Review of material covered so far
In Part II, I proposed that the working class has been going through a period of declining status as proxied by declining GDPpc-adjusted wage since around 1980. This trend is analogous to a similar trend in the late 19th and early 20th centuries. I assumed that the framework I used to characterize history over 1875-1955 was still valid a century later. Associated with the earlier declining trend was the presence of leftist parties in Congress, which I interpreted as a proxy for of worker resentment over declining status. I interpret decline in working class votes for Democrats since 1980 as a similar proxy.

After the first wage trend reversed, working-class voters began to support Democrats in larger numbers. After the Depression did not return after WW II, leftist parties disappeared from Congress suggesting working Americans were reasonably satisfied with government economic management. Based in this precedent I proposed that were the present declining wage trend to reverse, working class voting will shift from voting against Democrats to for whichever party was in power when the trend ended. That is, the party seen as responsible for achieving this reversal would gain a dispensation favorable to their party. It is possible, however, that working-class voters today are no longer economically motivated as they were in the past and have gone the way of the Populists, who today vote on social issues. In this case the framework I am using would be invalid.

That said, polling consistently reveals that economics still matters, so I believe the framework still holds. Hence, I argued in Part II that if Democrats were to achieve a reversal of the wage trend, they would win back working-class votes and win elections. I then moved into a discussion of politics showing the difficulty Democrats face in winning elections and noted that policy designed to achieve the wage trend turnaround will take too long to be politically useful. From this I moved on to Part III, where I discussed the problem of how can Democrats even get into a position in which they can begin such a process?

I mostly focused on how to respond to economic crises unleashed by Trump administration policy during this term. Democrats in power during an economic crisis in 2029 would be able to enact policy along the lines of what the New Dealers did: massive stimulus program, higher taxes (repeal of 1997, 2003, 2017 tax cuts, new 50%, 60% and 70% brackets, FICA taxes on unearned income), ban stock buybacks. All that would be needed then is to stay in power long enough for these policy changes to produce the cultural shift from SP to SC culture which should reproduce the outcomes for the working and middle classes seen during the New Deal era, leading to a new Democratic-working class coalition. This would give Democrats the ability to win Rule 3 elections which is the hallmark of a dispensation.

The core problem for Democrats: how to establish a dispensation
The fly in the ointment is the next Rule 3 election would be eight years after a potential critical election in 2028. Eight years is probably not enough time for the culture shift to happen. Democrats did not have this problem last secular cycle, FDR chose to run for a third term in 1940, converting a Rule 3 election to a Rule 2 election, which he won easily. One way to get around the Rule 3 problem is for a popular Democratic administration to replace their president with the vice president during their second term, converting an unwinnable Rule 3 election into a winnable Rule 2 election. If they do this properly, the former vice president could run twice more as an incumbent, providing Democrats up to 16 years for their cultural shift to happen and lock in their dispensation.

It is unlikely a sitting Democratic president will be willing to resign from office simply to establish a dispensation for their party. however. Given this reality, the Democratic administration needs to do something to persuade voters to stick with them for a third term rather than engage in their usual thermostatic voting patterns. I believe the New Dealers achieved with an immediate rise in workers’ real wages during the 1930’s, which I argued gave them a solid victory rather than a big loss in 1934, locking in the dispensation1 right then. This rapid wage increase was not the result of economic culture change. It was “spicy” policy specifically designed to reward workers for voting Democratic, achieved without spending public money.

Dispensation-creating policy is sourced from constituent interest groups
New Dealers obtained this spice and their long-term, culture-changing policies using ideas and political support offered by various groups opposing Republicans (Bryanites, labor movement/socialists, Progressives). From the Bryanites came a policy to abolish the gold standard and devalue the dollar in order to introduce inflation during a time of deflation to the benefit of farmers. From labor-socialists came legal labor organization, and the workers’ wage increase mentioned above. Progressive ideas were behind many of the New Deal reforms and social programs. These ideas and policies maintained Democratic popularity at high levels, allowing them to win four straight Rule 2 elections.

These worked because what these groups called for benefited a broad majority of Americans and the messaging and policy developed using them produced a winning electoral program. It seems to me that Democrats have tried to construct their political program based on the ideas provided by their constituent groups as they did then. Policy based on anti-Republican groups today (social justice, immigrant rights, climate change activists, gender ideology) were assembled into a program contained things like DEI initiatives, immigration expansion, the Inflation Control Act, and numerous actions in support of transgender rights. These have not been broadly popular and have clearly failed to produce a winning electoral program—much less establish a new dispensation.

