The Pandemic Depression
The Global Economy Will Never Be the Same
Even by the tumultuous standards of Donald Trump’s presidency, the rapid unraveling of U.S. institutions in the first half of 2020 has been remarkable. First came impeachment, laying bare how Trump and his allies withheld $400 million in military aid to Ukraine in order to convince that country’s leaders to investigate the family of Trump’s political rival, former Vice President Joe Biden. Even more shocking to those who still had faith in the U.S. Constitution to restrain Trump was the unwillingness of the Republican-dominated Senate to so much as hear all of the evidence against the president. Then came Trump’s audacious firing of Ambassador to the European Union Gordon Sondland and Lieutenant Colonel Alexander Vindman, director for European Affairs with the National Security Council, both of whom testified during the impeachment inquiry. Even Vindman’s twin brother did not escape dismissal from his job at the NSC. The intelligence community Inspector General Michael Atkinson was next to be fired, one of five inspectors general to be dismissed in the last three months.
Impeachment and its aftermath were just the beginning. Arguably more consequential for millions of Americans was the Trump administration’s refusal to heed expert warnings about the spread of the novel coronavirus. Instead of replenishing stockpiles of protective equipment or rolling out a national testing strategy, the president downplayed the severity of the pandemic and falsely claimed that the United States was prepared to contain it. Misinformation spread by Trump (and repeated by his allies on Fox News) in the early days of the outbreak appears to have accelerated the spread of the virus, which has now claimed more than 100,000 American lives.
While the pandemic was still raging, yet another tragedy struck: white police officers in Minneapolis, Minnesota, brutally killed George Floyd, an African American man, touching off mass protests that still continue. A leader who once referred to white supremacists as “very fine people” was never going to make a presidential moment of this crisis. But Trump’s response to the unrest gripping many U.S. cities has been shocking even by his standards. He demonized the protesters, encouraged their tear-gassing (apparently for a photo op), and threatened to invoke the 1807 insurrection act in order to deploy the military against them.
Institutional collapse often resembles bankruptcy, at least the way Mike Campbell experienced it in Ernest Hemingway’s The Sun Also Rises: “gradually and then suddenly.” As James Robinson and I argue in our recent book, The Narrow Corridor, democratic institutions restrain elected leaders by enabling a delicate balance of oversight by different branches of government (legislature and the judiciary) and political action by regular people, whether in the form of voting in elections or exerting pressure via protest. But democratic institutions rest on norms—compromise, cooperation, respect for the truth—and are bolstered by an active, self-confident citizenry and a free press. When democratic values come under attack and the press and civil society are neutralized, the institutional safeguards lose their power. Under such conditions, the transgressions of those in power go unpunished or become normalized. The gradual erosion of checks and balances thus gives way to sudden institutional collapse.
Such was the story of Venezuela under Hugo Chávez. Even before he was elected president in 1998, Chávez had no compunction about breaking political norms and polarizing the country. After all, he came to national prominence by attempting a military coup against Venezuela’s democratically elected president in 1992. Once in power, he moved to sideline what he called the country’s “moribund constitution,” undercutting the authority of the Supreme Court and National Assembly, removing presidential term limits, and ultimately initiating a process of constitutional reform to enlarge his powers. By the early years of this century, he and his allies had acquired the authority to bypass institutions and dismiss judges and bureaucrats. These powers paved the way for Chávez’s increasingly dictatorial later rule and the even more disastrous regime of his handpicked successor, Nicolás Maduro, who now presides over what is left of Venezuela’s institutions and economy.
Russia and Turkey suffered similarly gradual, and then sudden, institutional collapses. Presidents Vladimir Putin and Recep Tayyip Erdogan began their assaults on democratic norms and institutions by demonizing the opposition. Then, with a combination of threats, purges, and appointments of cronies, they clipped the wings of their judiciaries and bureaucracies, enabling their subsequent, more complete power grabs. What Putin and Erdogan could get away with at the beginning of their terms in office is nothing compared with what they can get away with now.
By refusing to disclose his tax returns, openly pursuing policies that serve his family’s financial interests, vilifying Hispanic and Muslim Americans, propagating conspiracy theories, and relentlessly lying to the press, the president has left practically no norm of democratic governance unviolated.
