Economy & Work

Why Trump’s “Rigged” Argument Resonates

Trump's argument that the system is rigged makes sense to economically vulnerable people who have long felt that policy ignores their interests.

Why Trump's "Rigged" Argument Resonates

Supporters of Republican presidential nominee Donald Trump cheer during a campaign rally in Greeley, Colorado on Oct. 30, 2016. (Photo by Jason Connolly/AFP/Getty Images)

This post originally appeared at the Working Class Perspectives blog.

One of the most popular memes in Donald J. Trump’s campaign is his claim that the system — and more recently the election itself — is rigged. After Hillary Clinton secured the Democratic nomination, Donald Trump made the following appeal to Bernie Sanders supporters: “It’s not just the political system that’s rigged. It’s the whole economy. It’s rigged by big donors who want to keep down wages. It’s rigged by big businesses who want to leave our country, fire our workers and sell their products back into the US with absolutely no consequences for them…. It’s rigged against you, the American people.”

While journalists and pundits discuss how economic restructuring and technology have left many of Trump’s supporters feeling left behind by the American economy, his statement that the system is rigged captures what many from in and around the precariat have long known intuitively. They are being screwed. Rentier capitalism, in which governments and elites have created mechanisms that generate rental income flowing to the plutocracy while generating chronic economic insecurity for the rapidly growing precariat, and for part of the salariat as well.

This is not a free market economy, but an unfree one. Financial and nonfinancial assets have risen and accrued disproportionality to the elite. Productivity increases but workers lose out as wages and benefits decline.

Five currents drive this unfree market. First, governments have constructed elaborate trade and investment agreements that protect intellectual property rights and regulate economic activity. One result has been a soaring number of patents and copyrights, which are often bought by large corporations. Those companies also trademark goods and services, guaranteeing themselves super profits and income for decades to come.

This winner-takes-all market is not driven by market forces but by the regulatory apparatus, including the undemocratic Investor-State Dispute Settlement process by which multinationals can sue governments for any policy change that corporations believe harms their prospective profits. The system is further rigged because those corporations get to appoint the judges, corporate lawyers who adjudicate via confidential proceedings that do not have to draw on precedent. Such regulations give corporations economic power far beyond what any individual holds. Imagine if you could sue government for prospective harm from any policy change!

Second, most countries have engaged in a “competitiveness” game by which they indulge in beggar-my-neighbor fiscal policies that give oligarchs and multinationals incredible subsidies to encourage them to relocate or to stay. Such practices include selective tax systems as well as the widespread use of tax havens, tax avoidance arrangements and access to low interest loans. Here again, the vast unearned subsidies go directly to the rich, not to the precariat or most other workers. This mechanism for inequality transfers income from the precariat to the elite and to financial intermediaries.

Some long for imagined ‘good old days.’ This part is easy prey for neo-fascist populists who play on their fears and insecurities.

Third, a less appreciated form of “rigging” is the steady commercialization and privatization of the commons, public spaces, natural resources and services built up by and for the people over many generations. Often in the name of austerity, much of the commons has been given away, and more is planned, at discount prices to commercial interests. The accelerated depletion of public natural resources is having devastating ecological costs. It is supplying more rental income to the elite, and the loss is adding to the insecurity of the precariat.

Fourth, despite predictions that it would improve working lives, the ongoing technological revolution has generated a new elite, part of it controlling rent-sucking apps and so-called platforms that are shaping the tasker labor force. Uber is now the largest transportation company, but has no cars. Airbnb is the largest hotel chain, but owns no properties. Despite this, they take 20 percent or more from every transaction within their operations. While they promise people new ways of earning money, they contribute to wage stagnation. Those who own the platforms make millions on the labor and property of others, while those who do the labor have no control over what they own — their bodies, cars or homes. This is rentier capitalism.

Finally, our democracies have been put up for sale. Plutocrats are allowed to fund politicians and parties, and PR companies make huge amounts from manipulating elections. Many of those who enter politics use it as a revolving door to lobbying, board appointments and other means of extracting income from the sectors they help to privatize, deregulate or remake. Sadly, one can document all this with ease.

Yes, the system is rigged — by an evolving form of capitalism that undermines genuine “free trade.” Rising inequality is fomenting anger and desperation. A revolt is coming, but its direction is uncertain. Part of the precariat consists of people who have fallen into it from old working-class communities and families. They tend to look back and feel deprived. Some long for imagined “good old days.” This part is easy prey for neo-fascist populists who play on their fears and insecurities. In the US right now, their leading harlequin is Donald Trump. In France, it is Marine Le Pen. In Britain, they tended to vote for Brexit.

Such types are creeping closer to gaining real power. They will not be stopped by scorn alone. We need a progressive alternative that can appeal to all factions in the precariat, but particularly to the young educated part. Fortunately, a more progressive form of revolt is beginning to bubble up. It will focus on building a new income distribution system suited to the 21st century, one in which the economic gains are captured for the citizenry, not for the oligarchy. While they may seem an unlikely coalition, defenders of free market capitalism, socialists, ecologists and other progressives have a common interest in helping this new system emerge.

Guy Standing

Guy Standing is professorial research associate at the School of Oriental and African Studies, University of London.