Before drawing firm conclusions on the 2024 election and what to do next, take a clear-eyed view at what actually happened.
November 5 culminated several decades of economic, political, and social change. These changes gradually increased the electorate’s feelings of alienation and insecurity. When these feelings became sufficiently intense and widespread, more than 50% of voters rejected the governing elites in favor of a strongman. Therefore, what comes next is up to him.
Four charts illustrate the forces that produced this outcome. The underlying analysis comes from earlier Legal Evolution posts. So this is a cold take. Also, it’s not the usual longform. If you want the complete, unabridged analysis, click the hyperlinks to the original posts.
Chart 1
Economists, historians, and political scientists acknowledge that widening wealth inequality gives rise to populism and political instability. See Post 319 (collecting sources). Chart 1, originally published in Post 312, compares wealth inequality at the end of the Gilded Age to the present.
The historical events leading up to the first inequality peak reveal the destabilizing effects. During the 1912 presidential election, for example, the dominant issue was how to rein in the powerful business trusts (oil, steel, railroads, finance). President Taft’s continued aggressive enforcement of the Sherman Antitrust Act was the most conservative position. Yet, it garnered fewer votes than the Bull Moose nominee Teddy Roosevelt (23% to 27%), who advocated for a system of large state-controlled monopolies managed at the federal level. The winner was the middle choice, Woodrow Wilson, who channeled the anti-corporate bigness policies of his advisor, Louis Brandeis. See Post 312. Wilson’s antitrust enforcement, however, soon got derailed by World War I. After the war, the public’s desire for normalcy enabled Harding, Coolidge, and Hoover to embrace a laissez-faire attitude toward business. When that ended in a stock market collapse and mass unemployment, President Franklin Roosevelt had a bipartisan mandate to regulate and tax the monied classes. See Post 312.
Yet, it does not end there. Wealth inequality was rampant globally, creating widespread feelings of voter alienation. In Germany and Japan, this resulted in fascism, dictatorships, and, ultimately, the Second World War. At the time, highly capable people had a clear-eyed view of what was happening. Thurman Arnold’s aggressive enforcement as head of the DOJ’s Antitrust Division from 1938 to 1943 (1,375 complaints in 213 cases involving 40 industries) was motivated by Arnold’s belief that German totalitarianism was the inevitable consequence of concentrated economic power that began under Bismarck. See Tim Wu, The Curse of Business: Antitrust in the New Gilded Age (2018) at 79-82 (quoting Arnold, “Germany became organized to such an extent that a Fuehrer was inevitable; had it not been Hitler it would have been someone else”).
The parallels between the 1920s and 30s and the present caused Columbia law professor Tim Wu to conclude, “If we learned one thing from the Gilded Age, it should have been this: The road to fascism and dictatorship is paved with failures of economic policy to serve the needs of the general public.” Id at 14.
The Biden administration took Wu seriously, making him a senior competition and antitrust advisor. However, constraining rich, powerful people is extraordinarily difficult, as the political impulse is always to restrain the DOJ from going all out lest the resulting opposition cost you the next election. This happened to Arnold under FDR, see Post 312, and Wu lasted 22 months. See Josh Sisco, “White House antitrust adviser Tim Wu set to depart.” Politico, Dec 30, 2022. Yet, it only puts off a day of reckoning. Without a compelling narrative to channel the electorate’s growing feelings of alienation and insecurity, the door is propped open for billion-friendly demagogues.
For a more detailed analysis, see Post 312 & 350.
Chart 2
The 1929 stock market collapse was followed by several years of rising unemployment, thus resulting in FDR’s landslide election in 1932 (electoral votes: Roosevelt 472, Hoover 59). President Roosevelt financed his New Deal policies with massive tax increases on the rich. As shown in Chart 2, high progressive tax rates were the conventional wisdom for the next 50 years.
However, the dismantling began in earnest in the 1980s with the election of Ronald Reagan, whose inaugural address contained the memorable message: “Government is not the solution to our problem; government is the problem.” Reagan Inaugural Address (Jan 21, 1981). Indeed, when Reagan’s successor, George H.W. Bush, agreed to increase the top marginal tax rate from 28% to 31% to pay for the Savings & Loan bailout, it cost him the 1992 election. See Howard Gleckman, “Reading President Bush’s Lips,” Tax Policy Center, Dec 5, 2018.
