Immediately after Donald Trump’s supporters rioted at the Capitol on January 6, 2021, the idea that Trump might be sworn in for a second term as president was virtually inconceivable. But the conditions that made his return to power possible were shaped over several decades, starting with policies first introduced by President Ronald Reagan.
In January 2021, after tear gas was dispersed and the Capitol was cleared, the FBI launched the largest federal investigation in U.S. history to apprehend those responsible. Trump, who urged protesters to “fight like hell,” would later face federal charges for his role in the chaos. Surely this would make the new presidential campaign look laughable.
So how on earth did Trump win?
Critics were quick to criticize the Democrat’s tenure. Has President Joe Biden turned his back on the working class? Yes, that’s right. But this doesn’t explain why nearly every voting group leaned toward Trump. Trump became the first president since the Great Depression to leave office with fewer jobs than when he entered office during his first term.
Some argue that Biden dropped out of the race too late. But he was trailing in the polls even before he appeared in the disastrous debate. Others say Kamala Harris’s campaign was too “woke” or that her failure to identify what she would have done differently for Biden was fatally damaging. Others will point to record inflation and other economic pressures.
These theories are different, but none of them answers the real question. How can a country with democratic values so deeply ingrained in its psyche elect a president who openly defies them?
The truth is that democratic capitalism has been steadily building towards a predictable crisis over the past 45 years. It consists of three mutually reinforcing trends that began during the Reagan era: stagnant growth, rising inequality, and increasing polarization.
Of course, the comparison between Trump and Reagan goes too far. But what is overlooked is how Reagan’s policies created the conditions for a populist seizure of power. Reagan came to power during a period of the highest growth rate since the Industrial Revolution. Inequality was decreasing and almost everyone was sharing in the fruits of progress.
However, the Reagan administration turned away from the welfare model established by its predecessors and preferred political economy theory and neoliberal ideology. Neoliberals rejected the idea that tax-funded government programs were the best way to improve life. Rather, they believed that when the market prospers, everyone prospers. And if the government doesn’t get in the way, the market thrives. Tax rates for the wealthy were drastically reduced, leading to a sharp increase in income inequality.
Since the introduction of so-called Reaganomics in the 1980s, the top 1% and top 10%’s share of income and wealth has increased dramatically at the expense of everyone else. This is a global trend, but it has been most pronounced in the United States.
This has been further compounded by the information revolution, which has created a huge skills premium (i.e. the difference in wages between skilled and unskilled workers). The shift to a service-based economy and increasing deindustrialization have combined to exacerbate already widening wealth inequality. Manufacturing sites across the Rust Belt have closed or are closing, accelerating job losses for blue-collar workers. As a result, inequality is now close to levels last seen in the Roaring Twenties.
The 1980s also marked the end of the era of high growth. In the 1960s, the U.S. economy grew at an average annual rate of more than 4%. Over the past decade, this figure has been around 2%. Rapidly rising inequality and slow economic growth take a heavy toll on the poor.
Slow growth prevents the economy from mitigating the effects of rising inequality. The slow-growing pie was not split evenly, leaving those generations worse off than their parents.
In the 40 years leading up to Trump’s first election victory, real hourly wages for Americans without a college degree (64% of the population) actually declined. Wages for workers with a high school diploma fell from $19.25 to $18.57, while wages for workers without a high school diploma fell from $15.50 to $13.66.
We see this impact clearly in the housing market. In 2016, the average worker had to work 40% longer than in 1976 to afford the average home.
This exposes the deep contradictions at the heart of capitalist democracy. If inequality is increasing and life is getting worse for most people, how can the majority continue to vote for parties and presidents that perpetuate a system that does not serve them?
The answer lies in a third driving force: political polarization. Politicians use divisive election strategies to motivate voters to vote for the other side. This is often framed as an ever-increasing threat to the United States.
Topics change to the war on terror, immigration, critical race theory, and gender. But the strategy is the same. By focusing your anger on other issues, you distract yourself from the main contradictions of a democratic system that mostly serves the elite.
The result is a political culture of increasing polarization and radicalization on both the left and the right. This polarization allows for the entry of extreme populist positions into the political arena. It also creates an opportunity for many voters who have lost faith in the establishment to exploit a divided political system for an authoritarian seizure of power. Trump was the first to seize the opportunity.
In fact, it’s surprising that another “Donald Trump” didn’t happen sooner. All it took was the right presidential candidate to emerge for the 2008 Obama vs. McCain presidential campaign. All they have to do is weaponize the conditions that began in the 80s: slowing growth, rising inequality, increasing polarization. This is the secret to Trump’s populist power grab, which has undermined the foundations of American democratic culture.
Gilad Tanay is the founder and president of the ERI Institute, a research firm specializing in social impact and philanthropy.
