The Death of the Carbon Coalition
Existing models of U.S. politics are wrong. Here’s how the system really works.
BY THOMAS OATLEY, MARK BLYTH Foreign Policy
In 2020, President Donald
Trump received more votes, almost 75 million, than any sitting president in
U.S. history. And yet he lost the popular vote to Joe Biden, who received more
votes than any presidential candidate in U.S. history—full stop. The 2020
election will thus go down in history as one in which Americans were both
remarkably mobilized and sharply divided.
To date, the election
postmortem focused on the role of the pandemic and its associated economic
collapse, the long-standing divides uncovered by the Black Lives Matter
protests, the appeal within a segment of the electorate of Trump’s personal
brand, and an overestimate in the polls of Biden’s lead.
But such issues miss the
forest by obsessing about some (important) trees. In particular, the discussion
pays almost no attention to the more profound changes in the U.S. economy’s
structure that have both produced Trump and will continue to make Trumpism part
of the fabric of U.S. politics for years to come. It’s time to recognize that
Trump is a symptom, not a cause, of our discomfort. And to understand that, we
need to clear out the broader theoretical models that shape how we think about
politics.
The stickiest of these
bad models goes by the name of the “median voter theorem” (MVT). Derived from
the observation that, back in the 1930s, all the shoe shops in U.S. towns and
cities were apparently located close to one another, analysts decided to treat
political parties as shoe shops and voters as shoe buyers. The most successful
shoe shops were the ones closest to the middle of the shoe district with the
broadest offering of shoes. They were, in effect, trying to capture the median
shoe buyer. Now, rinse and repeat for politics. Parties compete for the voter
in the middle and win by drifting closer to that center opinion.
MVT has been under attack
for years over the simple fact that political parties in the United
States and
around the world have become less
centrist over time and yet keep winning. They also seem to cater
mainly to the interests of voters in the 80th
percentile and above for income distribution.
But the MVT’s most
significant flaw is that it operates nearly independently from the economy.
Consider that, according to the Brookings Institution, Biden won 509 counties
to Trump’s 2,547—that’s over five times as many going to Trump. But here’s the
kicker. Biden’s counties constitute 71
percent of the country’s GDP. Trump’s is less than 30 percent. Surely we
must somehow factor this into how we think about why people vote the way they
do? How does growth, or the lack thereof, determine elections?
Our answer is simple. The
underlying model of growth that made the politics of the MVT seem reasonable is
decades past broken. What we see in U.S. politics today is the death and
dissolution of a particular social coalition that dominated politics and
economics and underwrote social peace for three generations; call it the carbon
coalition.
The carbon coalition was
an encompassing political coalition, built on a set of agreements negotiated
between 1932 and 1950, that distributed the income generated by the industrial
economy among groups within society. In the auto and steel industries, the most
dynamic of that era, United Auto Workers (UAW) and General Motors (GM) signed
the 1950 Treaty of Detroit, which tied pay to productivity. This created a path
to prosperity for two generations of workers in manufacturing.
Meanwhile, to bring rural
areas into the coalition, the urban middle class paid higher prices for food
and accepted permanent agricultural subsidies so that farmers could enjoy
higher incomes. These agreements drew together labor, business, and farmers;
the North and the South; the Great Plains and the Great Lakes into one
settlement. This broadly inclusive distributive coalition in turn softened the
sectional and partisan divisions that had roiled U.S. politics almost
continuously since the 1890s.
All this is well known,
but what is not recognized is how this political coalition was in fact entirely
dependent on a particular growth model: an extremely fossil fuel-intensive
agro-industrial economy.
It is only a slight
exaggeration to suggest that the United States’ postwar economy was a massive
machine that transformed oil, coal, and natural gas into income and food.
Consider the following: In 1971, automobile production directly and indirectly
provided 1
of every 6 jobs in the U.S. economy. Most of these jobs were unionized, or,
if not, most workers enjoyed wages and benefits that spilled over from union
agreements. Then add to these jobs others created by the interstate highway
program, by the oil and gas industry, and by the retail sale of gasoline and
the repair and maintenance of automobiles. And then throw in jobs in aviation,
shipping, and agriculture, which became increasingly energy intensive due to
the use of diesel-fueled equipment and through the use of natural gas to
manufacture artificial fertilizer. Finally come jobs in plastics and
petrochemicals.
The carbon coalition
distributed the income generated by the carbon economy. Elections determined
those distributions. That model is now dying and indeed, given climate change,
must die. The politics it made possible are dying too.
