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Can Bernie Sanders Fix the Broken American Dream?

We are in a different era where the electorate is up for grabs.

While age is a factor, Sanders’s personal energy and dynamism belie his years.

While age is a factor, Sanders’s personal energy and dynamism belie his years.

Watching Sanders this morning, cajoling his troops, emoting his followers and leading them again, it is clear that what underlies his movement and gives him energy is the cause. The objective is to give more and more people access to some of the enormous wealth of this extraordinary country.

“The way he was talking, you’d be mad to rule out another presidential bid in 2020.”

This was my conclusion to an article published following a weekend at the Sanders Institute in Vermont last November. It ran counter to the prevailing wisdom that Bernie Sanders shouldn’t/couldn’t/wouldn’t run for the US presidency again on the grounds that he was too old. If elected in 2020 he will be 79 years old, which would make him the oldest Democratic president ever.

His big idea is the simple fact that in a country capable of creating enormous wealth, far too few people own far too much and far too many own far too little.

While age is a factor, Sanders’s personal energy and dynamism belie his years. Campaigns are certainly affected by stamina but they are ultimately won by the big idea, the cause and the crucial central message. His big idea is the simple fact that in a country capable of creating enormous wealth, far too few people own far too much and far too many own far too little.

In the US, dramatic wealth inequality is highly corrosive because it undermines the American Dream. Persistent inequality makes a mockery of the myth of American opportunity which contends that if you work hard, do the right thing and put your shoulder to the wheel, you will get on, climb up and raise the floor for your children.

In the US, this is simply not true anymore. The promise of opportunity and social mobility is less credible when just three individuals – Jeff Bezos, Bill Gates and Warren Buffett – have amassed more wealth than the bottom 50 per cent of America. Indeed, the top 1 per cent of Americans now own 40 per cent of the nation’s wealth.

The American Dream is broken.

Today the United States is involved in a massive battle of ideas where everything is up for grabs. The pendulum swung radically to the right with the election of Trump, and it could yet swing to what would be (for Americans) the radical left under Sanders. To understand what is going on, it’s important to consider the economic, political, generational and philosophical super-cycles that have characterised American thought in recent history.

Big economic cycles

From 1950 to 1980, America was characterised by high taxes, low personal debt, huge State spending on infrastructure and education, extension of civil rights, liberal constitutional reform, extensive regulation of banking and finance, and strong economic growth. This was the great era of American equality. When seen from the perspective of today, that America was positively Scandinavian with incomes rising for the bottom 90 per cent and largely stagnant for the top 1 per cent (thanks to high marginal tax rates).

Then around 1980 came the pendulum swing of Ronald Regan and his transatlantic hand maiden, Margaret Thatcher, with their tax-cutting, debt-fueled, deregulated, free-for-all growth model. Regulation in banking and finance was slashed, while taxes on the wealthy and on corporations were reduced. The economy responded positively, but the spoils were not evenly shared. The rich began to get much richer.

This 30-year era came to an abrupt end with the 2008 crash.

Since then, politics has been in flux. The policy response to the recession – a combination of austerity and zero interest rates – has amplified inequality. Austerity hurts poor people more than rich people they depend more on the state. In addition, a monetary policy that drives up asset prices will make those who own assets, the rich, better off.

Inequality in rich countries is one of the great issues of our times. In the US, the Gini coefficient – which ranks a nation’s income inequality on a scale from 0 (perfect equality) to 100 (perfect inequality) – has jumped from just 34.6 in 1979 to 41.5 in 2016.

Having experienced two super cycles between 1950 and around 2010, we are now in a third super-cycle, defined by a battle between Insiders and Outsiders, between those who have a stake in society and those who feel locked out, which could be loosely termed the era of populism. Most people like to point to Trump and Brexit as being the exemplars of this swing, but the movement against the status quo is everywhere.

For example, one in four Europeans have cast their ballot for populists of one stripe or another. Since 2008, when populist parties commanded a mere 7 per cent of votes across the continent, support for populists has surged to more than 25 per cent – predominantly on the far-right of the political spectrum. But the extreme left have scored well too.

The number of Europeans living under governments with a populist in cabinet has increased 13-fold from 12.5 million in the early 2000s to 170.2 million now.

Diverse demographics

We are in a different era where the electorate is up for grabs. And this is where Bernie Sanders comes in. A Quinnipac University national poll sheds light on the diverse coalition that could propel him to the Presidency.

The data reveals Sanders’s potential sway over African Americans (55 per cent favourable – 26 per cent unfavourable) and Latinos (52 to 26), although he needs to win over some white people (43 to 45), particularly white men (40 to 51) and working-class whites (38 to 44). Despite his age, he has galvanized the youth (57 to 29).

Recent data from Pew research show that across almost every demographic in the US, among those who describe themselves as non-partisan, there is now a clear lean towards the Democrats.

Recent data from Pew research show that across almost every demographic in the US, among those who describe themselves as non-partisan, there is now a clear lean towards the Democrats. Trump repulses people beyond his base. This is most marked among the young, the ethnic vote and women.

Looking to the Presidential race, we know that in campaigns, unusual things happen. Coalitions that you couldn’t imagine become reality. Consider the possibility that Sanders, to overcome the age issue, decides to nominate the most talked about politician in the US right now, Alexandria Ocasio-Cortez, as his running mate.

It sounds radical now, but in changing times, what was once radical becomes mainstream and what was once mainstream becomes redundant. By throwing his hat in the mix again, Bernie Sanders has defined the big issue of the election and framed the argument by running on a ticket closer ideologically to Eisenhower than Obama.

Who knows, Sanders could even be as influential and economically radical as the most radical of them all, Ronald Reagan.

David McWilliams

David McWilliams, one of Ireland's leading economic commentators, is a writer, journalist, lecturer, broadcaster and documentary maker and has written four bestselling books, presented award-winning documentaries and performed an economics stand-up show. He is a regular contributor to the Financial Times and the co-founder of the world's only economics festival www.kilkenomics.com. Follow him on Twitter: @davidmcw

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