The rise of America’s hard left
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We all know about the rise of the authoritarian right in America, and the risks that it poses to both the economy and society. But what about the hard left? This political tail risk is now being taken more seriously by many in the business community who worry that the centre-left is disappearing, just as traditional conservatism has given way to Maga.
The rise of democratic socialist New York City mayoral candidate Zohran Mamdani (who is still leading in the polls following incumbent mayor Eric Adams pulling out of the race); the emergence of a number of other leftwing populists like Graham Platner (a Maine oysterman who is likely to take on five-term Republican Senator Susan Collins in next year’s midterms); even hints that congresswoman Alexandria Ocasio-Cortez will run for president or the US Senate in 2028 — together, these developments have both Democratic centrists and business thinking about what a sharp swing to the political left in the US might look like.
The issue is, in fact, at the heart of the current US government shutdown, which is being driven by Democratic unwillingness to sign off on a budget that will cut healthcare benefits for millions of the poorest Americans in exchange for tax breaks for the wealthy.
In the past, many Democrats would have been unwilling to go to the mat and risk being blamed for a shutdown, but at this point, there’s very little to lose, politically or practically. Trump’s federal government staffing cuts will go ahead regardless of whether Democrats sign off on the budget and given that support for the party is at a record low, there’s little reason not to take a vocal stand against Republicans, a position that Democratic populist Senator Elizabeth Warren has called “righteous”.
Whatever the outcome, it’s clear that future elections are going to be won or lost on who can convince working people that they will fight for them. For example, the issue of healthcare affordability — surveys show premiums will probably rise by 10 per cent or more next year — is driving the launch of “TrumpRx”, a federal website through which Americans will be able to purchase discounted drugs (ironically taking a page from Obamacare). The affordability crisis is also behind the rent freezes and municipally owned groceries suggested by Mamdani.
Populism is clearly what’s driving the move among Democratic incumbents and prospective candidates to adopt a more explicitly pro-worker, anti-business tone, and to focus on things like AI-related job destruction, which disproportionately affects younger people. No wonder 62 per cent of this cohort holds a favourable view of socialism, according to a recent Cato Institute-YouGov poll. Some of the new hard-left campaigns are being managed by veteran staffers who have worked for populists like Vermont Senator Bernie Sanders, or Pennsylvania Senator John Fetterman.
Business is predictably fretful, most notably about Mamdani, given that the New York mayoral election is just a few weeks away. Wall Street financiers who found that early donations weren’t enough to stop his momentum have begun funding attack ads. Real estate moguls are pushing a narrative of capital flight from New York, rising crime and a “back to the ’70s” scenario should Mamdani win. Hedge funder Bill Ackman has been particularly aggressive, claiming hundreds of millions of campaign dollars are available to anyone who can defeat him, even though anti-Mamdani donations have slowed recently given the seeming inevitability of his victory.
Would leftwing populism really be worse than rightwing authoritarianism? Not this kind. In fact, I’d argue that most Americans really have no idea what socialism is, given that much of what passes for it in the US would be considered middle of the road in much of Europe. But it is true that taxes on wealth and regulatory burdens — already high in some areas — could increase if the hard left gains power. That’s something that the so-called “abundance” camp in the Democratic party has decried.
Populists have focused on affordability, but so far the policies presented by both right and left are flimsy and ad hoc. Simply cutting regulation won’t fix America’s housing crisisand it’s possible that a big economic downturn could make joblessness, rather than inflation, the most pressing economic worry. What’s needed is something that connects these ideas with a solid theory of power and how it operates.
Here, the populist left will have to grapple with what is righteous, and what will work. Mamdani is right that New York City is completely unaffordable for most normal people. But assuming he wins, I’d love to see a more nuanced take on regulation of, for example, big landlords rather than small ones. Universal childcare, another idea he’s proposed, must be paid for somehow. But as the Biden administration proved, there are ways to make it work for business too — witness how former commerce secretary Gina Raimondo linked childcare provisions to federal subsidies for semiconductor investment.
Whether Democrats win or lose points for their populist stance in the current government shutdown will tell us much about the depth of support for the hard left. But what’s already clear is that the centre is not holding.
