good evening ladies and gentlemen my name is stefano feltri i am a journalist of fato cotillano i'm here to introduce a lecture by thomas ferguson just a few elements so that you can get ready what is inet it's the institute for new economic thinking it's a research center it's a an alliance among brains which has been created to respond to the worst bankruptcy uh in this time that is the brown group concept of ideas the crisis of economic thinking it was inspired by george soros so a group of brilliant brains are there to think out of the box and to offer radical different innovative ideas as a young economist dolby who was there at the beginning of inet the idea was to reconcile and join uh politics and economics as a tomaso pados gupta said and i think that thomas ferguson is a perfect person to reconcile economy and political sciences he has been a lecturer at boston and great usa universities and he's the director for research of inet is an expert of the weight of financial funds uh during elections and how they do distort or influence the outcome of elections just to give you a few numbers you might know that an important judgment was passed in 2010 by the supreme court eliminating the limits to the funding of candidates in the name of the freedom of speech according to the latest election these are the numbers according to washington post 1.4 billion collected by hillary clinton 957 million says the gentleman by donald trump just to give an idea of magnitude for some years in italy uh rather 25 years we are discussing whether public funds should be given to uh politics in 2015 these are the figures the government funded uh political parties with 106 million euros the indirect funding um by a private parts is 44 million just to give you an idea of the magnitude uh thomas ferguson during his studies that he is going to tell us as an economist and as a researcher as a journalist who investigated uh reconstructing the real amount of money going to whom that might simple at the time be simple at the time of the internet as a matter of fact transparency or rather traceability of funds in the us electoral campaign is very complex and for years he has been able to trace back and to give a size and a weight to these funds he carried out very important studies and he will talk of them in the framework of uh the uh in theory of the investment in a party competition so um the preferences of individuals are not enough uh to influence the outcome is not the summation of many individual choices as we might like to think and as it should be in democracy where every one person every person decides the preferences and the summation of that is the outcome seems are not as simple as that because then money arrives and they have a much higher influence than any other variable in the outcome of elections and now this is his conclusion so i give the floor to him for his lecture uh for about 20 minutes sorry 40 minutes and then we'll have time for a discussion thank you stefano i guess i begin by saying that i'm quite happy to be here again i'm particularly uh grateful to tito who gave me tito bori who gave me a few extra days to finish a powerpoint when i was having trouble downloading 23.5 million files which is the whole record on the election but i'm actually happiest to know that some several sets of students i taught in italy are some of them are here today and i'd like them to feel especially welcome now i have the problem is i'm the rest of this conference is on health i'm talking about the elephant in everybody's room and it's donald trump and look as an american male i sort of always claim the right to indulge myself in infinite self-pity and my friends know that i can find almost any excuse to do that and i have been trying in my brain to sort out how you're going to do this one uh and especially in 45 minutes because the first thing to be said about this subject is you know politics in general you see two problems everybody thinks they already understand it and then they can't agree even on basic facts normally but in this election it's entirely it's much crazier what one in in the united states right from the evening the votes came in there formed a kind of double bubble in which both sides the pro and the anti-trump folks began living almost in alternative universes uh and you know very soon the trump people were talking about alternative facts and nobody was laughing and the the sort of i mean i thought you know as i got to thinking about this i thought this made sense uh here in trento where you folks were sitting right where the protestants and the catholics you know didn't come together it was the last time europe fell apart uh there but you may have some inner feeling as it were for a truly schizophrenic uh situation anyway um one huge problem deriving from that bubble let's start with the hillary clinton folks right from that night became up the whale that the election was really decided in moscow um and that the russians were really responsible this was mixed somewhat uncertainty uncertainly and not quite consistently with stories however that the head of the fbi had tossed the election uh to um donald trump by reopening a famous inquest into hillary clinton's emails late in october and you don't presumably you all know that there are all kinds of ongoing investigations into this i mean next week for example the former fbi head will be testifying in congress now i'm actually never worried what many people were joking to me which was do you think you can give the lecture about trump before he disappears as president i didn't think that was in the cards uh but that doesn't mean that there won't be lots of things to be said um but i will deal very shortly uh with some of the russian business not the specific facts i don't have any inside information on the books of the deutsche bank or any other place there but the question of whether it's possible the russians could have tipped the election there there are also a lot of other strange things happening there is a kind of super myth that's gone around it started in a swiss uh german journal and then has spread around the world as to the trump people using what were thought to be super advanced cutting edge internet tactics to win the election typically one instances the name of one of the firms cambridge analytica and then one is told not always on a completely certain provenance that it would especially in regard to time when it's owned by the mercer family or robert mercer well uh i will say a word about that later but the sort of big problem in coming to grips with this if you get past the immediate moscow did it story on the democratic side they'd probably say progressive um there's been a complete unwillingness to engage anything but general cultural theories of what has to have happened that is to say uh right on election night people were saying it was all really race that trump it was a reaction to uh having the first black man ever elected president of the united states um there were other views there was an anti-woman story which did admittedly seem pretty obvious as a factor uh right as did race i mean you can't one of the sort of stunning things about the election is that normally you'd get you know if you were doing a book on an election you'd get a chapter on the sort of not so wonderful uh innuendos and things like that here the innuendos were right up front you didn't have it was just stunning really shocked a lot of people but there has been an almost complete unwillingness to engage in the economics not just of the uh upper part of the election