This is the core of Democrats’ problem. A party determines what ideas are worth pursuing politically from the interest groups that make up its constituency. It takes these inputs and formulates electoral campaigns and policy portfolios built around them. The GIGO principle applies, if the inputs are garbage then the product will be garbage. In 1932 the inputs obtained from the Populists, Labor, and Progressive groups used to produce the New Deal package were politically sound; they were used to construct a Democratic dispensation that lasted 48 years. In contrast, the inputs provided by Democratic groups in 2008 and 2020 were unsound, because they have failed to produce the dispensation needed to achieve most of the longest and most dearly held Democratic goals like universal health care and a more equitable society.

My argument is the same as what many others in Democratic circles have already concluded. We need the groups to supply better inputs. An example of a new imput is the Abundance idea, which argues that Democrats should stop being obstacles to development. This is a sound policy idea. Blue states and cities should clear procedural and political obstacles to building infrastructure and housing, if only to stop population (and loss electoral clout) lost to red states. Whether it can address the core political problem facing Democrats is a different question.

Why good policies can be bad inputs.
Matt Stoler notes that Dallas-Fort Worth is an urban area doing what the Abundance movement calls for—yet it still has unaffordable housing. He gets into the weeds on why this is the case and summarizes his findings:

Our policies are structured so that the home is less a place to live than a cash-flowing asset for Wall Street to print and sell mortgage-backed securities off of, and homebuilding is not a vocation to produce homes for local families so much as a means of generating a high return on equity for distant capital allocators. We shouldn’t be surprised that these policies have led us to a world with less and more expensive housing. From the perspective of the financiers we’ve put in charge of homebuilding, that’s the whole point of the enterprise.

I inferred that housing had become financialized as a consequence of the rise of SP culture when I noted how home and stock price rose out of their long-standing trading range at about the same time, suggesting a common cause.

Like most progressives, Stoller suggests regulation as a solution to the problem, which treats the symptoms rather than the disease. Regulation alone is unlikely to be effective. They will be hard to achieve, requiring expenditure of significant political capital, only to be effortlessly eliminated by the next Republican administration. Policy that benefits financial interests over ordinary people is consistent with SP culture, under which it is acceptable to screw over people, if by doing so shareholder interests are served. Those who do this are just doing their job, like the 19^th century sheriff evicting a farm family from their land after the bank foreclosed on it. The problem is “the system,” people will tell you. In the 19th century example the system was represented by the gold standard, rendered untouchable by the ruling Republican dispensation. Today, the system is the low tax rates on high income individuals and investments that maintain SP culture, which is equally untouchable under the current Republican dispensation.

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A better way to solve the problem is how the New Dealers did it, changing the business culture to reduce the motivation for circumventing regulation, allowing it to function. While the dispensation that established this solution remains in place, the new culture will persist and the regulations will work. Stoller notes the origins of the high housing price problem stem from changes made in financial regulations in the 1980’s, much as the 1982 legalization of stock buybacks enabled extreme stock market valuation. That is, the regulations Stoller desires had been in place before 1980 and were maintained by the power of the FDR dispensation. When that dispensation was replaced by a new one in 1980, they were soon swept away.

Another example of good policy is green infrastructure to address climate change. This is a serious problem, like impediments to building infrastructure, that needs to be addressed, but doing so produces little electoral benefit. The job creation associated with building green infrastructure does produce benefits for those hired—as long as the policy actually hires people. Trying to make sure this happens is part of what the Abundance movement is about. But there is good reason to believe it would not help electorally. This is shown by the comparison of FDR with Obama. Both presidents achieved a similar level of unemployment reduction, yet their Congressional election results couldn’t be more different. From this I concluded that focusing on job creation, as Democrats are wont to do, doesn’t help. What seems to help is improving the benefits from labor for those who already have jobs. People who do not fear job loss and feel they are making progress in their lives will tend to reward whoever is in office, potentially converting a Rule 1 into a Rule 2 election.

Why social justice inputs generally do not work: Black Lives Matter
Black Lives Matter (BLM) proposed police reform (e.g. defund the police) to reduce the number of black people killed by police. I note that white homicide victims are more likely to have been killed by police than black homicide victims, so why did BLM choose this issue? It appears to have been a symbolic appeal, police killings of black men are reminiscent of lynching, a cultural touchstone for black people historically. Symbolic appeals targeting a large electoral demographic (e.g. anti-trans ads targeting conservative-leaning voters) can have some electoral impact. The group BLM’s message targeted (non-liberal blacks) is small, however. Not only that but it appears to have had no traction2 with its primary beneficiaries, young black men, whose votes shifted towards the Republicans in 2024.

Conclusion
The focus needs to be on collection of ideas and policies that will produce tangible, immediately realizable, positive improvements for a wide swath of voters, without spending money we don’t have. If large numbers of voters come to believe that the nation is on the right track for a sustained period of time, this will generate the support that wins Rule 3 elections. If Democrats wish to be successful, they need new groups or better ideas from the groups they have.