December 6, 2016

The Economic Situation, December 2016

Key materials

Mr. Trump and the Forgotten Man

President-elect Donald Trump’s unexpected victory—at least for most prognosticators—generated an analysis avalanche, along with thoughtful commentary, on what we might expect in the way of economic policy changes. In his victory, Mr. Trump spoke of the importance of making life better for all Americans. He then referred to the Forgotten Man: “Every single American will have the opportunity to realize his or her fullest potential. The forgotten men and women of our country will be forgotten no longer.”

Mr. Trump’s speechwriters knew exactly what they were doing when they suggested the Forgotten Man reference. They undoubtedly knew that the expression came from Franklin Delano Roosevelt’s famous April 7, 1932, Depression-era campaign speech. In his speech, FDR made reference to the horrors of World War I, pointing out that the 1932 depression crisis was far more serious. He then made reference to the policies of the Hoover administration and introduced the Forgotten Man:

It is said that Napoleon lost the battle of Waterloo because he forgot his infantry—he staked too much upon the more spectacular but less substantial cavalry. The present administration in Washington provides a close parallel. It has either forgotten or it does not want to remember the infantry of our economic army.

These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power for plans like those of 1917 that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.

Like Mr. Trump, FDR was a wealthy populist who was swept into office by voters across the land who, disgusted with Washington’s business-as-usual failed policies, were desperate for change. But while the fact of winning is similar for the two of them, it must be remembered that in his campaign against incumbent Herbert Hoover FDR carried 42 of the then 48 states and gained 57 percent of the popular vote. Mr. Trump carried 31 states out of 50 states and the District of Columbia, and he lost the popular vote. Like Mr. Trump, FDR turned on his Wall Street buddies and called for embarking on a huge infrastructure project. He would later attempt to put America first when it came to limiting immigration from war-torn Europe. Mr. Roosevelt, too, remembered the Forgotten Men, those ravished by the depression. But unlike Mr. Trump, Mr. Roosevelt was a dyed-in-the-wool Democrat and a successful politician who had governed the state of New York and rendered service to the nation in Washington. And unlike Mr. Trump, Mr. Roosevelt was one of the greatest orators of his day.

Can public choice economics explain the Forgotten Man?

The question in FDR’s time as well as today is this: How did the Forgotten Man get to be forgotten? A major part of the answer to the question comes to us from public choice economics. By definition, the Forgotten Man is a part of a large but politically unorganized component of society. Otherwise, he would not be called forgotten. Though all such men taken together have common interests, they do not form a politically important interest group. No one seeking national office typically needs to curry their favor. Unlike organized interest groups—the teachers and labor unions, environmentalists, business and financial interests, ethanol producers, corporate farmers and cattlemen, and some minority groups—each member of the unorganized forgotten ones can be thought of as being interchangeable with others in that same group. Sure, their votes matter, but their support—most of the time—is not essential to a candidate seeking to gain political power, at least until they awaken and rebel. Seen another way, it is very costly to organize the unorganized Forgotten Men, unless technological changes reduce the cost of doing so. Smartphone technology and related social media may have done just that.

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