meaning investor blocks i'll talk about those but also what was motivating voters this is a serious problem i have a fair amount of things to say about that only some of which i can do today but i am greatly comforted and cheered up the shannon manats lecture yesterday which i think just basically nails the basic facts there that is to say particularly among poorer whites the move to trump clearly was major substantial and that in fact lots of counties that had previously voted for obama went for trump and that the fundamental issue there though one nobody is going to say race never played into it was the disastrous many years of no serious help from the government in economic policy but we'll come back to that later anyway the the other problem we all have and i i have to in trying to deal with this is the rapidly evolving character of the trump administration indeed one thing i will soon lay out to you it's perfectly obvious that trump was building several different political coalitions during there's one for the nomination phase another that is quite contradictory and it's easy to point to you as to how it's contradicted i will do that um right with some tables and then after he got elected they were re-auctioning and that is to say particularly in the inaugural where i mean if you this is sort of almost inside soccer but it's still a fact one needs to know um you can sell a lot of shares in things in a presidential race during it um after it and particularly at the inaugural inauguration where the trump folks broke every record for money coming in my colleagues and i my two colleagues whom i will speak more paul jorgensen and ji chen we're looking at the inaugural cash too but do i don't don't have that done today anyway the and the changing coalitional structure here is obviously driven around by a lot of funny things happening now the new york times solemnly informed us after about a week of uncertain uncertainty even on its own pages that there was no such thing as a deep state in the united states you know on the very same page it told you that they told you that any but the chairman of the deep state if the term means anything the head of the cia had walked into senator harry reid's office in the middle of the campaign for a special briefing i know that's not the deep state i don't know what is but we'll just set that question aside what has certainly happened if you look closely is that the forced resignation of the national security adviser trump's first national security adviser general flynn led to the appointment of general mcmaster now if you do the uh analysis on mcmaster you will quickly realize that his task was preparing the us armed forces for uh as it were the battles of the future the main enemy assumed there's russia and he promptly brought in to the national security council fiona hill and fiona hill's basic uh line on russia is that there's not much that isn't wrong with russia that vladimir putin isn't related to this is the exact opposite of the views that the trump folks came in with but this has already happened i mean and in effect what i'm telling you is that while trump could do management by objective on i mean he can just give an order and probably it would get obeyed although when the aircraft carrier was told to go off north korea it went near australia anyway uh itself an interesting fact um the uh that he clearly does not have control of the national security council that's in the hands of very traditional internationals and everyone knows that there is a kind of what shall i call it a fire drill type arrangement in the white house in which you've got various com uh political forces there we can talk more about those maybe later anyway so i want to caution you're dealing here with not just something in rapid evolution but an amazingly rapid evolution and then on top of that um was the sort of cascade of events it was like from the moment they played the star-spangled banner in the america at the inauguration they cut directly to ride the valkyries and then day after day you got impossible i mean it was like it was a shock every day i i admit it normally when i wake up in the morning i read the foreign newspapers first um i stopped doing that when trump came in because i couldn't wait to see what was the next thing coming down the pike i mean who would you know would here's somebody who tweets out against the head of gm against the head of boeing who will do entire countries sort of characterize with a broad brush stroke in a tweet never saw anything like it and you could see although if you notice the stock early stock market responses to some of these tweets were big dives for the firms that does not typically happen now people have sort of gotten somewhat used to it anyway so let me switch to getting on here and i will hope this works yes so my outline here i want to sort out the alternative facts and i want to get rid of the questions i think that are unanswerable you'll get that in one second at least under current and and then we will look at the questions i think which can do why were both political parties so badly shaken because of course trump knocked off the anointed one who was you know george bush um and everybody thought in fact the script for this election was being written in the previous year in 2014 really people were writing books uh sometimes quite good ones keyed to the idea that the republicans led by the koch brothers would be running a huge campaign against hillary clinton and it was all set instead what happened is the cox ended up on the outside trump came along and then bernie sanders mounted an enormous challenge we need to understand this because i will guarantee you this is the basic substructure of american politics if trump stays or goes this will remain and the problem in the next presidential election will resume right from there then i want to look briefly at a couple background factors obviously one is globalization the other is money's role in american politics i'm sorry i have to do this fast but i will do it in pictures and pictures are worth thousands of words okay then we will look at very quickly how one trump won the republican nomination we will look at sanders and then we will take a look i have actually with my colleagues assistants a lot of their assistants i have put together a data set that i will show you on what big business contributions look like broken down by sector to um trump and clinton in this election it's remarkable it's like nothing i've ever seen and i'm grateful for stefano for just saying yeah i've been working with this stuff a long time uh before it was fashionable and i don't doubt i'll be working on it if it ever becomes unfashionable which i doubt when things break apart people get more interested in political economy anyway um i will begin with one quickie though stefano very alertly picked up on a point which has been hugely messed around in newspapers in all kinds of countries from the new left review to uh whatever you think come its equivalent on the right is in many countries the claim that trump won the election without spending much money at all i think your figure was nine hundred thousand if i understood um my colleagues and i can track 1.1 billion right now uh 900 million i'm sorry we can track 1.1 billion and hillary spent about 1.5 there is a very large amount an extraordinary amount of so-called dark money which is money that you can see because they record that they spend it but you can't see where it's coming from because they don't have to say where they got it only certain forms of