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Blue Model Blues
The Trump Movement and Blue Model Nostalgia

Nostalgia for the blue model isn’t only a phenomenon among Democrats. In the movement that elected President Donald Trump, there are thick streaks of blue, as the Wall Street Journal’s profile of Chief Strategist Steve Bannon demonstrates:

“The only net worth my father had beside his tiny little house was that AT&T stock. And nobody is held accountable?” Steve Bannon, 63, said in a recent interview. “All these firms get bailed out. There’s no equity taken from anybody. There’s no one in jail. These companies are all overleveraged, and everyone looked the other way.”

No White House official has more influence on a wider portfolio of issues than Steve Bannon, who has become a litmus test for how people view the Trump administration. For supporters, he is helping to deliver on Mr. Trump’s fiery populist promises, with their emphasis on punishing illegal immigrants and U.S. companies aiming to move jobs out of the country. The left has painted him as isolationist, sexist and anti-immigrant.

There were many factors that turned Steve Bannon into a divisive political firebrand. But his decision to embrace “economic nationalism” and vehemently oppose the forces and institutions of globalization, he says, stems from his upbringing, his relationship with his father and the meaning those AT&T shares held for the family.

“Everything since then has come from there,” he says. “All of it.”

Bannon’s father had worked for AT&T and invested much of his savings in the company. AT&T was the prototypical blue model company: A former monopoly telephone company with jobs for life, stable benefits, and consistent investor confidence on the stock market. The end of the telephone monopoly was necessary to unleash the info-chaos in which Bannon’s Breitbart has prospered, but it also meant the end of the world that shaped his father’s life.

Many people would like to return to the blue model economy, and they blame greedy Wall Street traders for taking advantage of and ruining a good thing. We won’t litigate for any side in this debate—there was clearly a lot of wrongdoing and recklessness. But the blue model system isn’t dying because of toxic Collateralized Debt Obligations and the housing bubble. It had been dying for over thirty years. Moreover, it’s dying because of globalization but also because of technology—automation means factories may come back to the United States, but they’ll require very few human workers to operate them.

Policymakers spent decades—particularly since 1991—naively arguing that neoliberal solutions would lift all boats and provide stability and safety. And some of their ideas, like the free trade system that China has taken advantage of, have exacerbated problems elites often never even acknowledged were real in the first place. But the blue model past is not recoverable. The future of work will be different, and the regulatory structure and safety net that promotes the development of good jobs will be different that what we’ve had in the past too.

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  • ——————————

    “The future of work” may be different, but we need to keep it here, and make it available to everyone…not just those with college….

    • Pete

      And if we don’t keep the work here, those disposed will become dependent on government which is to say the Democrat Party.

  • Wayne Lusvardi

    Probably, but will 3-D Printing technology make small manufacturing and house building viable? So yes high tech is the trend but that might also mean that high tech will come full circle back to making micro-manufacturing economically viable. Mom & Pop AT&T??? The future isn’t knowable.

    • f1b0nacc1

      3D printing, mass use of robotics, etc. will make small-scale manufacturing wildly practical, as even tabletop manufacturing will be to generate mass output.

      • Proverbs1618

        Yes, Xanadu is right around the corner. 🙂 You know, when I was younger I thought that for sure I will live long enough to see a reunified rebuilt Jerusalem. Now that I’m older (fact check: true) and wiser (fact check: debatable), I’m starting to doubt it. I do hope that some of my genes make it through to see it and the future of mass robotics. Future is going to be awesome and the best thing is, those future generations would not care about the sacrifices we had to make to make it all possible.

        • f1b0nacc1

          I am already seeing small-scale manufacturing making a big come back, and robotics has a lot to do with that. 3-D printing is already infiltrating the aerospace industry, and making table-top manufacturing of critical parts a real option. A lot of it is highly specialized and ‘invisible’ to most, but the results are real.

