Luttwak writes about the political economy of automobiles and the corresponding incentives to vote for President Ivanka Trump


Luttwak is a crafty planner of coups d’etat.

Luttwak wrote:

the victory of the Democratic establishment merely ensured the victory of the only Sanders counterpart on the Repub­lican side with whom Sanders differed sharply on almost everything – except for the only thing that really mattered to both: the urgent need to mobilize government policies to increase American jobs and wages, in firm opposition to all the competing international and planetary priorities continuously proffered by elite Americans and their core institutions, along with Pope Francis and other leading figures.

In the dramatic crescendo of the 2016 elections that gave Trump to the United States and the world, very possibly for sixteen years (the President’s re-election committee is already hard at work, while his daughter Ivanka Trump is duly apprenticed in the White House that, according to my sources, she means to occupy as America’s first female President), none of the countless campaign reporters and commentators is on record as having noticed the car “affordability” statistics distributed in June 2016 via www.thecarconnection.com. Derived from very reliable Federal Reserve data, they depicted the awful predicament of almost half of all American households. Had journalists studied the numbers and pondered even briefly their implications, they could have determined a priori that only two candidates could win the Presidential election – Sanders and Trump – because none of the others even recognized that there was problem if median American households had been impoverished to the point that they could no longer afford a new car. This itself was remarkable because four wheels and an engine might as well be grafted to Homo americanus, who rarely lives within walking distance of his or her job, or even a proper food shop, who rarely has access to useful public transport, and for whom a recalcitrant ignition or anything else that prevents driving often means the loss of a day’s earnings, as well as possibly crippling repair costs.

Clinton did not understand in what country she was running for election: not one populated by black women (they dominated her convention), environmental activists, patriotic Muslims, vegans, committed free-traders and social engineers, but chiefly a country of car owners and bitterly frustrated would-be new car owners, a far better categorization than Clinton’s own “deplorables”.

That is why the car affordability numbers revealed in June 2016 were so vastly significant in determining the outcome of the elections. Going by metropolitan areas, they extracted maximum affordable car prices from median incomes. The latter ranged from the stellar $87,210 of San Jose in the opulence of California’s Silicon Valley, all the way down to the $24,701 of deindustrialized Cleveland, Ohio, numbers that in turn yielded maximum affordable price limits of $32,855 in San Jose, and $7,558 in Cleveland – not actually the lowest number, which was Detroit’s $6,174, owing to high average insurance costs in that crime-afflicted city (at $1,131.40 per annum, as compared to Cleveland’s $659.47).

What made these seemingly obscure numbers nothing less than momentous was that the cheapest new car on sale in the United States in 2016 was the Nissan Versa sedan at $12,825, twice the level that average households could afford in Detroit or Cleveland, and more than average households could afford in cities ranging from Philadelphia, Orlando, Milwaukee, Memphis, Providence, New Orleans, Miami and Buffalo, as well as, a fortiori, in a very great number of smaller localities across the United States, even in high-income states such as California and Oregon, as well much more commonly in the lower-income Southern and rust-belt states.

The mass exclusion of Americans from new car ownership is the result of two converging phenomena, only one of which was recognized by Hillary Clinton, though scarcely emphasized in her identity-focused campaign: wage stag­nation. Sanders and Trump did not hesitate to blame that relative impoverishment on the exposure of the least agile of Americans to international competition, with the resulting de-industrialization that translated millions of Americans from $20-to-40-an-hour factory jobs to miserably paid service jobs. Beholden to the sanctity of free trade, the Clinton crowd even more than the candidate herself blamed the lethargy of the TV-watching, beer-drinking, gun-owning, church-going, and cigarette-smoking “deplorables”, who unaccountably failed to avail themselves of the wonderful opportunity to leave boring assembly-line jobs or downright dangerous coal-face or oil drilling jobs to become fashion designers, foreign-exchange traders, software engineers, or even political campaign operatives.

It was the other phenomenon, the other blade of the scissors that cut off the possibility of new car ownership for more and more Americans that Trump squarely attacked as Sanders did not and could not: the regulatory regime that has been relentlessly forcing up new car prices from the 1977 average of $4,317, equivalent to $17,544 in 2016, to an actual average price today that exceeds $30,000. Those regulations prescribe that American cars must be very, very safe, and steadily more demanding safety requirements have been forcing up manufacturing costs: the latest addition is the provision of rear-view cameras in all cars that will be mandatory in 2018, the result of an Obama decree prompted by the campaign started by a wealthy driver who had suffered the tragedy of killing his own young daughter while reversing. Because of his suffering, and his energetic lobbying, and because of Barack Obama’s enthusiasm for promulgating more regulatory decrees, in 2018 the additional cost of those rear-view cameras – only a few hundred dollars – will deprive thousands more households of the chance to buy a new car.