organizations can do that but the trump people spend a lot of time so did the hillary clinton folks by the way but uh anyway all right so let me begin with the comey question now comey was the head of the fbi and there is a view widely propagated that comey did it um that hillary clinton basically repeated that just two days ago and it's been repeatedly claimed the new york times keeps running a graph by sam wang from princeton who got everything wrong in the general election and he keeps showing you a graph until recently where he just well what he actually does what he did was actually to me remarkable uh he uh announced he was changing the basis of the graph and then kept us basically the same graph um the the problem is this is it is there under that narrative hillary clinton's polls turned down at the the day that comey makes his announcement that he's reopening the investigation now i have to say and i warn you plainly nothing on this thing that i've drawn is innocent in the sense that everybody is going to make assumptions about averaging procedures that if you take a different averaging procedure you'll get a different turning point now what wang did in his latest uh opus the other day was to average some averages i'm not making this up and then add some constants he had a reasonable basis for this this gentleman is not stupid but i think it's quite mistaken i think when you it when you sort of step back and look you see something like what i've drawn here which was adopted from marcy wheeler's empty wheel uh on which i have then done some other things basically it's pretty clear the polls started to turn down um before comey's talk in fact they turned down roughly about the time that the a very famous announcement was made that the obamacare premiums the insurance premiums were going to rise a lot that has led a lot of people to say it was that there now that's a possibility it is also true that the if you take the when you realize that many of the polls which were people were working from were actually taken a day or two ahead of the time they were let go uh the downturn prob probably precedes that too one that interests me a lot is this um the and it's you know it's let me explain this there is a view in economics i'm not trying to tell you this has to be right but it is i think a sensible view if you are simply trying to crystallize what people think if you want an indicator sort of which is they will now sell you a futures contract on just about anything and some i mean if that's financialization well it's come to um election stuff too um and the the there is in particular a contract that was sold by the iowa markets there's a long list of papers on this i'm just going to wave my hands and go on that what it cost you to buy a contract that would effectively bet that the republicans will control both the house and the senate now nobody thought the republicans were gonna lose control of the house so all the variation is in the senate and if you look at this you can see how extraordinarily cheap those contracts are as late as october 22nd 23rd and then you see the prices rise and then they soar now what's going on there underneath this is something that i know i can document with my colleagues the uh all right what's on the record is that the republican leader of the senate mitch mcconnell was calling essentially shooting distress flares off and demanding from a million billionaires and millionaires help to control the senate one story has trump telling them all in new york that they should spend their money to sort of surge in the senate and this these contract prices i should make clear which i did not just a second ago are very closely following the polls that come out in various states on the senate i basically use these contract prices because they're a single number uh on uh summarizing all kinds of polls in various states and here's the point you can see an enormous influx of money into the republican senate my colleagues and i have tracked that we've done it day by day actually and money turns the result around i mean it gets control of the senate for the republicans now what's interesting about this uh is that this is the first election in many years i believe in which both uh in which everybody who won a senate race which party won the senate race also won the presidential vote in that state and one wonders whether the senate cash was not carrying the presidential thing is very hard to imagine how i mean i can imagine how you persuade people to vote for a presidential candidate and ignore the rest of the ticket in fact you know a lot of democrats have been experts at that particular device it's much harder to imagine how you get a senator tell them just do the senate i don't think so but i i'm not claiming this has to be true i am saying this is as reasonable a pitch as any other and it is remarkable to me that you find no discussion of this in all of the comey effects stuff nor do you see any discussion since we're talking about tiny changes in the end in states of vote suppression there is no question that in some of those states that were crucial and went for trump that republican governors and legislatures had made it much harder for democrats to vote that's obviously true in wisconsin i think it's true in michigan and also in pennsylvania where the where the where there was some court action because somebody caught one of the republican leaders actually talking about how great it was that people couldn't vote uh which is sort of a no-no there are a few other things going on in the final days um the most striking one is the fabled interview which i concluded i could not run here it's the last one um it's a very famous interview against glo i'm sorry an ad against globalization and it gives a spectacular voice over saying you know these people on the hillary clinton side don't care about you these globalizing folks they're just interested in free trade etc and then it cuts very famously to the faces of three jewish americans george soros janet yellen and lloyd blankfein they're not identified it was a kind of crypto uh anti-semitic ad i i didn't believe it until i saw it once you see it you never forget it but they ran that in in the last minute that type of stuff it's a powerful ad if it weren't anti-semitic if it weren't closet anti-semitic in that sense i'd probably agree with it uh but there we are anyway a few other points uh on media coverage here um from one point that's interesting is that if you actually look at how the media treated hillary clinton you see this enormous rise in coverage of the scandal once comey does his thing now that might support the view that it was comey's thing had tipped the election there's only one problem with that then your problem is not with comey as much as with the media and nobody is bringing that into the discussion if you wish to blame the associated newspapers and major media outlets of the united states the other thing that people notice is that hillary clinton's ads were overwhelmingly on candidate characteristics and almost nothing on policy there's no real precedent for that uh in american campaigns we have measurements from 2000 on okay so my suggestion is look i can't tell you how those final one half of one percent went out um i would make the point that um shannon minute made yesterday that it's only in a few states now political scientists haven't quite caught on to that when you look at how they're writing about this they actually when they're very careful they say we have non-systematic errors in the poll meaning they can't figure