The carbon economy has
been in decline for decades, but the knock-on effects in politics are only now
becoming visible.
The carbon economy has
been in decline for decades, but the knock-on effects in politics are only now
becoming visible.
The center of
economic dynamism and wealth generation in the United States now lies in
knowledge-intensive (or at least high-value-added) industries, some of which,
like pharmaceuticals, are research intensive and some of which, like various
forms of media, are creative.
Although this knowledge
economy is diverse, these activities share one overarching commonality: None
require (much less depend on) fossil fuels. Indeed, their survival over the
long haul depends on successfully switching out of carbon completely.
Productivity in these activities doesn’t come from more energy and bigger
machines applied to faster assembly lines but from improvements in our ability
to manipulate, analyze, and monetize information.
The economy that drives
U.S. GDP growth today is already post-carbon. And though many of its activities
are energy intensive (server farms consume more than more
than 2 percent of the world’s electricity use; financial services
consume more electricity than any other industry in New York City), the energy
they consume can come as readily from wind and solar as from coal and natural
gas. This isn’t the case for the internal combustion engine, for the steel from
which its constructed, and for the oil extraction, refining, and distribution systems
that support it. Nor is it true for an ammonia plant or for cement or aviation.
Farmers cannot substitute solar energy for artificial fertilizer.
The U.S. economy is thus
now divided in two: a growing and potentially sustainable post-carbon economy that
can adapt to the realities of climate change and a carbon economy in decline
that is unsustainable.
The carbon coalition has
fractured as a result of this economic bifurcation in two ways. First, the
institutions through which the United States distributed income in the carbon
economy have shrunk along with it. The UAW and GM continue to negotiate, but
the bargains they strike apply to fewer and fewer workers and to a smaller and
smaller share of the U.S. workforce. More broadly, the country has moved away
from an economy in which a corporation such as Ford brought physical capital
and labor together under a single roof to create an economic surplus that
workers and owners divided.
In the old system’s
place, the United States has created a new one in which highly skilled, or at
least high-credentialed, individuals earn high incomes at Google, Apple, Merck,
and Goldman Sachs while low-skilled workers earn minimum wage without benefits
at Walmart and the Dollar General through, in many cases, baroque global value
chains. The industrial separation between highly valued human capital and
low-skilled labor is reinforced increasingly by geographic distance. The rich
and the poor once lived in different parts of town. Today, they live in different
parts of the country.
As such, the carbon
coalition has also broken down along a second and somewhat more fundamental
dimension. Americans no longer live in the same economy.
Americans no longer live
in the same economy.
Rather, they live
in two incompatible models of economic growth. Those who remain embedded in the
carbon economy quite rationally want to defend and rejuvenate that model. In
contrast, those who have found a spot in the post-carbon economy largely
embrace the future. Indeed, the urgency of the climate crisis makes many of
these people in the post-carbon growth model very hostile to the idea that we
should save (much less expand) the carbon economy. As a direct consequence,
both the carbon coalition and the underlying growth model that made it possible
and that structured U.S. politics through most of the postwar era are dead.
In terms of electoral
politics, you cannot capture the median voter when you have a quadratic
distribution.
Today, the firms and
sectors that make up each of the two growth models fund elections and determine
the strategy of their parties.
The post-carbon coalition
dominates the Democratic Party and supports Biden. This coalition brings
together a West Coast variant composed of high-margin agriculture (think wine),
Big Tech, entertainment, and digital and high-end services and an East Coast
variant based largely on financial services. These post-carbonites embrace some
variant of the Green New Deal, which identifies the climate crisis as the most
critical issue the country faces and offers a coherent policy response.
The carbon economy
coalition that dominates the Republican Party and supports Trump includes
export agriculture, carbon extraction, refinement and production, steel and
other declining traditional industrial sectors, as well as low-wage and low
productivity services (think Walmart over Accenture). This fragment of the
original carbon coalition remains committed to defending and rebooting the
carbon economy; this is what “Make America Great Again” means. And given their
assets and the incomes that depend on them, such an attitude is entirely
rational.