That said, with the collapse of the Soviet Union and the fall of the Berlin Wall, things were looking up on the geopolitical front. Thus, a consensus emerged among elites—both governing and business—that there was no longer a viable alternative to Western liberalism. The best exemplar of this view was Francis Fukuyama’s influential essay, “The End of History,” 16 Nat’l Interest 3 (Summer 1989), and book, The End of History and the Last Man (1992). With the election of Bill Clinton in 1992, both Democrats and Republicans coalesced around pro-business policies, including opposition to the welfare state and an embrace of free-trade economics. Yet, as shown by the long blue End-of-History tail in Chart 2, the low marginal tax rates were a sharp break from the past, suggesting that America’s governing elite were experimenting with a new tax policy that would likely make rich people richer.
As the data in the next chart suggests, this was a disastrous idea, resulting in what could be a harsh and violent resumption of history. For a more detailed analysis, see Posts 319 & 350.
Chart 3
Chart 3 should make Democrats the most nauseous. It shows the change in average household net worth for four segments of the U.S. population: 0-50th percentile (i.e., half of all households), 50 -75th percentile (a quarter of households), 75-90th, and 90th to 100. To appreciate the full sickening scale, you’ll need to click on the chart to enlarge it.
Over the last 35 years, the average net worth of households in the bottom 50% has never exceeded $50,000 (measured in constant 2022 dollars). Yet, except for Bush I, who lost his job over a tax increase on the wealthy, Republican and Democratic administrations have consistently delivered million-dollar gains for the top 10%. Focusing just on the Biden portion of the graph, we can be certain that federal pandemic policies—massive fiscal stimulus plus the Federal Reserve’s printing of money—triggered significant inflation. Of course, this angered voters. However, there is little public awareness that these policies also increased the value of household wealth, such as stocks and real estate. See, e.g., Sean Ross, “How Quantitative Easing (QE) Affects the Stock Market,” Investopedia, Aug 28, 2023.
As a result, from 2019 to 2022, the average net worth of the bottom half of households moved from $25,800 to $46,600—proportionally large but hardly enough to create feelings of widespread security. In contrast, in the same three-year period, the 75-90th and top 10% brackets gained $290,000 and $1.2 million, respectively. Most troubling, however, is that the net worth of the bottom quartile (0 to 25th percentile) also inched upward—from -$15,700 in 2019 to -$5,300 in 2022. See Federal Reserve, Changes in U.S. Family Finances, 2019 to 2022 (Oct 2023) at 14. Ignore the stock market and the low unemployment rates. Instead, look at rents and housing prices, the toll of medical debt and student loans, the specter of AI taking peoples’ jobs, and overall inflation. This is why so many Americans are pissed off about the economy.
For a more detailed analysis, see Post 350.
Chart 4
Chart 4 is based on Patrick Deneen’s Regime Change: Toward a Post-Liberal Future (2023). Deneen is a political science professor at the University of Notre Dame best known for his book Why Liberalism Failed (2018). Praised by both conservative and liberal commentators, including Barack Obama, Why Liberalism Failed is a wholesale attack on liberalism, the political philosophy that embraces individual rights, civil liberties, democracy, and free enterprise. To be clear to younger readers, liberalism, as in “Western liberal democracies,” is the core set of beliefs underpinning the End of History. Back in the 1990s, nationalism, autocracy, theocracy, and communism had all proven to be political and economic dead-ends. Thus, Western liberalism was widely viewed as humanity’s final destination. See Fukuyama, “The End of History?,” at 3 (concluding that there were no longer any “viable systematic alternatives to Western liberalism”). Since liberalism was dying, Regime Change was meant to be a prescriptive follow-up.