out what's going on in just a few states what's going on in those few states as i think put shannon exactly what she said that is to say poor whites come turning off but that's will later questions i want to ask her what's with the political establishments of both parties and why should the final election have been so close it's a little odd this question needs more exploration than it's had so let me just take a look um i myself think that you could see this disaster coming in 2014. i say that because i mean my colleague walter dean burnham uh and i wrote it up at the time and the point went when you looked at the 2014 off-year election results what you saw is this um if you measure voting turnout drop off from presidential election to the next off year i mean it's it's no secret that it drops in 2012 to 2014 it was the second largest drop of all time that's a gigantic turn off nothing really quite like it and the turnout levels were decaying to rates that were staggering they just blew us away i mean turnouts in ohio for example was back to 34 that's the level the state last had in 1814 new york and you can read i don't think i actually despise people who simply read their own slides but you can sort of the point this is in state after state you decline the turnout decline is enormous and in the west it huge declines it was interesting that in the south which had been slowly rising from its just microscopic levels i mean turnout in georgia for instance any in 1942 or 44 was a 3.5 percent i mean this is this this point this stuff people know the south was peculiar but very few people understand how peculiar anyway but you know you know we've now come together uh the regional differences have gone down they were very low but there they are anyway so let me i that what that told me is that both parties bases were really angry at their leaders and i thought it would be a zoo and it was the zoo now behind this i think basically sits a reality it's the reality that shana manat talked about yesterday now i will use the language from two friends of mine peter temen and service storm these are both inet discussion papers you can just find them sometimes with a little difficulty but you'll find them go to the magnifying glass and type in the author's last name what they're effectively putting out here is an economic growth model for developed countries that looks like the old w arthur lewis model applied to developing countries that is to say you have a basically relatively small high-wage sector that grows in value-added terms but not in people it's shedding people and then an enormous low-wage economy that grows everywhere now i think this characterizes every place in the west even germany though the germans sometimes act more superior than they should the growth of the low-wage sector in germany is i think quite clear and it is clear that this unsettles populations a lot this translated into english what i'm telling you is this is that in fact by 2014 large numbers of americans were figuring out that no matter how often they were told things were really great that they were almost back to where they'd been in 2007 they weren't getting any better indeed when you actually look at if you're going to use a one one cut predictor of what people were thinking in the polls it turns out if you basically agreed with the line you read over and over in the new york times that things were really pretty good you were very likely to vote for hillary clinton but if you disagreed you were overwhelmingly likely to vote for donald trump anyway now i i i didn't actually lift this from shannon this is actually from an earlier discussion i did last year the mortality the she correctly focused yesterday on the huge change in poor white men uh mortality um there are folks who try to make it you know relativize it i don't think you can do that i'm going to just bypass that i'm not claiming that this is new or that i did the research it's not i am saying that if you're trying to sort of settle arguments about are people really happy and do they have a so do they see themselves as sort of in some sense in good shape this evidence should stick in your throat and i think that this is the bottom line this is clearly one of the electorates that trump appealed to inside the republican party it is also very clear that it is also part of an electorate that bernie sanders reached but let me make a little detour here i want to say something about money in politics the question here is okay what i'm telling you is by 2014 it was obvious that a huge chunk of the population probably a majority despised their party leaders so what is that now the question is and my basically my approach to this is very simple uh you can boil it down to four points here peter timmon in his book as chapter six is basically devoted to a straightforward exposition of it um it's political actions a lot more costly than people usually tell you in democratic theory if you don't have popular organizations power passes by default to block investor blocks political parties are basically there for bank accounts first and foremost and there's a lot of ways you get money into politics uh and and the formal campaign funds are sometimes hard to measure in the u.s you actually get a lot of information though by no means all of it but here's my i i can do this in pictures people did not believe we could do this until we did it um this was a spatial regression of um house elections it's the democratic percent of right down money and the percentage of their vote it's a straight line just yeah and the reaction of folks was this is a fluke all right i'm gonna ask you to believe what i have with my colleagues shown elsewhere it's not a flute every single election since 1980 for which we have data there's one kind of funny exception in the senate and both the house and the senate always looks like that the the linear model actually is a very powerful predictor now the only comeback for folks that think this is not money driven is to say it's reverse causality um that really all this money is chasing the votes okay now there's several ways you can deal with this i'm not gonna i will ask you to believe the following in various papers my colleagues and i did a a latent instrumental spatial model which means we don't even need to know what the instrument is and we can rule that out now actually in a week my colleague chen will be delivering a paper we wrote in the statistical thing which has to do with we're going to actually try to separate out how much money is coming in uh because people expect it's going to win and our we can estimate that it's not more than a third which means the two-thirds of all the cash floating around is not coming in because they expect to win if you think about this for five seconds you can sort of figure out the logic you know if they're going down in the polls they're not pouring money in there because they think they're they're they're they're trying to get on a bandwagon it's that they've got to turn the election around and we are exploiting that fact anyway now just to bear point i want to make this will be a nice baseline for what you're about to see this is the 2012 results um what the this this has this comes out of a paper in the international journal political economy where we just do all the cash now i i should say for 30 seconds doing all the cash is much harder than it looks because the standard stuff you read even by people who claim to know what they're talking about is just very poor the problem is the bad quality of the data you're not required to list