Also costly are the ever-more stringent fuel conservation norms and pollution restrictions that mandate pricy engine ancillaries, and that strongly favour inherently more expensive hybrid cars, as well as drastically more expensive all-electric cars. And both those purposes are much more costly to achieve than they could have been because they are subverted by the safety norms that prohibit the much lighter vehicles I happily drive in Japan, whose K-cars merrily drive up steep mountain roads in spite of their minuscule engines, and that also prohibit the several small cars sold in Europe for much less than the $12,825 of the cheapest US car.

Historians tell us that Marie Antoinette never said that those who could not afford to eat bread could eat brioche instead – but the regulatory restrictions that grew enormously under Obama, and that Clinton promised to increase even more (the luxuriously funded Sierra Club environmental agency gleefully anticipated the forthcoming demise of natural gas extraction in the wake of the destruction of coal mining), faithfully reflected the mentality of the French queen of legend: who wants to be a miner anyway? And never mind that the closing of a mine also destroys the value of the mining town’s houses, the only wealth possessed by most miners. Then there was the mechanically repeated assertion that, in any case, it is the declining cost of natural gas that is killing off the coal industry. That might well be true in the future, but it is plainly not so in the present, because otherwise President Obama would not have dedicated his final months in office to a slew of new decrees calculated to increase costs and restrict production to finally strangle the industry. (Trump has already revoked most of them.)

What was true of coal mining is just as true of much else that also directly attacks the interests of the American working classes, a categor­ization revived by Sanders explicitly and by Trump substantively – and it was the forty-fifth President’s grim inaugural speech warning that he would not forget them or their pressing needs, as the cynical had confidently assumed he would (the ex-economist Paul Krugman wrote that particular column several times in the New York Times during the campaign), that triggered the vehement panic of the elite Americans who are now trying to drive Trump from office. For those pressing needs include the restriction of competing labour inflows, and ever so liberal Silicon Valley tycoons would be totally lost without their Mexican gardeners, Asian chefs, Filipino childminders, and assorted immigrant dog-walkers and cleaners, along with their Indian programmers under special visas. Even more intolerable for the elite is the fact that the needs of the American working classes also require the correction of certain chronic trade imbalances and the abolition of environmental and cognate regulations that excessively increase production costs, all of them very direct attacks against the current elite ideology.

What happens next depends on the fate of that other vector of the Trump strategy – his $1.3 trillion infrastructure plan which a White House team is striving to convert into an actual programme that specifies what is to be built where, and with what sort of funding, whether public or private. If the resulting employment generation kicks in fully by 2020, Trump will coast to re-election, especially if by then he can claim that the Mexican border is “sealed”, which will then result in his ordering the automatic legalization of all tax-paying and non-felonious illegal immigrants, giving him a chunk of the Hispanic vote as well, after decades of unfulfilled promises, including Obama’s.

Even a developer very fond of fast food at its worst, and who enjoys boasting about his crotch-grabbing, is still a developer, who very naturally thinks in six-year blocks from site scoping to finance to design to construction and disposal, as opposed to the two-year horizon of American politics. That is why Trump registered his “Make America Great Again” slogan in 2010, six years in advance of his planned campaign, and why he is now focused not on the next mid-terms, but on the 2022 mid-terms, after his 2020 re-election, because it is only then that he can launch his daughter’s candidacy, while serving his own last two years in office. In the meantime, he is securing his base by striving hard to keep his promises: withdrawal from the Paris agreement that the US Congress never voted on (Obama approved it with a decree that seemed secure under President Hillary), the Muslim entry restrictions, the “sealing” of the Mexican border that will make universal legalization acceptable, and above all, his sorely needed infrastructure programme that is now being prepared by wholesale deregulation – at present, newly aggravated environmental rules almost exactly double road, bridge and tunnel construction costs as compared to France, in spite of its thirty-five-hour working week, and Japan, in spite of its extreme space restrictions.

As for Ivanka, in addition to her unique on-the-job training, lately pursued at the G20 meeting, in which she was a real participant, she is also preparing herself by carefully dif­fer­entiating her personal views on a number of electorally important issues from those of her beloved father – who seems to accept her publicized dissents with paternal equanimity. No wonder that leading Democrats and non-Trumpers continue to act hysterically even eight months after the election. President Trump’s plan threatens to exclude them all from office until long past their retirement age.

https://www.the-tls.co.uk/articles/public/trump-dynasty-luttwak/

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