The Economist sees a two-way split in the US economy, one liberal, the other conservative:
The broader MAGA universe extends beyond goods with over-the-top marketing to products and employers merely favoured by Republicans. And each economic choice adds up to something bigger. According to our analysis, America is splitting into two different economies and markets: one conservative, the other liberal. People on each side think about the economy differently; they buy different things and work in increasingly different industries. Not only that, the MAGA economy is doing surprisingly well.The association of Republicanism with backwardness is at odds with the data. Even places like Yuba City are doing better than before and together MAGA-land is enormously powerful. If Democrats have two-thirds of American GDP, that still leaves Republicans with around $10trn—making them the world’s third-largest economy.
The growing gap between the MAGA and Democratic economies can be seen in both “soft” and “hard” data. Surveys suggest that Democrats and Republicans now live in separate realities.The two economies are separating in part because their industrial compositions are changing. We have analyzed data on work and pay across counties. Over time, places that voted Democratic in 2024 have taken a greater share of knowledge-intensive forms of economic activity. In 1993 roughly the same share of employee compensation came from the “information” sector, comprising software and the like, in Republican counties as elsewhere. Now the [Republican] share is 30% lower than average, while dependence on manufacturing has risen. All told, employment patterns in the Democratic and Republican economies have diverged by 20%, as measured by the difference between “location quotients”, a gauge of job dispersion by industry.Recent market turmoil hit the Republican basket hard. But in the past decade its shareholder returns, including dividends, have thrashed the blue one.
Since the end of 2020 MAGA’s price has easily outperformed that of DEMZ. Goldman Sachs, a bank, has built a stock index containing firms “that could benefit from key Republican policies”, such as those in oil. Over the past decade their share prices have comfortably beaten the market.
Two points:
- That is an indicator that the deep split in American politics has spilled over into the economy and society generally. These splits will remain for a long time, probably decades at least. This looks like a new normal.
- Is the red economy generally less environmentally, worker and consumer friendly than the blue one? That seems to be implied. I asked Pxy. It analyzed that and concluded in part:
Conclusion: The MAGA economy is showing surprisingly strong performance by several measures, particularly in stock returns and certain sectors like manufacturing and energy 44. However, this performance appears to come with significant trade-offs in environmental, worker, and consumer protections 45. The Republican policies driving this economic performance—deregulation, tax cuts, energy development, and manufacturing focus—prioritize short-term economic growth over long-term sustainability concerns.
The questions and the entire Pxy analysis is available at this link.
The bottom line: Not surprisingly, by getting rid of environmental, worker, and consumer protections companies can make more money. MAGA elites and the djt administration have not denied their deregulatory agenda. Instead, they openly celebrate it as a core achievement and policy objective (1, 2, 3, 4). Instead of denying the scale of their deregulatory agenda, MAGA elites reframed this using consistent propaganda narratives, e.g., (1) deregulation results in economic benefits, and (2) federal regulations are tyrannical socialist government overreach.
That reframing allows MAGA elites to acknowledge deregulation while spinning it as economically necessary (5, 6). What MAGA propaganda does not say is that the benefits are mostly for the elites. Not much, if anything, is going to be trickling down to average consumers, workers or the environment. Deregulation protects corporations and powerful special interests while deprotecting consumers, workers and the environment. This is more evidence of the authoritarianism and kleptocracy of the MAGA wealth and power movement.
It is not just economic benefit that flows up from
deregulation, power also flows up from us to the elites