your name in a formally correct way and so when you get into this data you will see for example i'm going to make it up thomas ferguson t ferguson a t ferguson p q t ferguson will assume the same person and maybe they'll have multiple addresses and then they may do junior and senior when you actually start to do this what my colleagues and i do is we take the same types of programs that hospitals use when they buy other hospitals and then they run the names in a million different variants that the result the consequence of this is that we always report much higher concentrations of money than everybody else but we're right and everybody else is wrong this is not a tough call anyway i want to direct your attention because this reverses this is something you have this first of all there is a small money thing which does not have to be itemized by name and in 2012 obama and romney obama pulled in a fairly substantial amount of small money now democratic parties typically do that they were thought to have a traditional party voter base i mean like ordinary people were thought to be democrats i can tell you because i've run the numbers with my colleagues now that's not true last year in fact trump pulled in twice as many small contributions as hillary clinton did twice as many then if you go down and just look what you want to do is just look at the bottom there the really big money you can see the dependence on really large sums of money here of both major parties now that should lead you to a model of political action in which you want to know about the divisions within big money right okay so my colleagues and i produced that one for obama that's not worth a lot of time what you saw there is that i would draw attention to all money this is really all business versus big business you can see the big business columns the republicans typically get do much better than the democrats but that the among the big business there's a substantial support there when you break it down in sectors this was the old trick i've done for a million years and it was a problem all of the sort of traditional marxian approaches where you just sit there and talk about the ruling class you need to break this stuff down otherwise you are out to lunch in the modern state i'm not going to spend a lot of time on this but look at mine on the left yes um mining coal mining paper chemicals oil utilities these are all big polluters they were all massively republican now i will just skip this and i'll come back to that let me ju i want to go directly to where we're at here with the cash story this is complex i admit but you know this is all i had time to do before i had to submit the powerpoint and i thought we should i would suggest that we not tear ourselves upside turn ourselves upside down i'll tell you what i think is really uh crucial here what you want to notice there in trump is first of all look at mining coal mining uh the casino story we'll come back to in a word in a minute um but then go down to oil look at uh where it's down it's uh industry 29. if you some of you think this is has a loose basis with the standard industrial classification you're correct but it's not the sic stuff anyway you can see oil and i have carried out as a rough and ready way to do this these are preliminary numbers in the primary and here's the big point i want to make right off here with what these numbers are telling you is that trump didn't have a lot of friends in the republican party in the primary who did he have he had the chemicals and oil which are super polluters now you know this is a very easy argument to make this week because we just pulled out of the climate accord and the biggest winners are very plainly those folks there and if you go down just look at i want you just at column the one says 97 over on the right there's nothing in there in the original uh primary nothing hardly at all it's just not interesting these numbers there's there's no one in that column the the the final columns percentages are for the total election i should perhaps make that clear anyway here's my take um in the primary it was really trump and a few of the obvious folks who had the most outrageous sets of public policy demands like get out of the climate accord completely don't even pay a lip service um and they uh they gave him money once he gets the nomination which in our thing we did this from may 4th roughly um there then more money starts to come in now in this type of presentation i would direct you to look at or 38 for machinery these are mostly people seeking tariffs look at automobiles who were nowhere in the primary but who then come in overwhelmingly for trump we now know there was a meeting between trump and the head of the ford motor company and it's in prince and the japanese press if not the american one and there's a string of people here including steele um in which they have pretty plain desires for tariffs and they are joining this parade now coming in late in the in our folks who are not into that and the one i want to direct your attention to is again the private equity folks 97 now that total is suspiciously low but what's interesting about it is that it's all in the post uh primary phase now that is the moment when the dark money comes pouring into trump's campaign i can't directly connect those dots although i can do i i have a couple schemes to try to do that but the point is the private equity folks are extremely interesting why first of all they're nearly all free traders secondly these are the folks who are always talking about disruption um and making a virtue when you actually look at who these folks are they often have ties to the old drexel burnham lambert complex another way if you don't like them you'd say this is pirates of the caribbean number three four or five you know johnny depp isn't in it but some of these other people are and indeed i that's the point i will at the very end come back to now let me go back um we you've seen this from shannon's talk yesterday uh i have nothing to add to it my only plea is i did do it last year when it was in the post i read the washington post right i took it from the post not from my colleague the which was at the time fiercely resisted by a lot of people including just about every major political scientist in the country discounted this um it just shows you that i mean what basically what trump did was this he busted a cartel of republicans that were hardly differentiated at all and he walks in there and he mocks george bush he says the iraq war is stupid then he talks and he says it like that and then he says you know globalization is stupid too and i'm going to do something for you well it was like opening the you know a tomb that had been uh shut for a generation and you know the air that's coming in is really rancid but it's fresh air in that sense uh and it's not surprising that huge numbers of people in these primaries went spontaneously for him um now uh it's basically the same uh with sanders uh i did not try to direct your attention to the intricacies of that 2008 table but that 2008 table uh sorry 2012 table that 2012 table i know by heart and the striking thing is this you could see very clearly a divorce grow up between obama and most of the new york financial community though not the very largest banks after uh he embraced the dodd-frank reform bill in the weak version that actually passed and more precisely the volcker rule which actually preceded that after the with the democrats got a lost on the of the election uh for the massachusetts senator shockingly um and the white