          I wonder though….the future will likely be awesome, that is true, but given how utterly ignorant the current generation is (harumph!) most of them will never realize that it wasn’t always this way…

  • Angel Martin

    First, it is important to get the factories back into the United States (and other industrialized countries) even if there are less jobs this time. We will need them in the next war. Buying military components from the communist Chinese is insane when they are the most likely future enemy.

    Also, it is important to distinguish between: things which are happening because of technology vs. the results of deliberate policy choices.

    One tactic of globalist progressives is to argue that it is all due to technology: “those jobs are gone forever”, “those factories are never coming back”, “globalism can’t be stopped”, “it is impossible to secure the border”… blah.. blah.. blah…

    A lot of the results of deliberate policy choices are misrepresented as technology, so trade agreements that ignored domestic manufacturing in favour of “protection of intellectual property”, patent and trademark protection, and (of course) “free trade in financial services” are taken as Acts of God which can never be changed.

    My view is that the next round of trade agreements should sacrifice intellectual property and financial services in favour of domestic manufacturing.

    Silicon Valley, Hollywood, Wall Street and Boston Route 128 tell us all how great “free trade” and open borders is. Let’s see how they do without a gov’t backstop built into every trade agreement.

    • RedWell

      Ah yes, manufacturing, the economic tide of the future.

  • Matt_Thullen

    There is a lot of oversimplification going on in this post. I think that most Americans, including Trump voters, understand full well that our economy isn’t going to magically be transported to what it was during the 1950’s-1980’s. What Bannon is talking about is first, accountability. How is it that the people in charge who make catastrophic decision float along, never suffering any meaningful consequences for their actions, be those malevolent or incompetent? Just this week we find out that Melissa Mayer is getting $23 million for a disastrous run at Yahoo. How is that justified in any way, shape or form?

    The other thing Bannon is talking about is having a greater allegiance to your countrymen than to citizens of the world. Relocating a factory to China helps a firm’s shareholders and the people hired for that factory, but ruins the place where the factory used to be in the U.S. Maybe it would be fine to make a little less profit in order to try and keep your fellow citizens employed. Too many executives want to import solutions to their problems. The H1-B visa is a perfect example of this mindset. Instead of working hard–and I mean hard–to improve the U.S. education system so that it can produce the engineers and others that Microsoft et. al supposedly need and can’t find in the U.S., these executives find it easier to lobby to vastly increase the H1-B pool. How does that help America, as opposed to providing a short-term fix for these corporations?

    • Angel Martin

      “Maybe it would be fine to make a little less profit in order to try and keep your fellow citizens employed.”

      The irony is that this outsourcing is in many case producing such crap products that the “cost saving” have not materialized – and in many cases has cost more.

      But the managers that did the outsourcing still get their bonuses…

    • Pete

      “The other thing Bannon is talking about is having a greater allegiance to your countrymen than to citizens of the world. ”

      Exactly. Nafta was designed to build up a middle class in Mexico, for example, at the expense of our own middle class. Since it did not personally adversely affect the elite, they didn’t really care. Instead they got even richer.

      • Angel Martin

        my personal favourite globalist argument in support of NAFTA was that if it was blocked there would be a flood of illegal immigrants from Mexico…

      • Tom

        I don’t think that was the plan. The plan was to build up the middle class in Mexico so that goods and services produced by the American middle class would have greater demand.
        Unfortunately, it did not quite work out as planned.

    • texasjimbo

      There is the brick wall economic nationalism crashes into. It is none of the government’s business where private businesses build their facilities or who they hire (except for the employee being legally in the country if the facility is in the US.

  • FriendlyGoat

    Yes, the blue model has been dying for over thirty years. The worldwide race to the bottom on income taxation (coupled with transaction taxation as a substitute) is one major reason why. If Bannon was really “nostalgic” for the plight of working people in this country (and all countries) he would understand this instead of doing everything he can to elect more of precisely the wrong policies. “Bring out the hate (to get them to do their civic duty)” is working for nothing at the moment except shifting wealth and power straight upward.

