Where are the enlightened capitalists?

We are seeing the richest democracy in the world being subject to an attempt to transform it into an autocracy. How this will end is not clear and will depend on the opposition, the economy and the checks and balances. It is an attempt surrounded by corruption and incompetence. Although events and decisions have a random component, Trump has reached power for the second time with the support of powerful interests.

The conservative columnist of the New York Times David Brooks argued that “It’s time for Americans in universities, law, business, nonprofits and the scientific community, and civil servants and beyond to form one coordinated mass movement.’ (I miss churches in that list). But will business leaders participate in a massive uprising?

Political scientist Steve Levitsky said: “If we’re going to mobilize, it’s going to be the most prominent, the most well-endowed, the most privileged and protected of us in civil society who have to take the lead.” Levitsky believes that the biggest threat to aspiring despots may come from other elites rather than from mass protest below.

Stuat Kirk in the Financial Times says that “The silence of CEOs in the face of Donald Trump’s tariff chaos is one of the biggest failures of leadership in corporate history. Where are they when we need them? In the corner shuffling their shoes.”

But it is not only the tariffs. In the recent decades, enlightened capitalists in the US organized themselves (for example, around the Bussiness Roundtable)  to promote the idea of a responsible market economy were companies would have a social purpose, fighting extreme inequality, corruption and climate change. Trump 2.0 is built under the assumption that all this is a concession to wokism. 

Some business leaders have politely complained about tariffs, but not much about the demolition of public goods, the violation of human rights or the destruction of democratic international alliances. What is their broader view of capitalism then?

Capitalism has been compatible with very different political regimes over history. Most of Europe and America are capitalist and democratic today, but Spain under Franco or Chile under Pinochet were also capitalist. Are business leaders indifferent between these options? It is important for the other democracy participants to know, because we may wait for them or not.

Some business leaders could argue that what is happening is not their responsibility, except that it is, because many of them made it possible with their lobbying and their donations.

The worst ignorant against the best universities

One thing that truly makes America great is its universities, both public and private.

Trump threatening Harvard University to cut its financing unless it accepts to lose its independence, and Harvard saying no to authoritarianism, shows that when the current President says “Make America Great Again,” he in fact has in mind a very narrow and sectarian view of his country.

The Trump administration will freeze over $2 billion in federal funds because Harvard refused to comply with a list of demands that threatened its independence. Harvard leaders believed saying no was worth the risk. The University’s President has said it clearly: “The university will not surrender its independence or relinquish its constitutional rights.”

In Europe, we have always felt envious of the American universities –and tried to benefit from them, sending there our best future scientists and academics. And we watch amazed this act of national self-harm. Italian journalist Michele Serra has said in the Italian newspaper La Repubblica on April 17th that

"The social rancor of the ignorant who detest culture does not allow a shadow of doubt about the theory and practice of Trumpism. Culture is something that money cannot buy, not even the billions of Trump and his friends, and this makes it particularly unbearable to people who consider any human being for sale. Learning is more difficult than commanding. Destroy everything you cannot have, everything you cannot be: this is Trump."

Her colleague on the same page, Concita de Gregorio, adds: “Dictatorships write textbooks, burn books, dismiss academics.”

Although Harvard and other universities may win in Court, the Trump administration will push further for cuts in their funding. In the long run, only the electoral defeat of Trump and Maga will ensure the survival of this global public good, the US university system.

This is part of Trump’s campaign against science. The smell of Macarthism cannot be hidden behind the obsession with wokism and the hypocritical accusations of anti-semitism (mostly code for students criticizing another neo-fascist government, Netanyahu’s). In the fight against trumpism, the resistance of universities will be an important building block.

Is there a better model to explain Trump?

John E. Roemer has an old article, “Why the poor do not expropriate the rich” that, in my view, gives the best explanation of modern right-wing national-populism. In a democracy, given the distribution of income in any country, the median voter is poorer than the voter with average income: as a consequence, the median voter, the one that decides elections if there is only one dimension of voting under some assumptions, should be pro-redistribution. If the only concern of voters was material welfare, majority voting would yield strongly distributive policies, in the extreme the expropriation of the wealth of the rich. However, although at the beginning democracy was associated with the expansion of the welfare state, national democracies are today compatible with high levels of inequality.

There are several reasons for this paradox, most of them listed in a review article by Adam Bonica and others. But most of them go back to the answer that Roemer gave to the question in the title of his article: the poor do not expropriate the rich because the latter mobilize policy dimensions (cleavages) other than income and wealth, such as religion, ethnicity, "values" or scandals. In some cases, these dimensions correlate with income (South Africa) and redistribution is inevitable, but in many cases the poor majority can be divided across ethnic or religious lines, and that breaks the pro-distribution coalition. In addition, if there are winning coalitions for ethnic or religious reasons, these can be easier to mobilize because they include at least part of the rich, who have more resources to invest in politics (time, media, money). Modern right-wing national-populism is just the adaptation of this strategy to modern technologies and constraints. Here, there is no dilemma between "economic" and "cultural" explanations to populism: both are integrated in the same conceptual framework.

As Dani Rodrik has explained, when inequality increases (for example, in times of macroeconomic shocks), the incentive of economic elites to mobilize other cleavages increases: “as economic inequality increases in society, a party representing the rich is more likely to invest in strategies that appeal to identity and culture. Greater inequality means the median voter grows more distant from the rich in terms of where they stand on economic policy interests. For the party of the rich, there is now higher return from a political narrative that catalyzes identity around issues such as racial resentment, gay marriage, women’s rights, and immigration, all of which can give low-income voters a reason to vote against their purely material interests.”

Of course, reality is much more complex than a simplified model, but good models are useful because they can pose meaningful questions and test precise hypotheses. Roemer’s explanation can be enriched to incorporate irrationality (Trump’s, for example), in a world of trial and error by boundedly rational agents, where gains for particular groups are the result of selection and adaptation.

Fascism as an extreme case, when the powerful interests fail by democratic means, can be incorporated to the same model. Instead of focusing on income and wealth distribution, a sufficient part of the relatively poor focus on interethnic redistribution, and scapegoats, foreigners or ethnic minorities can be targeted. In all these cases, it is understandable that a lot of attention is paid to the political (typically pathological) leader, but there are powerful underlying forces behind his emergence.

Thinking about these theoretical issues may be seen as a luxury and a waste of time in dramatic moments. But it can also be seen as a way to think about how best to react. If the powerful compete in a multidimensional policy framework, the relatively poor majority must also become competitive in the battle for the dominant cleavages, in a way that will be different in different political contexts.