According to Deneen, our contentious left-right debate—at least in the days before MAGA—was about two different flavors of liberalism, one favoring market forces (classical liberals) and the other favoring an expansion of rights and entitlements guaranteed by the state (progressive liberals). Although these two types of liberalism nominally competed with each other, Deneen argues that the cumulative effect of these alternating forms of liberalism is what we observe today: staggering wealth inequality, decline of traditional institutions, weak communities, political polarization, growing loneliness, drug use, and suicide.
The blue and red box at the top of Chart 4 characterizes this divide, albeit Deneen believes that many voters view both sides as corrupt and compromised elites. Thus, nothing reliably resonates, whether it’s Harris, Biden, Sanders, or Warren from the left or Cheney, Haley, Romney, or Ryan from the right. Drawing upon political theory going back to Aristotle and Plutarch, Deneen’s deeper claim is that “the dual embrace of economic and social ‘progress’ has generated a particularly virulent form of that ancient divide that pits ‘the few’ against ‘the many.’” Regime Change at x.
In Chart 4, the larger box depicts an updated version of the ancient divide. Thus, whether they supported Obama-Biden or Romney-Ryan in 2012—arguably the last iteration of a fading order—the Few/Elites have the income, status, and mobility to live in vibrant urban and suburban corridors that comprise the nerve centers of government, finance, and tech. In contrast, the Many/Demos are more anchored to place. When global competition and consolidation cause local businesses to shutter, their communities slide into economic irrelevance. Likewise, during the global pandemic, the laptop class’s comfort, safety, and convenience were made possible by a nearly invisible army of “essential workers.” Cf “Essential,” This American Life, Aug 13, 2021 (documenting lives of essential workers during the pandemic, including widespread feelings of frustration and resentment).
For several years, I’ve struggled to understand Donald Trump’s iron grip on voters, which in turn gave him plenary control over an entire political party. Amidst mounting evidence of lies, corruption, incompetence, and criminality—absolute disqualifiers for anyone else—his base level of support never waned. Why?
With Deneen’s analysis, I finally found a credible answer: a considerable proportion of the electorate became disillusioned with smug, out-of-touch political elites pulling levers of power in ways that disrespect and disrupt the lives of ordinary people. They weren’t judging Trump; they were judging the governing class and the media who cheered them on. On November 5, they totaled more than 50% of voters. Deneen’s theory has nothing left to prove.
Although Deneen rarely mentions Trump by name, he makes clear that the leading Republican candidate, and now President-elect, is a “deeply flawed narcissist.” Regime Change at 150. But Deneen also concludes that an enormous portion of the managerial class, which includes virtually all professors, lawyers, and other professionals, are engaged in “a stupendous effort of self-deception about the nature of [our] own position.” Id at 40.
For an interesting conversation between Patrick Deneen and Ezra Klein recorded while Deneen was writing Regime Change, see “What Does the ‘Post-Liberal Right’ Actually Want?,” Erza Klein Show (NYT), May 13, 2022 (Deneen emphasizing problems of culture, which Klein reflexively attempts to reframe in policy terms). Also, for a deeper dive into stupendous self-deception and the possibility that Deneen may be right, see Post 350 (thread 2, part C).
What’s next?
That’s a personal question for each of us.
As mentioned at the outset, this is a cold take. For 15 years, I’ve taught legal ethics and professional responsibility. This body of law includes an affirmative duty on lawyers to “further the public’s understanding of and confidence in the rule of law” because “legal institutions in a constitutional democracy depend on popular participation and support to maintain their authority.” ABA Preamble, ¶6. Three years ago, I was so troubled by the aftermath of January 6, and therefore, what it seemed to require of lawyers, that I started digging for answers. This resulted in two years of learning and reflection, which I documented in a series of detailed essays that included the above four charts and accompanying conclusions.
In the last reflective essay, Post 350, published last December, I announced that I was shutting down a 20-year chapter in my professional career (research and writing on law firms, legal innovation, and lawyer development—all the original content of Legal Evolution) to redirect my efforts to building new infrastructure for the broken, byzantine, and unaffordable legal system for ordinary people. I reasoned that if my analysis was correct, it didn’t matter who won the 2024 election, as the consequences of further delay were intolerable.
The start-up costs have been formidable but worth it. Over the next few months, I’ll have several interesting PeopleLaw updates.