    • Gary Hemminger

      I don’t much like Trump or Bannon, but how does preventing companies from moving abroad help shift wealth and power straight upwards? Doesn’t make any sense. Your logic is not logical. I can understand that perhaps you think that Trump and associates will help the wealthy. so just say that. but your logic that Bannon wants to work against globalization and that will shift wealth and power straight upwards makes no logical sense whatsoever.

      • FriendlyGoat

        Bannon is delighted with the election of Trump AND an alignment of Republicans to lower high-end taxes, deregulate every business practice in sight, diminish health insurance for ordinary people and pack both courts and agencies for the purpose of screwing every little person’s concern for a generation. The “preventing companies from moving abroad” is little but a MINOR smoke screen for the rest of it. For instance, middle Americans can pay more for their clothes and shoes via “border adjustment” to finance tax cuts at the Goldman Sachs level and make the export of oil/gas tax free, but that ain’t gonna bring clothing and shoe manufacturing back to the USA. It’s just another way for our lower half to be made into losers while the upper half gets dramatically richer. In these circumstances, Bannon cannot be shown to be doing anything but moving wealth and power UPWARD.

        • Proverbs1618

          Wait, somebody in the White House actually thinks that me, everybody’s Uncle Sugar, gets to keep some more of MY money?? That is…. not horrifying. Like at all.
          The rest of your post is pretty generic FG BS. “diminish health insurance for ordinary people” That’s what Barack Obama did. Look it up. People lost their plans and their doctors. Prices went up 25% YoY. So how about we worry about a problem that actually exists as opposed to fighting the dragons of your imagination?

          • FriendlyGoat

            Republicans own health care at this moment. Mr. Trump promised something fantastic. So we are all going to see how that plays out. Looks like the goal is to knock ten or twenty million off of coverage completely at the low end and reduce the standards for everyone else. Those appear to be the best ideas the GOP can cook up in seven years of “planning” for its big moment in the sun.

          • Proverbs1618

            And they are trying to fix it. not their fault Democrats are preventing them from doing anything and instead are making people live with the horror of Obamacare for another year. Democrats are obstructing fixes to make people’s lives better. Thankfully, voters in red states with democratic senators will have their chance in 2018. that’s how it works. Everybody places their bets, we spin the wheel and let chips fall where they may.
            also, I know the idea of not having men with guns enforcing what you want done is terrifying to you. But I’m going to go ahead and suggest that people who will stop buying useless Obamacare policies once they are no longer forced to are not really victims. They will buy insurance that THEY think they need as opposed to being forced to buy something YOU think they need. The difference is subtle, but it is there, I assure you.

          • FriendlyGoat

            The “subtle” difference is you haven’t shown the actual future policy choices to actual citizens before you ask them to approve their new choices. Carriers do not write policies to lose money——-soooo——-what people want to buy and what they CAN buy in the “market” are two different things.

          • Proverbs1618

            Did Democrats show people ACTUAL policy choices in the passage of Obamacare? No, they didn’t. Instead they repeatedly lied about it.

          • Boritz

            One key provision is if you like your plan you can keep your plan while saving thousands annually.

          • FriendlyGoat

            There has never been a day in private or employer insurance when citizens could unilaterally “keep” what they “like”.
            The “choices” you get and the prices are completely determined by forces outside any individual’s control. You’re spinning bullsh*t as usual.

          • Boritz

            own health care.

            That’s about like me taking a Dremel tool to your mouth then saying well, your dentist owns it.

          • FriendlyGoat

            Not really. Whoever is in power suddenly inherits actual responsibility for the general welfare of the citizens. This was true of Obama walking in on a Great Recession and it is true of Donald Trump and the Republican Congress with respect to the present state of health insurance and health care.

        • Anthony
          • FriendlyGoat

            Thanks. Christians have several years to decide whether “America First” was exactly the message they felt called to send abroad or whether they goofed around and got on the wrong communication horse.

