Donald Trump and the Long Con of Populist Politics
In 1994, Newt Gingrich distributed his infamous ‘GOPAC memo’. Titled ‘Language: A Key Mechanism of Control’, the document outlined the ‘optimistic governing words’ that fellow Republicans should use when talking about the GOP and the ‘contrasting words’ they should use when talking about Democrats. Gingrich, a former history lecturer and shrewd student of public sentiment, intuitively understood how mass opinion could be groomed and manipulated via the media. Self-identified conservatives were encouraged to associate Republicans with positive words such as moral, compete, control, truth, opportunity, prosperity, candid and family. They were also encouraged to use words such as radical, traitor, decay, fail, crisis, destructive, liberal, betray and lie when talking about Democrats. With his memo, Gingrich spawned the modern-day art of American attack politics, which has been used so effectively ever since by talk show pundits, political strategists and, most visibly of late, by President-elect Donald Trump.
Gingrich, his peers and their disciples, created a sophisticated form of propaganda. Perhaps recognising that a lie repeated many times may or may not become truth, they reduced the risk of political failure by creating multi-layered deceptions that misconnected reality and root causes. Their goal was, in essence, to have their cake and eat it too – to convince voters to buy into policies that went against their own self-interest, in service of directing disproportional amounts of profit and wealth into the bank accounts and investment portfolios of the global rich. Over the past half-century, since Richard Nixon first harnessed the power of populist politics to win over middle-class whites in then-Democrat southern strongholds, ambitious individuals have waved the flag of the Republican Party and utilised the divisive language of control to stoke anger and frustration around realities that the enemy – ‘liberals’ – have frequently denied or ignored. They have perpetrated a remarkably successful ‘long con’ over huge swathes of the American public, robbing them of economic advancement and opportunity. The irony of the 2016 election is that Trump, a political chameleon with no loyalty to any one party, beat the masters at their own game. He outconned the Establishment con artists.
The Long Con
A long con is an elaborate fraud that plays upon the greed and desperation of the intended victim, in anticipation of a large pay out. To gauge their gullibility, victims of a long con are often let in on a secret that plays upon their understanding of the unwritten rules about the way the world operates. Slowly but absolutely they are reeled in and robbed.
The most incredible long con of recent years is the subject of Guy Lawson’s book Octopus, about hedge fund manager Sam Israel III. Israel’s story was overshadowed during the financial crisis of 2008 by the exposure of Bernie Madoff’s Ponzi scheme, but it is a far more colourful tale and a great example of how an ‘open secret’ is dangled in front of the victim as bait with the promise of private gain, before their worldview is then used against them to the benefit of the con artists. The open secret used to con Israel is the same as the one that has been used to redirect significantly larger sums of wealth away from the middle classes and accumulated by the 1%. It is the same card that Donald Trump played so masterfully.
Sam Israel started his career as a runner on the floor of the New York Stock Exchange in the 80s, serving as a bagman for successful brokers who paid large sums of cash to informants in exchange for insider trading tips. He saw how the move to fiat currency after the Gold Standard was abolished allowed the Federal Reserve, as the lender of last resort, to create money from nothing in order to stabilise markets and protect corporate America. By the time he set up his Bayou hedge fund in 1995, ‘Sam believed he’d discovered the central illusion at the heart of American capitalism’. The crude slogan used more frequently – and quite aptly – to describe this paradigm is ‘capitalism for the poor, socialism for the rich’.
Less than a decade after he set up Bayou, Israel was living in a palatial residence in upstate New York that he rented from Donald Trump for $22,000 a month, estranged from his wife, and struggling with bipolar disorder and a considerable cocaine and painkillers habit. To the outside world Bayou was a success, but Sam and his partners were disguising losses through a fraudulent accounting scheme and desperately looking for a way to make a quick $200 million to get back in the black. He began asking around the affluent circles he moved in for high-growth investment opportunities, and was soon introduced to the man who would change his world, Robert Booth Nichols.
Google ‘Robert Booth Nichols’ and you enter an unbelievable world of fantasy and conspiracy. Nichols is now dead but if you’ve seen the Steven Seagal film Under Siegeyou’ve witnessed him in celluloid flesh (though you likely never knew it). Over the course of three years, he conned Sam Israel out of $10 million. I won’t ruin the story (it’s a brilliant read and the film rights have been optioned by HBO), but suffice to say that Nichols’ expertly manipulates Israel’s beliefs about the biases built in to the global financial system to convince him of the existence of the Octopus (an Illuminati / Bilderberg type power elite) and a ‘shadow market’ on which super high rollers are occasionally allowed to trade with no risk and the opportunity to earn hundreds of millions. Sam Israel is now in prison, and Donald Trump is headed for the White House. So what’s the connection?
The Long Con of Populism
The United States has long been gamed for the rich. Save for a brief ‘Golden Age of Capitalism’ in the mid 20th Century, when the gap between rich and poor briefly began to close due to the creation of a welfare system and a period of sustained growth fuelled by engineering innovation and war reparations, the US has, since inception, been propelled by the myth of small government, low taxation and the pioneer spirit of the self-made individual. The reality is more nuanced; the American economy is big, diverse and highly productive, but it is sustained through massive government intervention and state infrastructure that, over the past 35 years, has pursued regressive fiscal and monetary policies that have hollowed out the middle classes, decimated the poor, and materially benefitted the world’s wealthiest citizens.
Donald Trump told voters the same truth about the financial system that Sam Israel discovered for himself. It is rigged and, scarily, it survives only because the trade imbalances of developed countries are enabled by the attractiveness of their currencies to central banks that buy debt as a safe investment that provides a low, steady return. But like many populists before him he has positioned the myths and policies that have exacerbated the very real problems of the present day as the solution. It’s not a new tactic, but like all good cons, it appears to work every time.
The modern-day versions of these myths began as theories of supply-side economics, that became the experiments of Reaganomics and Thatcher’s Britain, that became gospel under Clinton and Blair. They were worthy experiments that, like many good ideas, failed. It’s worth noting that these ideas were not partisan – many moderate politicians and thinkers championed them. But in the US, the Republicans – truly the more radical and innovative of the two main parties – simultaneously began to engage with a grassroots movement that capitalised on a great truth that most people had missed: that the concept of the left- and right-wing is a thing of the past, replaced by highly stratifying identity politics. This grassroots movement was moulded by agitators such as Gingrich, and has morphed over the years from the Moral Majority to the Tea Party and beyond. They have been informed by a pervasive separatist media infrastructure, from the Weekly Standard and WorldNetDaily in the 90s to the Drudge Report and Breitbart in the age of the social web.
The beliefs of the self-identified American Conservative movement have slowly but surely become untethered from anything as tedious and restrictive as economic theory. They have become a simple set of guiding principles that are understood on instinct alone, articulated via a highly aggressive and confrontational media style that is part performance art and pure entertainment. The outlook is grounded in truth – of the failure of globalised capitalism – but deluded by impossible ideas, such that a powerful economy can survive without big government, that a low tax policy will somehow reverse wage stagnation amongst the middle classes, and that an evermore connected world can stem the inevitable increase in the movement of people in pursuit of a materially better life.
In a sense, the populists of the American Conservatives have overreached. They have outgrown the Republican Party, and have found an opportunistic bedfellow in Donald Trump. But the con artists have met their match and, over the next four years, the climax of the long con will be sprung. Too late, we will all begin to realise we’ve been utterly fleeced.