house panicked and brought out volcker and said let's do the volcker rule we can talk if people are interested we can talk about that here's the point hillary clinton was self-consciously trying to end that and she wanted to heal the breach between wall street and the democrats and sorry let me go back to if you go down to 96 investment banking and hedge funds you could see how overwhelming she was on that um there i mean that's what all the stuff about the goldman sachs speeches uh was that i mean and what sanders did was just say hey you've just sold the party to wall street why can't we have a democratic party that's not sold to wall street and hillary's answer was i'm the first woman candidate yesterday she said two days ago she said well you know when she was asked why she took all the money from goldman sachs it was a lot of money uh and she said why she said you knew that the interviewer actually said you know you knew you were running and she said well god men take money from goldman well you know bernie sanders didn't that was the story uh and uh there's just there's nothing else i think much to be said my conclusion is therefore that you know you were running a democratic candidate who was unpopular who was campaigning mostly in the hamptons and which is a an exclusive area in new york who was not even bothering to send much stuff into michigan and some of the other battleground states until the very last week and then she got blown out now an interesting thing i miss a point that has everybody seems to have lost track of ray fair uh has done a pretty good economic model for many years his prediction and contrast to most people was that the republicans would win the odd thing is though that his error was quite a ways off it's the second or third largest i think he ever made 1992 off and looks like but he got the the outcome right which most uh most folks didn't now what this says to me is not quite what most people think it's buttressed by a direct look at the polls lots of folks sort of want to treat the trump electorate as uh how best to put this aryan supremacist or something in a heavily mobilized highly convinced and look there's a big block of those people i am not trying to tell you they're not but when you look at the trump voters what you find is large numbers of people had doubts about trump they often had doubts about both candidates uh and you can sort of see this wonderful thing that or i quote stanley feldman um you know 17 percent of the trump voters said they would be concerned about president trump then they voted for him uh which what i'm trying to say here is is there's a very substantial amount of ambiguity throwing out there even among people this was the choice if you like the evil of two lessers that is folks who did not like either uh candidate and uh my own reading of this is just enough at the end um went for uh they decided to just you know take a chance uh and they just enough of them in those states where the depa particularly with the the huge pockets of despair they went for hillary clinton i now it's in in when in you when you look at areas like tennessee where in some counties um trump got 75 percent of the vote and you know that's not vladimir putin it just can't be and it can't be richard comey either this doesn't you know in the end when you're talking about one half of one percent uh that's a bit you but you better deal with the sort of the main effects here and what i the lesson i extract from this because i certainly think that the trump voters are about to get nothing uh in fact worse than nothing they're about to lose stuff they had well this is two years this is basically two big presidential years where you've done bait and switch twice obama did it it wasn't nearly as terrible as what you're going to get from trump you know he promised real change gave you a half size fiscal stimulus and the bank bailout that made him less than wildly popular and they had a landslide against him in 2010. now we've got the the trump case this is happening yet again now there are folks who think everything is lost and normally i agree my favorite slogan for many years has been if you want a happy ending see a disney movie uh but actually the less i've done the screen i was as interested as everybody else to see was there were there some billionaires backing bernie sanders i would my my colleagues uh paul jorgensen and g chen and i have run that screen no there weren't there's tiny amounts when we get around to publishing the full table you see there's some tiny amounts obviously from lower level people and some of these folks i think sanders has shown you that at least in the us now you can build political coalitions without really big money you can't run the democratic party between elections that way so these guys all the billionaires and their friends and the press in the press just stand there and just go on and on about all kinds of stuff mostly irrelevant but when you actually put up candidates it's going to change you will see this slide back into a different world so i'm just gonna shut up i mean and thank you very much for your attention we can do questions thank you very much thank you very much thomas ferguson uh for helping us to understand what happened and what's going on what are the priorities of trump's administration um i feel a bit of discomfort but anyway we have time for just a couple of questions breaking the ice otherwise i will ask a question well my question is this trump appears to be against all traditions and patterns he has an agenda is that influenced by his funding supporters he might have in a way emancipated from those patterns but he did not questions yeah thank you the question is whether is trump emancipated from the support sources of his cash my answer to that is no this guy is doing what he has often done which is to sell shares again i mean i mean that quite literally i think i did not pursue the question i didn't pursue the question of um the incongruity between protectionism and uh free trade we actually have a whole discussion of this tomorrow uh on the agenda and i'm one of the panelists and we can do that in more detail but the essential point is this um i my reading of where we are headed here is the folks with the most cash and that's the private equity and an increasing amount of the financial sector the banking community in particular as they found out how great deregulation uh and non-really less it's not that you're going to abolish dodd-frank it's that you're just not going to enforce all kinds of things and eventually re uh reduce the fiduciary rule for uh folks investing your money which the financial community hates because they've got to actually do something for you and not themselves anyway my take is that the free trade folks are basically in control of the show just as uh their close allies for many years the uh internationalists in them in foreign affairs in the military are in control basically of the national security council um what that that is does not mean however that you won't see some big changes what we're going to rerun is the reagan administration in 1980 which did the same trick they had a columns of folks marching in completely opposite directions uh if you like on that and what the way that was resolved was to stick with free trade but if you were a really big sector and you paid enough you got some kind of special accommodation a sectoral accommodation it does not require a genius to know under the u.s laws the so-called super 301 provisions are likely to be there because a president can do that