The United States is currently working through the later chapters of this same authoritarian playbook, which Trump adopted early in his presidency. By dismissing concerns about Russian interference in the U.S. election, refusing to disclose his tax returns, openly pursuing policies that serve his family’s financial interests, vilifying Hispanic and Muslim Americans, propagating conspiracy theories, and relentlessly lying to the press, the president has left practically no norm of democratic governance unviolated. These actions not only weakened the institutions that are supposed to restrain the president but also further polarized the U.S. electorate, creating a constituency that unconditionally supports Trump out of fear that the Democrats will take power. Having destroyed many Americans’ trust in their country’s democratic institutions, Trump has set about destroying the institutions themselves, one oversight mechanism at a time.
Although the United States is now on the brink of the sudden phase of institutional collapse after three and a half years of gradual decay, Trump has not yet freed himself from all constraints. There are still federal judges willing to block his unlawful executive orders and at least some bureaucrats willing to stand up to his most abhorrent behavior. The armed forces may be able to restrain him as well, as evidenced by the forceful rebuke he received from former Defense Secretary James Mattis after threatening to deploy the U.S. Army and the National Guard against protesters. But it would be a sad day if Americans had to depend on the military to save their democracy. And the trend is toward fewer, not more, checks on the president’s power. If the last remaining restraints give way, the fall toward autocracy will be swift.
There is nothing inevitable about the process of institutional decay. History is full of examples of countries rebuilding their institutions, just as it is full of examples of countries destroying them. Argentina, Brazil, Chile, and Uruguay all transitioned to democracy after years of brutal and often kleptocratic military rule. But for countries making such reversals, the process of institutional rebuilding is often slow, painful, and uncertain. Argentina still bears the scars of decades of Peronist rule and could be on the cusp of more democratic backsliding under President Alberto Fernández and his deputy, Cristina Fernández de Kirchner. Even countries that underwent relatively successful democratic transitions, such as Brazil and Chile, have contended with residual social conflict—catapulting the populist authoritarian President Jair Bolsonaro into office in the former and igniting massive protests last year in the latter.
The United States has a history of shoring up waning institutions before they completely fail. The fundamental political reforms of the Progressive Era introduced direct election of senators and limited the economic and political powers of big corporations. Later reforms took on corruption by dismantling the political machines that controlled many American cities until the 1940s. And in the 1950s and 1960s, the United States began the painful but largely peaceful process of reversing two centuries of political and economic discrimination against African Americans—a process that continues fitfully today. All of these efforts helped heal the body politic by fortifying the norms that in turn build trust in democratic institutions.
Another course correction is possible today, provided Trump loses the U.S. presidential election in November. Latin American countries did not have the ballot box to save them in their time of political crisis. The United States does. But even if the Democratic candidate, Joe Biden, wins the upcoming election—and even if Trump leaves office without a fight—his new administration will confront damage that it will be powerless to fix unless it addresses the deep structural problems that propelled Trump into office in the first place.
U.S. institutions were vulnerable to Trump’s attack because public trust had been quietly ebbing away from them for some time. For more than three decades after World War II, growth was not just rapid but broadly shared, at least among whites, enabling most Americans, even those without college degrees, to find good jobs. But instead of spreading those gains even more widely, and cutting African Americans into the American dream, U.S. economic institutions became less inclusive over the last three decades, and politics became more beholden to moneyed interests. Endemic racism persisted, and economic inequality deepened, producing radically disparate outcomes for different groups of Americans. The financial crisis of 2008, and the subsequent bailout for banks, only accelerated the trend toward inequality and deepened distrust in Congress, the judiciary, the Federal Reserve, and regulatory agencies.
To regain that trust, the next administration must confront endemic racism as well as economic inequality. Good jobs must once again be on offer for most Americans—even those without college degrees. Redressing these wrongs will go a long way toward restoring faith in American democratic institutions. But the next administration must also redouble its commitment to bureaucratic expertise, competence, and autonomy. Institutions don’t merit public trust if they serve the interests of the president or other politicians instead of the interests of the people. Americans deserve better. One hopes they will use the ballot box, and if necessary the streets, to make sure that they get better.