the other deficit driver is the Trump "Tax Cuts for the Rich and Deficits Act of 2017." Democrats have never railed enough against this, specifically the deficit creation, and in 2021 to have used their trifecta to repeal it.  Harris certainly did not say enough in the campaign even though Trump clearly intends to extend and maybe expand it.

"The 12M were also disappointed by his neglect of border security and his failure to apologize for inflation. The 12M were also disappointed by his neglect of border security and his failure to apologize for inflation."

I agree about the border.  Biden should never have allowed in enough asylum seekers for DeSantis and Abbot to demagogue with.  If he was not going to flood the border with enough agents process and reject bogus asylum claims, Biden should have done in 2021 what he did in July 2024.  More fundamentally he should have tried turning the issue to immigration reform, how to recruit more of world talent and skills to make the economy more productive.

"Apologizing for inflation" is trickier.  The Fed, not Biden, is responsible for inflation and some over-target inflation was necessary to achieve a rapid recovery from COVID.  The Fed failed to start dialing inflation back for too long (March 2022 instead of September 2021, I think) and this meant that inflation went on longer than necessary. If any apology is necessary, it is for higher interest rates the Fed had to use to bring inflation down given those – wait for it – deficits.

The best thing that Biden could have done about inflation was pin the blame on the Fed.  He should have been talking about what a good job _the Fed_ had been doing to simulate recovery (i. e., the ARA was not “stimulus”) and the great confidence he had that _the Fed_ would do an equally great job in controlling inflation.  Under no circumstances should the Administration have been drawn into the debate about how "temporary" inflation would be (as temporary as the Fed made it) and how much was caused by "supply chain disruptions" that Biden did not cause and could do little to cure. Inflation Wars

In this case, honesty really would have been the best policy.

One possible solution is for the Democratic Party to take a vow of strict centrism and laser focus on the economic issues of the bottom 60% of the electorate. They should also give careful attention to other concerns (such as border security) that the public demands.

I’d say make that a vow of _Radical_ Centrism 😊 and laser focus on the economic issues of _100%_ of the electorate.  Only on taxation of the highest income groups is there much tension between the interests of the 1% and the other 99% and some of that would be ameliorated by the faster growth that smaller deficits achieved in part by progressive taxation of consumption would promote.  Immigration reform of which border security is a component, is part of a pro-growth program 

But this strategy cannot possibly work —the reason is that 25% of the votes and much of the party’s energy grow out of various causes of progressive activists.  When these activists realize that the Democratic Party has abandoned their causes or expects them to wait for a generation until they can reemerge, they will quit the party.

“Neo Social Democrats” need to persuade activists that growth promotion is not inimical to their concerns.  Policy need not be as zero-sum as some activist think.  (Zero-sum thinking is the MAGA hallmark!)  Getting the world to net zero CO2 emissions, even if achieved in the least-cost manner (taxation of net CO2 emissions) will require large investments in new zero-CO2 emitting technologies.  Less efficient policies require more investment. These investments will be more affordable, require less sacrifice of current consumption, in a rapidly growing economy.  DEI done properly makes firms more profitable and other institutions more effective.  More cost-effective deterrence, apprehension, prosecution and punishment of crime makes everyone but criminals better off, including better off economically.

Image Prompt: University professor, list in hand, searching for lost objects in a room

[Standard bleg:  Although my style is know-it-all-ism, I do sometime entertain the thought that, here and there, I might be mistaken on some minor detail.  I would welcome comments on these views.]