America the Failed State?

America: the failed state

America's political rot is infecting the world order. This could be as big as the Soviet collapse

by Francis Fukuyama / December 13, 2016

Published in January 2017 issue of Prospect Magazine

Donald Trump’s evolution from a buffoonish fringe candidate taken seriously by no one to the President-Elect of the United States is one of the most unexpected and traumatic events in recent US history. The effects are uncertain, but—in the worst case—they could lead to the US giving up entirely on global leadership, and the unravelling of the liberal world order it has done much to build since the 1950s.

The triumph of the Trump brand of nationalism is arguably of a piece with authoritarian advances in disparate countries, from Recep Tayyip Erdo˘gan’s Turkey to Viktor Orbán’s Hungary. Together these developments constitute an even more fundamental problem to cherished western ideas, by making populist democracy an active threat to individual liberty. A great deal remains up in the air, but with indignant nationalists riding the tide in so many places, we cannot preclude the possibility that we are living through a political disruption that will in time bear comparison with the collapse of Communism a generation ago.

There will be endless post-mortems in the US on how Trump’s win could possibly have come about; much of the media attention will continue to focus on short-term issues like the intervention by FBI Director James Comey 11 days before the election, or on the stream of reportedly Russian-sourced leaks from Hillary Clinton’s campaign. Such considerations are valid and may have had a bearing on the outcome. But it is important to recognise that the result had roots which run deep into American society. As both the Republican and Democratic parties reassess their positions, they would do well to think about how the political map has changed in the four short years since 2012, and how this reflects not only campaign dramas, but changes within America itself—concerns over the state of the economy and a profound sense of unease over its role in world affairs.

Right around the developed world, the banking crisis of 2008 called into question the authority of elites who had created this highly risky system—there was, in Alan Greenspan’s famous testimony, a “flaw in the model,” undermining the expertise on which the standing of the elites had rested. More serious even than the failure of the western economy was the sense of burning injustice that grew in its wake. The public saw all those moneyed institutions and individuals who had been running the system being bailed out, and then poor and middling sorts being handed the bill in the form of austerity policies and unemployment. In the US, the disruptive effects of these aggravating observations were compounded by an anxiety born of decline in the nation’s relative power. After the George W Bush era had painfully exposed the limits of America’s military might in Iraq, the Barack Obama years saw China knock America off the top spot as the world’s largest economy on one measure, and it looks all set to overtake it entirely within a few years. Nationalism can take many forms, but nationalism tinged with nostalgia can be especially effective. Trump promised not merely to make America great, but to “make America great again.” British readers may hear an echo in the Brexit campaign slogan which was not simply an exhortation to take control, but to “take back control.”

The greatness which Trump promises to regain will not be that which America used to imagine for itself. Instead of the sometimes overclaimed commitment to the spread of openness and democracy, he proposes an assertive and yet more insular politics, potentially creating the space for other powers—and who knows which—to fill. The world as a whole, then, could soon have to grapple with the consequences of America’s retreat. The first task, however, is to understand why the nation came to take this solipsistic turn. And to find the answer to that one must look first to the US political system.

Elite capture and vetocracy

The dysfunction of the US political system weighed heavily on the outcome of the 2016 election. The charge that big money and powerful special interests were corrupting Congress and lining the pockets of “elites” at the expense of ordinary citizens was one that united the two outsider candidates from right and left, Trump and Bernie Sanders. Both of them vilified Clinton as the personification of this kind of corruption, since the Clintons had enriched themselves by taking money from powerful interest groups. Both targeted Wall Street banks like Goldman Sachs as particular villains and, as the year ground on, the right took the charge to new heights, with Trump damning a range of American institutions as corrupt, including the FBI (though only when it exonerated Clinton), the Federal Reserve, and electoral administrations across the country. The conservative provocateur, Matt Drudge, even suggested that the National Oceanographic and Atmospheric Administration was hyping the threat from Hurricane Matthew for political purposes.

The American political system has indeed become dysfunctional; the trouble is that critics like Trump and Sanders don’t correctly identify the source of the problem, and could not offer anything by way of real solutions.

The real problem has its roots partly in the nature of American society, and partly in the country’s institutions. The American people are highly diverse along every conceivable axis—racially, ethnically, religiously, geographically, and culturally—and, over the past 20 years, they have become highly polarised too. This polarisation is reflected in the places in which Americans choose to live, where ideological affinity is often more important than race or religion, and it is reflected in a Congress in which the most liberal Republican is considerably more conservative than the most conservative Democrat. This is quite different from the old 20th century situation, when overlap between the parties allowed for bipartisan agreement on major policies from the New Deal to the tax cuts of Ronald Reagan’s administration.

Beyond ideological polarisation, America has seen the rise of a huge number of wealthy and well-organised interest groups—not just corporate lobbyists, but also environmental groups, advocates for spending on virtually every disease known to man, and individual wealthy donors like the casino magnate Sheldon Adelson or the infamous Koch brothers, Charles and David, who can on their own raise nearly as much money as either one of the two parties. The amount of money in American politics has increased by more than an order of magnitude since the late-1990s; fund-raising now constitutes the major preoccupation of all office-holders, particularly members of the House of Representatives who have to stand for re-election every two years.

The constitutional structure bequeathed by the Founding Fathers intensifies the effects of polarisation and interest group capture. Compared to the parliamentary democracies of Western Europe, the American system spreads power out widely, among many competing branches of government. In the presidential system, the executive and legislature are effectively supposed to check one another; in a powerful upper house of the legislature, supermajorities (60 out of 100 votes) are required to pass ordinary legislation; a Supreme Court can invalidate acts of Congress, and in recent decades has taken it upon itself to make social policy; and, truly substantial powers remain with the states and localities. Each one of these power centres can potentially veto action by the system as a whole.