The competing coalitions, organized around different growth models, are easy to
see in the U.S. electorate. The graph above compares Trump’s share of the 2020
vote in counties that remain dependent on the carbon economy with his share of
the vote in knowledge economy counties. In counties with significant oil
production and coal-fired electricity generation, Trump captured 65 percent of
the vote. In contrast, Trump attracted only 45 percent in counties that did not
produce oil or use coal to generate electricity. The same pattern characterizes
county dependence on other carbon-intensive industries, which we represent with
skill level. Here, it shows that Trump captured two-thirds of the vote in
counties that rely relatively heavily on low-skilled employment in traditional
carbon-intensive manufacturing while he attracted less than one-third of the
vote in counties that rely relatively heavily on high-skilled jobs in
knowledge-intensive industries. These same contrasts were evident in the 2016
election as well with Trump capturing large majorities in carbon economy
counties and Democratic presidential candidate Hillary Clinton earning a
majority in knowledge economy counties. And moreover, the relationships in both
elections persist even once we control for the important role that race played
in the 2020 and 2016 elections.
The United States’ two
coalitions cannot be brought together. Indeed, they are existential threats to
each other. And on a population scale, each electoral coalition has more or
less the same number of potential voters. As a result, elections are decided by
thin margins in a race to the death. And where the MVT encourages us to expect
parties to move to the median to win, that strategy cannot hope to succeed in
the current U.S. electoral landscape. To see why, consider a contrast with
Germany, a country with a single growth model.
Germany has a single
export-oriented growth model that powers its economy. Cars, machinery, pharma,
high-end engineering, and metallurgy make the country grow. But those sectors
employ fewer workers over time due to automation and globalization, and other
sectors must be brought into that coalition to win elections. That creates a
problem. Exporters like Germany rely on the suppression of wage growth to stay
competitive. Export firms can pay their workers more, but if they have to pay
everyone more as they expand the coalition to win elections, then exports and
the growth model they support will fail.
To deal with this, during
the 1990s, Germany embarked on two major reforms that were embraced by both
major parties, the Christian Democratic Union and the Social Democratic Party.
First, Germany
liberalized labor markets to grow a low-wage service sector that would increase
overall employment while keeping down wages. Second, the elite embraced the
euro, at the risk of around 70 years of hard-earned price stability, to drown
what would otherwise have been a disadvantageously high real exchange rate in a
pool of low productivity neighbors. The result was that after the 2010 to 2013
euro crisis, Germany was poised for export-led growth.
That growth may be
parasitic on its neighbors and can probably not be generalized as a model
elsewhere. (For Germany to have an export surplus, someone else must have a
deficit.) But it does work as an encompassing national growth model, and all
the major German parties take it as their mission to support it. Despite all
their differences, no one questions the export surplus, and politicians compete
with one another to find different winning electoral coalitions within these
parameters.
Democrats and Republicans
can’t do this because their models are antithetical to each other and the
middle means death. For almost half of U.S. states, the Green New Deal, which
is—sotto voce—at the center of Biden’s
platform, spells the end of their existing strategies—think fracking,
refining, plastics, mining, logging, and so on. And for the other half of the
states that support the deal, scaling back its objectives to attract support
from the carbon coalition threatens the post-carbon coastal communities. Will
Silicon Valley and Wall Street remain above water at 2 degrees Celsius global
warming? There is simply no way to build a centrist coalition across this
divide.
There is only one way to
fix this mess. The post-carbon coalition has to bribe what’s left of it to make
the carbon transition. Non-coastal, largely Republican states must be the
epicenter of the green transition and be the recipients of most of the
investment. After all, they have the most assets to turn around and the most to
lose if they are not compensated. If all they are offered is “you
decarbonize/we keep the money,” then all they will give back is more Trumpism.
There are clear parallels
in U.S. history, such as the massive bribe that the urban sector began paying
to farmers in 1933 with the Agricultural Adjustment Act and two generations of
generous farm bills thereafter. Yet the bribe this time must involve more than
a subsidy; it requires exiting the carbon economy. For it to work, green
investment must extend well beyond energy capture (solar and wind farms) and
downstream into industries that are powered by alternatives. Massive
investments in electric vehicle production, for instance, to support a rapid
turnover of the U.S. motor vehicle fleet with U.S.-built cars and trucks, are
required.
There are many proposals
on the table to ameliorate polarization. But perhaps the most fundamental, and
hardest to do, is to change the way we think about politics. Elections in the
United States are not being fought over rival principles and certainly not over
median voters. They are contested over which parts of the country will grow and
how and who will pay for it. Recognizing this is the first step to fixing the
deeper problem of the carbon transition for the good of all Americans.
No comments:
Post a Comment