doesn't need to get into a big congressional deal and it's fairly easy to do um and so uh you'll see some big adjustments you know i i was in berlin last week and i did give a talk in edward institute and i said to them well you know if i were you guys i would do something about that trade surplus because i suspect you're going to have something back at you if you don't probably some kind of it's just enormously large and the chinese have clearly decided to accommodate that if you look what the uh trump you know went into the meeting with president xi saying he was going to really pace the chinese and they all came out and happy smiles with a what is it a six-month agenda and then they signed four trade agreements just the other day including one that's i think really big they're going to sell a lot of liquid natural gas to china that's going to do something to reduce the chinese trade imbalance with the us is enormous uh it's the same like in germany so we're going to just rerun past republican coalitions but i'm not looking for a total reversal on the other hand that's you know from the standards of free traders this like these people remind me of um babies who just can't stand any criticism at all that is to say they it's the world if you listen to them if you do anything at all uh that they don't like the world is falling apart um and you know the world could fall apart if you do a really big gesture on the other hand i don't think it will um what you see is sort of uh i don't i don't expect to see big new trade agreements uh you know the pacific accord is already dead the uh one surely with the european union is must be dead too on the other hand you know i wouldn't count on him tearing up nafta they'll probably just renegotiate it and this is just going to be a patchwork this is what the world looks like incidentally in conditions of insufficient aggregate demand on a global basis with a lot of mercantilist exports i mean this is sort of a weak version of the 30s in this type of situation it's it's not the first time in world history you see this type of stuff and so you get people in power who aren't pure cases of anything let me one comment i better say it if i don't it may never come up and it's so important where does that leave the america first story well look carefully at like right after trump won there was the munich uh security conference which is a sort of like a medieval trade fair of the arms industry and diplomats um and they um there you know uh let's see i think it was the vice president was over there but everybody all the americans including the new secretary of defense were basically telling the europeans you've got to pay more my slogan for this and is that the taxi meter is running that is to say the u.s is a superpower it's a diminished superpower and yeah they want they want more money from other folks or they really will reduce what they're going to claim our services i'm not going to get into that question there unless somebody wants to um but the america first stuff when it appears to budgets defense i think that's shared broadly among almost the entire uh american establishment it's not uh something peculiar to trump and if he disappeared from the scene it would surely survive him another man i um i asked you a few months ago what do you think bernie sanders can win and you said a clear resounding no and then now you seem to have at least changed a little bit on that that you're saying okay now populist campaigns are possible and like that that's new in american politics so do you think in in at the next election a candidate like bernie sanders i mean he himself is probably told but like somebody like him is able to win and also what what can you can you elaborate a little bit on what you think about the fight for control in the democratic party and whether that's a necessary precondition that the senators people win that fight to then effectively run a candidate that can both win the presidency but where they can also get house house seats um that can they can so they can bring about meaningful change in the interest of the populace okay that should i answer we want okay the short answer on this is i thought sanders started too late and in some respects foolishly i i don't mind saying i urge their people to win both they declared in the week baltimore was burning i thought they should have gone down there and declared from there i couldn't persuade anybody um and he started too late uh didn't really i'll tell another true story one of their people called me up the day after the michigan primary which was one of the greatest upsets in american political history i mean uh who was it nate silver who said there was a 99 chance that hillary clinton had it won it was all set and then they lost um and the next morning somebody called me from that campaign and said you know anybody who's good on trade and jobs and i said let me see if do i have this right you have six seven or eight primaries in the next six weeks uh on uh in the midwest it's like now you can say emma what that could prove is the strength of the campaign at the grassroots which is exactly what i think it shows but on the other hand you know if you ran an intelligent campaign where you thought more than one move ahead um or like i i'm not well am i not i mean i'm sort of tired of these people constantly behaving like this i i got a call from some of their folks in early december in 2015. that's about month before the iowa primary and uh which i'm sorry caucus that's not a primary and they said to me well bernie was with the des moines register yesterday and they asked him how much his program would cost and he said he didn't know and he said could you help us cost his program um and you know it's like come on guys have a program have some idea of what uh you think about uh trade in jobs beyond just we want free trading agreements renegotiated you know that that is a no-brainer um and it's like you can't make mistakes like that and expect to win and you know i think the next time around i'm sorry to say although i think sanders did everybody an enormous service if you'd asked me a year before could i believe that somebody running as a democratic socialist could get millions of votes and win states and win caucuses in the west i would have said you're crazy but it happened and he sort of showed everybody the way but i think somebody else can pick up that torch maybe more than one person but it would start if you just do a little preparation uh of what i'd say serious preparation you do much better and i do think he showed that the money is there i i am satisfied that uh i mean he his totals are perfectly reasonable i don't think it was just starting late and losing you know and and the super delicate structure of the democratic party super delegates can be read as an extraordinary case of the investment theory of political they're all already in office and planning to go uh for their pain masters and they get they get the seats in the uh convention anyway he started late did not plan very well um and uh you know you could do better you could any other questions oh the control all right the question he's asking is this the current leadership of the democratic party is very plainly completely in bed with big money that's in the house it's in the senate i mean chuck schumer is wall street he is not anything else that's a little unfair because he's also the insurance companies uh and a whole string of other folks and he's not alone in that nancy pelosi is not should in my opinion just accept single-payer and she's resisting it