Structural Change or Blip?
November 26, 2018
In the absence of earthshaking trade developments last week, I thought this time I would try out a hypothesis based on very little evidence but a lot of conjecture. Feel free to accept or reject it—any comments are welcome.
The hypothesis is that our political parties are realigning in what may well turn out to be a long-term structural change. It is not happening all at once, but when it is completed, it may last for a long time. The catalyzing element is Donald Trump, who has been busy remaking the Republican Party in his own image. As a result, it is becoming older, whiter, more male, and more rural than it has been historically. This is evident in voting patterns in last month's elections, even though the president was not directly on the ballot. Republicans continued to do well in rural areas but did much worse in suburban areas, particularly among women, than they did in 2016. Many of the House seats that flipped from Republican to Democratic were those suburban districts. Conversely, the Democratic Party is becoming younger, more female, more racially and ethnically diverse, and more urban.
While Republicans remain reliably conservative and pro-business on many issues—witness last year's tax bill—Trump has moved the party away from the internationalism it has espoused in the post-World War II era and toward populism. "Make America Great Again" has come to mean opposing immigration, pulling out of multilateral institutions in the interest of sovereignty, casting doubt on U.S. commitments overseas, and, most important for our purposes, supporting a protectionist trade policy.
While this implies a rejection of the last 70 years of Republicanism, in some ways, it is a return to the party's historical position. For roughly its first 100 years, beginning with Abraham Lincoln, Republicans were the party of business, which meant Northern manufacturers who supported high tariffs, wanted strict limits on immigration, and opposed foreign entanglements. It was Henry Cabot Lodge who led the opposition to Woodrow Wilson's League of Nations, and Republican Congresses in the 1920s who gave us some of the most restrictive immigration laws and highest tariffs in our history. (Remember Smoot and Hawley were both Republicans.)
Democrats likewise may be returning to their roots as a party of free trade and internationalism, although the trend is less pronounced and has had a different evolution. Historically, Democrats were free traders because their base was farmers, particularly in the South, who survived on exports. As the graphs and chart from Pew Research below show, Democratic support for trade has been steady and is now significantly greater than Republican support, and demographically the strongest support for trade comes from young people and minorities—increasingly the Democrats' base, while farm voters long ago became Republicans.
The Democratic trend comes with a footnote—organized labor. The bedrock of Democratic support at least since the time of Franklin Roosevelt, labor has not only moved sharply into the anti-trade camp over the past 40 years, has put trade at the top of its priority list. The substantial financial and organizational support labor provides Democratic candidates makes them a force to be reckoned with even if they are increasingly out of step with the rest of the party's base. This was ironically demonstrated in 2016 when labor did an excellent job of turning out its voters only to have many of them vote for Trump. The result is that labor leaders, who have a lot of experience with Republican efforts to reduce the influence of unions, are increasingly out of step with their rank and file, who are more attracted to populist candidates. Democratic-elected officials have the same dilemma. In order to maintain labor support many of them are trade skeptics, even though the larger part of their base is not.
Republican-elected officials have the same dilemma in reverse. Having grown up in the internationalist Republican Party of the past 70 years, free trade suits them, and populism does not. These disjunctions are sustainable for a while because trade is not a high priority in voters' minds, but eventually, politicians must catch up with their voters if they want to remain politicians. At that point, the transition will be complete. Republicans will be the party of populism, protectionism, low taxes, less regulation, and, ironically, high budget deficits, while Democrats will be the party of internationalism, open trade, and a progressive agenda of social and economic change, and, equally ironically, high budget deficits. Some things never change.
This transition poses opportunities and challenges for both parties. Republicans can add blue collar workers to their base, particularly if they can temper their anti-unionism. Democrats can add business to their base if they can keep their progressive wing under control. In a way, both moves would be quintessentially American—they both would be trying to move to what they believe is the center. Will any of this actually happen? Who knows? But smart—and successful—politicians are the ones who spot the trends before they are obvious. It's always better to prepare for the next war than it is to fight the last one.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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