If you think trade wars are bad for stock prices, just wait until investors are forced to digest Medicare for all, mandatory paid family leave, or a federal jobs guarantee. These policies are likely to be key planks in the Democratic platform in 2020, and would promise to remake the American economy and the fundamental relationship between workers and employers in America. And while many on Wall Street are rightly focused on the effects of Trump’s trade war on the economy and asset values, they should really be paying attention to the brewing backlash against rising economic inequality and Republicans efforts to shift ever more resources from public use to America’s wealthiest.
The Supreme Court’s ruling Wednesday that state governments can’t force government workers to pay agency fees to unions is a blow to the Democratic Party that will weaken public-sector unions ability to fund critical get-out-the-vote efforts in future lessons. But its effects may be circumscribed by the simple fact that in many states where such laws are on the books, there is deep and growing support for the labor movement in particular and the Democratic Party in general. Such jurisdictions will do as Hawaii has done and find ways to blunt the financial damage of this decision.
More important, Janus decision is but a mere coda to the decades-long decline of the organized labor movement, a phenomenon that has served to compound the widening gap between the rich and the poor and the decline of the middle class. And this stagnation of economic fortunes and the rising cost of necessities is pissing people off enough to turn public opinion in favor of activist government.
Take, for instance, Obamacare. The extreme inefficiency with which the U.S. healthcare system distributes care has made provisions in the law, like requiring insurance companies to insure against pre-existing conditions or taxing the rich to pay for medicare expansion, are overwhelmingly popular. The Republican Party has been tactifully masterful in sabotaging the law despite the popularity of its substance, but it has no grand strategy for actually solving the problem of unaffordable medical care. Instead of working with centrist Democrats to sure up the public-private structure of Obamacare, the Trump Administration and the GOP Congress has done everything it can to sabotage the law, further assuming responsibility for rising premiums.
Donald Trump’s major economic achievement has been the passage of large corporate tax cuts, which are increasingly unpopular with the electorate, and will only serve to compound inequality that is now being driven by rising gains to capital over labor. But the passage of this cut, with slim majorities in both houses of Congress, may end up being the supreme example of the conservative movement exercising power out of proportion with popular support for their policies. Democrats have already seized on combining a repeal of unpopular corporate tax cuts to pay for popular measures like an increases in infrastructure spending.
For this reason, the most consequential decision by Supreme Court this term may not be the aforementioned Janus ruling or the sanctioning of the president’s Muslim ban, but its refusal to reverse Wisconsin’s gerrymandered Congressional map. Such politically motivated drawings of congressional districts around the country have made it so that Democrats will have to win by huge margins across the country in order to take back the house. But they are slight favorites to meet even this high bar, and the prospect of the Trump Administration appointing a replacement for Justice Kennedy will only serve to unify and excite the left in November.
Political movements are naturally inclined towards assuming as much power as technically possible at any given time, and are poor judges of the natural boundaries of their success. President Obama admitted that left overreached in the 1960s and 1970s, when the judiciary claimed that the Constitution mandated unpopular policies like school busing. Whatever your opinion on the merits of the issues being debated, it’s hard to deny that public opinion is drifting left on key economic issues, and that the Republican Party is only feeding that trend by sharpening the contradictions between a world with a strong safety net and one without. Wall Street is on the edge of its seat, worried what the next chapter in Trump’s trade saga will bring. But they should be as or more worried about the backlash the president and unpopular Republican are paving the way for.
Christopher Matthews is a writer who splits his time between New York City and Accra, Ghana, with an interest in the intersection of markets, the economy, and public policy. He previously held staff positions at Axios, Fortune Magazine, and Time Magazine, and has been published in Forbes and Debtwire.