Add polarisation and the rise of powerful interest groups into this system, and the result is what I have labelled vetocracy: that is, a situation in which special interests can veto measures harmful to themselves, while collective action for the common good becomes exceedingly difficult to achieve. Vetocracy isn’t fatal to American democracy, but it does produce poor governance. This is evident in one of the government’s most basic tasks, producing an annual budget. The federal budget has not been passed under what is labelled “regular order” for more than a decade now. Each year there has been a showdown between Democrats and Tea Party Republicans, who threaten either not to pass a budget at all or not to raise the debt ceiling (an absurd refusal, which would involve reneging on US sovereign debt). In 2013, just as in 1996, the brinkmanship led to a complete government shutdown, during which federal workers were under criminal sanctions if they simply showed up at work.

Vetocracy has many other malign effects. The 10,000 page US tax code is a disgrace, an incomprehensible catalogue of exemptions or subsidies, special privileges slowly built up in past compromises, layer by sedimentary layer. The US, with one of the highest headline rates of corporate taxation, would do well to cut this rate in exchange for eliminating all these breaks. Budget experts in both parties agree in principle that it should be done, not least to encourage US multinationals to bring home the $2 trillion in cash they have stashed abroad. But in practice, a veto-clogged Congress is not even able to get rid of the hated “carried interest” provision, which grants private equity investors and hedge fund managers a lower tax rate than everyone else.

I define “political decay” as the capture of political power by well-organised interest groups that bend the system to their own interests, at the expense of broader public interests. A decayed system is also one that cannot fix itself, because those entrenched interests and ways of thinking prevent reform. The American political system has undergone decay over recent decades as well-organised elites have made use of vetocracy to protect their interests. This does not mean that the country is no longer democratic; it means that there is a crisis in representation as some Americans have much more weight in the political process than others. This perception of unfairness gives rise to the second important social condition which affected the outcome of the election, which is inequality.

Inequality and class resentment

Inequality has risen over the past generation. The broad figures about the concentration of wealth and income in the top 10 per cent of the top 1 per cent are well known. What was less recognised until the current campaign was what was going on in the lives of the other 99 per cent.

When people on the American left have considered inequality, they have traditionally thought first about African-Americans in inner cities, undocumented immigrants, or other marginalised minorities. Poverty among these groups continues to be a major problem, but the burden of growing inequality has fallen on a different stratum: the old white working class, which has now suffered three generations of deindustrialisation. As both Charles Murray and Robert Putnam, social observers from opposite ends of the political spectrum, have documented, America’s most important social fracture is no longer race or ethnicity, but class, defined by level of education.

“Trump may well accelerate the established trend for a significantly reduced American role in the world”

The diverging fortunes of university graduates and school dropouts is startling, and shows up not just in income statistics, where workers with only a basic education often make less than their fathers or grandfathers, but also in social dysfunctions like family breakdown, and drug addiction: during the primary season, the number one issue in largely white and rural New Hampshire turned out to be heroin abuse. Methamphetamine use has spread across rural America and children of single parents are being left to fend for themselves. There is a huge alienation on the part of rural and less educated people, and resentment that their urban fellow-citizens ignore their plight.

The white working class has not been well represented by either party. Republican elites come from corporate America, and advocate free trade and open immigration—what could be called the Wall Street Journal worldview. Working-class whites may have often voted for Republican candidates on the basis of cultural issues like guns and abortion, but the hierarchy has not shown concern for their economic interests. Trump proved masterful in stoking the rage that resulted—and today his supporters are often more enraged with orthodox Republicans like Paul Ryan, the Speaker of the House of Representatives, than they are with the Democrats.

But the Democrats have also lost touch with the white working class. They have won national elections by cobbling together coalitions of different identity groups: African-Americans, Hispanics, Asians, environmentalists, and the LGBT community. Women have been important too, but perhaps more particularly relatively educated women of feminist leanings: the outrage over the tape of Trump bragging about how he had groped women was felt more keenly among educated women than their working-class sisters, the majority of whom voted for Trump. The white working class was, until recently, an identity group that was not even perceived as particularly disadvantaged; as a result, the Democrats largely ignored them.

This transformation has been years in the making. Back in the 1930s, huge majorities of rural whites voted for Franklin Roosevelt’s New Deal coalition; they were often the chief beneficiaries of initiatives, such as the Tennessee Valley Authority that brought electrification to the rural south. After the Democrats passed the civil rights legislation of the 1960s, they began to drift to the Republicans, defecting in large numbers to Ronald Reagan in particular. Bill Clinton won many of them back in the 1990s, and Obama was able to hold on to enough to get elected twice. But their alienation from the Democrats exploded in a year when their candidate made the right noises about helping them, but seemed a cultural world away.

The success of populism in 2016 should thus not be shocking. The financial crisis of 2008 was the responsibility of an economic elite, but it was ordinary working class citizens who lost their jobs as a result. With neither party offering the white working class a home, economic marginalisation coincided with marginalisation in a political system that favoured those with money and status. The real surprise ought to be that the populist uprising did not come sooner.

Fixing the facts

One of the more troubling aspects of this year’s campaign was the debilitating effect of social media. Back in the 1990s, the avatars of the internet revolution believed that the new technology would be liberating; since information was power, its easy availability would have a democratising effect. This view appeared to be validated by democratic protest movements from Kiev to Yangon to Tahrir Square.