Trump as the financial crisis

Loved this extended analogy from Lee Drutman in Vox last week:

In 2008-’09, a major financial meltdown shook the economy and caused a significant recession. This crisis came as a surprise. No models predicted it. Initially, the only people who picked up on the warning signs were dismissed as crazy. But looking back, it should have been clear all along…

One benefit of such a comparison is that thinking in this way allows us to see Trump’s rise as the result of the incentives and structure of the existing political system, in the same way that we came to think about the financial crisis as the result of the incentives and structures of the financial system. This has consequences for the reform conversations that this crisis will hopefully bring about.

A second benefit of this comparison is that the analogy to toxic assets seems particularly useful. The anger turned violence that has emerged in the 2016 campaign is similar to the toxic assets that came out of the financial crisis. And to push the analogy further, those who think Trump can be simply marginalized by responsible Republican leaders are deluding themselves, somewhat like investors who argued that the collapse of Bear Stearns in May 2008 could be safely contained and we could then move back to endlessly increase housing prices.

While some might prefer to wish away the toxic elements of our politics that are emerging, this would be unwise. We need to find a way to rescue them.

A system full of perverse incentives

One reason the financial crisis was so bad was that the financial system was full of perverse incentives. For example, mortgage brokers and investment banks got rich by making and securitizing loans that should never have been made. But because they got rich doing so, they financed and securitized riskier and riskier loans, until the system was so flooded with junk that it of course collapsed.

 In a similar way, it seems that Republicans received short-term electoral rewards for poisoning our political system with increasingly hateful and nihilistic rhetoric. As Vox’sEzra Klein wrote: “Republicans have worked for years to radicalize their base against Obama, to persuade them that something truly different and terrifying is going on, and in that project they have enjoyed a catastrophic success.”

In 2009, Republicans faced a choice. They could have looked at the disastrous second term of George W. Bush’s presidency as the logical end of the Reagan coalition and seen the Democrats’ sweeping 2008 victory as heralding a new political order, and then worked constructively to pass a climate bill and a health care bill and end an era of increasingly bitter partisanship. Instead, Republicans decided that the problem was that they had not been conservative enough. Their congressional leaders opted for pure obstructionism. And their messaging rediscovered regions of negativity and hatred that had been ignored in America for decades.

The benefit was clear: As long as they directed fire at a common enemy, they could continue to maintain the fiction that their coalition was unified, papering over the growing contradictions and disappointments. Republicans could continue to placate their wealthy donors with fiscally conservative policies because they could misdirect blame onto Washington Democrats and their big-government agenda for any stagnating wages.

Sure, they were playing with fire. But like the investment bankers who kept shoveling toxic assets into the system even as the thin logic that had once rationalized them vanished, all the incentives pushed toward maintaining the existing fiction.

What investment banker would have benefited in 2007 from telling clients that all these securitized mortgages were really junk and it was time to stop investing in them? Everybody had an incentive to perpetuate the status quo just a little longer, deluding themselves that it could go on and on.

Similarly, what Republican politician would have turned his back on the fight, accepting minority status for the price of peace? All the incentives pushed to maintaining the existing fights. And especially when the Republican strategy worked in 2010, the rewards became clear…

Donald Trump represents the consequence of a political system in which the contradictions have been expanding for probably two decades now: a system in which economically struggling and less well-educated voters have been marginalized, in which both parties (but especially Republicans) have sided with their donor classes against their voters, and in which both parties (again, especially Republicans) have attempted to paper over their internal contradictions by spewing negative partisanship into the system. More than ever, voters support their party not because they like their party but because they absolutely hate the other party.

Trump is helping Obama is helping Hillary

I’m just going to borrow in full this post from Ezra:

Political scientist Alan Abramowitz emailed over an interesting insight about the effect the presidential race is having on Barack Obama’s numbers — and what that might mean in November:

All the noise being made by the presidential campaign, especially by the Republican campaign, has taken attention away from what may turn out to be more significant for the general election — Barack Obama’s rising approval rating.

Obama’s weekly approval rating in the Gallup tracking poll (I ignore the daily fluctuations which are largely meaningless) has risen to its highest level in many months — 53 percent approval vs. 44 percent disapproval for the past week.