it's plainly cash considerations it's not policy advantages um no the what should happen in a rational world is that these you just throw i mean look i'm in favor of throwing wall street out of the democratic party i don't mean by ejecting them and some just tell them go away we're not going to do that type of stuff and uh no we don't want big money in the i would change the party rules um but um that it would be nice to have that happen but there is this disjunction between the party apparatus which has to be in business for 365 days a year and those folks operate on cash they burn through it you'll see the other side of the party appear when somebody actually starts to run and you get i mean this might actually happen it's not a given i think um a lot of this stuff is just irrelevant crap uh admittedly it might have some influences on voters but it's not like you can guarantee you can't guarantee a wall street victory now in 2020 no matter how tight you think your existing grip on the party apparatus is i think it becomes vulnerable as soon as you run real candidates you know in california that obviously sent the official democratic establishment packing uh just in the last couple weeks the nurses union i think ran that campaign as far as i can tell and there is actually a bill to do single-payer inside california single-payer being the insurance scheme sort of like many though not all european countries have where you don't have 40 competing insurance companies with no standards offering you uh whatever it is they want to offer you and you know that that would be an enormous change may i make one quick point which i i my views here are my views they're not those of any of the organizations that i'm affiliated with yeah um i have a question because you show us this uh turnout in election in the u.s is one of the lowest i mean all western countries especially when it comes to congress but anyway the rate of uh congressmen who actually um win over their seat is i think one of the biggest in the in the western country even though is a sort of uh i mean it's not like in italy when where you have a list of people and you just for the party and that's it you have to run your own uh state or your own people so if that's true that congress is hugely disliked and people does not vote why they keep winning and it's almost impossible to throw out an incumbent i mean almost impossible and not impossible thank you okay now remember we have had a question and i guess did everybody hear it i mean all right the don't forget in 2010 we had landslides uh of historic sizes where all kinds of people lost their seats in there and you're i think generally true that incumbents do very well but if you're looking to explain that frankly money is the basic story there's a couple in in a short blunt account um you get one party i mean i i think this short simple sketch is not too far from reality republican party candidates are normally unpresentable to a full electorate meaning if anybody actually knew what they did they couldn't win in in the districts that they win the turnouts are very low they engage in massive voter suppression um redistricting is perhaps some of the explanation of that persistence in the house it cannot possibly explain the senate nobody's changed sen i mean that the business that we're all driven around by gerrymandering is ridiculous i mean you know um there but the democratic party policies are often just echoes of the republicans and they often don't even contest it and they do that because they're dependent on cash you can see that very clearly in some of these recent elections in the one in missouri the democratic national committee refused missouri refused to help the guy who was running sanders was the only person who flew who came in to help him and he almost won in montana they again withheld a ton of money from the candidate and you know that was a strange election uh in many respects including the republicans sort of literally knocked over the thing toward the end and the ballot but the balloting had was mostly over but you know the democratic national committee is not even trying in a large number of these now they are trying in that election for the price seat in georgia but they're running a candidate there who the flanders wing of the party is quite happy to say is not representative of them it's a really bitter and this type of stuff has happened rahm emanuel specialized in this stuff uh when he was in the white house with obama uh but you've got to look into the quality of the competition in the races and then the turnout the turnout story i i can't often too often repeat this you know most everybody seems to think that the logic of two-party competition should raise turnouts just right on a piece of paper uh because one party's got to win right they should all try for the vote just write on a piece of paper what turnouts actually are in american elections and you know going as far back as you want you can see you're nowhere near 100 you don't come close as you said they're very low that can't be the type of competition that's going on in those uh elections that's my basic answer are there any other questions i have one final question for you in italy we are reducing public finances for political parties we are heading towards an increase in private financing which are the mistakes that we should avoid based on the lessons of the american model any advice you might give out of time right i mean you i mean that is a wonderful confection of total disaster um first thing i want to notice is this um if you look at the usual lecture on globalization it's mostly i mean take a look at the pippa norris engelhardt paper uh which seems to me not basically accurate at all they want to claim it's mostly culture when you start to get beneath the culture and you start looking at there's a nice paper on brexit by three warwick uh university economists there's a one on germany by a group of people in service storm had a terrific piece on the dutch election uh in the inet website there it turns out that budget cutbacks really have an impact on people's attitudes they also have a spillover attitude on uh refuge on issues like refugees and immigrants i mean people are wait the people are way too easily waving the culture wand and they are not doing careful studies uh spatially organized of uh you know the cutbacks and so my first prediction is the extent you cut back in italy you're going to open pandora's box the other thing is look public private partnerships i'm tempted to say i'm a little i mean look italy has plenty of experience with those maybe it's sicily above all the we the generally when you hear the phrase public private partnership put your hand on your wallet because what's gonna happen is uh you're going to end up with some tiny little public good if you're lucky and they're going to end up with an enormous chunk of the profits uh and you're going to also lose i mean particularly when you start selling assets which happened on a colossal basis in europe if you look to me the most interesting section of picati's book is where he's covering the privatizations i mean look it was a great move i'm speaking for myself not anybody that i'm affiliated when the italian water referendum uh stopped the selling of water to the private companies that was a fantastic move uh to the extent you work too much but yeah you're gonna do to the extent you're gonna do public private partnerships watch out you'll be sorry thank you very much and if i'm not mistaken we have scheduled another lecture by him tomorrow you