      • Proverbs1618

        Using logic against Comrade Friendly Goat? Kudos to you Good Sire. May you succeed where many, including myself, have failed. I personally find logic to be useless when talking to religious fanatics.

        • f1b0nacc1

          As I said before…pearls before swine….

  • D4x

    “Wall Street traders [have been] taking advantage of and ruining a good thing” since 1978, when double digit inflation made manufacturing ‘not profitable enough’ for the high interest rate paradigm insisting on double-digit earnings increases qtr/qtr. That is what American Can said in 1978, and the age of LBOs began. American Can DID eventually become a financial services firm named Citigroup.

    When the WSJ reads the tea leaves to understand Steve Bannon, they should be reading this first, a very in-depth read on other factors that brought us to this point in a near de-industrialized economy:
    “The New Shape of Globalization By Clyde Prestowitz”

    “… Free trade theory stipulates that countries should concentrate on producing and exporting what they did best while importing the
    rest. But Japan and some others chose not to accept that reasoning. As Naohiro Amaya, an architect of the Japanese economic “miracle,” once explained to me, “we did the opposite of what the Americans told us.” He pointed out that the key elements of the miracle model included the protection of domestic markets, export-led growth, government-guided investment in industries with economies of scale (steel, ship-building, autos, semiconductors, etc.), a managed currency undervalued versus the dollar, and technology transfer as a condition of foreign investment in the domestic market.

    During succeeding administrations, free trade advocates pushed through a string of trade deals—including the Uruguay Round (1986–1994), the North American Free Trade Agreement (NAFTA) in 1994, establishment of the World Trade Organization (WTO) in 1995, China’s accession to the WTO in 2001, the United States-Korea free trade agreement (KORUS FTA) in 2007, and, most recently, the proposed TPP. Not surprisingly, these deals resulted in a steady increase of the annual U.S. trade deficit from $20 billion in 1980 to approximately $500 billion today. Meanwhile, the offshoring of U.S. production continued—not only in labor-intensive industries but also in the capital- and technology-intensive industries in which America is supposed to be competitive. During that time, the gap widened significantly between the top one percent of earners and the rest. …”

  • Jacksonian_Libertarian

    The Einstein Strategy:

    There is an urban legend that sometime in the 50’s; Albert Einstein was taking his daily walk on the Princeton quad, as he commonly did, with his science geek groupies. When one of wags present blurted out the question “What is the most Powerful Force in the Universe?”, too which Albert Einstein, who was intimately familiar with how an atomic bomb goes supercritical, instantly replied “Compounding Growth”.

    In 170 years America grew from 13 agrarian colonies, to being the Superpower after WWII with 50% of a Global GDP (it was undamaged by war, but still that’s Powerful Growth, that older countries could have enjoyed as well but didn’t). It did it with the most Powerful Force in the Universe. But the Free Market which produces the Growth, has been getting increasingly burdened by Government, such that America hasn’t seen 3% annual growth for a Decade. And any Growth which goes unrealized, is lost forever, never to be compounded.

    The Rahn Curve demonstrates that a Nation can maximize its growth by limiting the burden of Federal, State, and Local government to 15%. A Government that limits itself to only those tasks that only a Government can perform (Defense, Justice, Foreign Relations), and lets the free market determine everything else. Is best suited to human progress.

    It’s the “Feedback of Competition” that provides both the Information and Motivation which forces continuous improvements in Quality, Service, and Price, in free markets.

    Governments at every level have usurped power, and used that power to enrich themselves at the expense of all Americans. A report that California Government Employees pensions are higher than the wages of the same jobs in the private sector, is proof.

  • J K Brown

    The problem is we have 1990s freer trade, but with 1970s regulatory and licensing. If you want more jobs, you have to break the bureaucrats.

    Manufacturing now has over twice the square footage per employee than any other type of enterprise. Factories, even if more are built in the US, won’t be in cities. They won’t be where land costs are high.

    This isn’t coming back

    Not least because modern regulations banning lead from production soldering means that human soldering has a high failure rate and the machines now own the field.

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