This is potentially very significant for the November election because much research, including my own, has found that the president’s approval rating is a key predictor of the election results even when the president is not on the ballot. Thus a very unpopular George W. Bush probably doomed John McCain to defeat in 2008 no matter what happened during the campaign that year. A 53-44 approval-disapproval balance would give Democrats a good shot at keeping the White House even if they were not running against a badly divided Republican Party led by perhaps the most unpopular nominee in decades.

So why has Obama’s approval rating been rising recently? Several factors may be involved including an improving economy but one of the most important [may] well be the GOP presidential campaign. The more voters see of the leading GOP candidates, the better Obama looks. Along these lines, it is probably not a coincidence that there has been an especially large jump in Obama’s approval rating among women which now stands at 58 percent.

For context, Obama’s approval rating at this point in the 2012 cycle was 47 percent, and George W. Bush’s approval rating in 2008 was 28 percent.

Yep.  The media can, at times, pay way too much attention to presidential approval.  But in a presidential election year to see the steady rise in Obama’s approval (and okay, we don’t know that the Republican craziness is responsible for Obama’s increase, but it sure ain’t hurting) really is a big story that almost as much as anything bodes well for Hillary in November.

College admissions reality

From reading the news, you’d think all college admissions was about how damn tough and competetive it is to get into college these days.  Yes, it is absolutely absurdly difficult and competitive to get into the nation’s most elite (notice, I didn’t say best) universities, but that is not the reality for the vast majority of college students.  Ben Casselman with a great corrective at 538:

Here’s how the national media usually depicts the admissions process: High school seniors spend months visiting colleges; writing essays; wrangling letters of recommendation; and practicing, taking and retaking an alphabet soup of ACTs, SATs and AP exams. Then the really hard part: months of nervously waiting to find out if they are among the lucky few (fewer every year, we’re told!) with the right blend of academic achievement,extracurricular involvement and an odds-defying personal story to gain admission to their favored university.

Here’s the reality: Most students never have to write a college entrance essay, pad a résumé or sweet-talk a potential letter-writer. Nor are most, as The Atlantic put it Monday, “obsessively checking their mailboxes” awaiting acceptance decisions. (Never mind that for most schools, those decisions now arrive online.) According to data from the Department of Education,1more than three-quarters of U.S. undergraduates2 attend colleges that accept at least half their applicants; just 4 percent attend schools that accept 25 percent or less, and hardly any — well under 1 percent — attend schools like Harvard and Yale that accept less than 10 percent.

Yeah, I went to Duke and it was great (especially the basketball), but I’ve spent enough time at high-quality public universities that there is no way I would ever encourage my kids to put themselves through the stress and extreme workload seemingly required to end up at an elite college.

And Casselman makes a nice argument that it really does matter that journalists are focusing on the wrong things:

That myopia has real consequences for education policy. Based on media accounts, it would be easy to think that the biggest issues on U.S. campuses today are the spread of “trigger warnings,” the rise of “hookup culture” and the spiraling cost of amenity-filled dorms and rec centers. Meanwhile, issues that matter to a far larger share of students get short shrift.

The media’s focus on elite schools draws attention away from state cuts to higher-education funding, for example. Private colleges, which feature disproportionately in media accounts, aren’t affected by state budget cuts; top-tier public universities, which have outside resources such as alumni donations, research grants and patent revenue, are much less dependent on public dollars than less selective schools.

Or consider the breathless coverage of the college application game that few students ever play: For most students, or at least most high school graduates, getting into college isn’t nearly as big a challenge as getting out. Barely half of first-time, full-time bachelor’s degree students graduate within six years; for part-time or community college students, that share is even lower. But it took years for what is known in education jargon as “college completion” to break into mainstream education coverage, perhaps because at selective schools, the vast majority of students graduate on time or close to it.

Yes indeed.  Sure, trigger warnings and campus PC are interesting, but what we really need to talk about is how states, like North Carolina, are turning their back on public higher education.  Oh, and stop sweating your teenager so they can try and be among that 1%.  Lots of people have accomplished lots of awesomeness with some pretty modest colleges on their resume.

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