The Great Political Realignment

Welcome to the Kato Podcast. I'm Ryan Bourne, Kato's R. Evan Schaaf chair for the public understanding of economics. If you've been watching politics over the past decade, you've probably noticed that something fundamental appears to have changed. The big dividing lines no longer seem to be mainly about taxes, spending, or even the size and scope of government. Instead, politics now often turns on questions of how you perceive your identity, your stance on immigration, sovereignty, nationhood, and culture. What's striking is that my guest today saw much of this coming years ago. Steve Davis' new book, The Great Re-Alignment, details the thesis he's been working on for some time, that we're living through a historic shift in the axis of politics, away from the old left-right economic battles of the 20th century, and towards a new politics centered on non-economic conflicts that nonetheless have deep economic roots. Steve is a former colleague of mine at the Institute of Economic Affairs, where I think his official title these days is Senior Education Fellow, and I'm delighted he's here to talk about the thesis, why he thinks this realignment is here to stay, and what it means for us as libertarians. Steve, welcome. Welcome and delighted for being on the show with you. Steve, what is The Great Re-Alignment? Well, it's pretty much what you described there. So, the essential theory underlying my analysis and book is that at any given time in any political community, although there are many, many things that people disagree about, and which are the subject of political contestation and debate, there's always one issue that is particularly salient, and that issue is one that matters a lot to a lot of people. And so, this is the aligning issue. Politics is aligned or structured around that, and it divides politics into two broad sides, which we usually conventionally call left and right, or have done for the last 200 years. And people also use, people use the aligning issue to work out which side of that binary divide they're on, and also how far they are on one side or the other. Now, since the 1920s, I would say, certainly the United States and the UK, but earlier in some other countries, the big dividing issue was, as you said, capitalism or socialism. Do you favor a broadly free market way of running the economy with a smaller government and lower taxes, or do you favor an economy in which the government has a larger role, maybe even controls everything, and there's a, you know, maybe a very large redistributive welfare state. And so, that's the world that I think a lot of your listeners will have grown up in. It's the world I grew up in, in unit as well. And that's the one we've had, really, until about 10 years ago. And the thesis I have is that starting, well, it has roots that go back before then, but starting about 2005, in one country after another, that alignment, that division of politics and organization of politics around that issue has collapsed. And it's been replaced by what you also alluded to, a new aligning issue, which has to do with identity, really. And in particular, it's focused on the question of whether you favor nationalism and a thick idea of national identity and the nation state, or whether you lean towards a more cosmopolitan and pluralistic idea of identity and government. And this is an issue which is orthogonal, in many ways, to the old one. So it means you have free marketers on both sides of this new divide. You have people who favor big government on both sides of this new divide. And so, what you now are living in is in a new political world in which a lot of the old alliances and old enmities no longer make sense, and you are having a kind of shuffling of the deck. So that's what this is about, really. So by just for clarification, when you say identity, a lot of American listeners might hear that and think about identity politics in the race and gender sense. That's not quite what you're talking about. Not quite, although that is an aspect of it, because what is going on here, in one sense, one of the things that is part of this new divide, is a question or a debate about the degree to which what you are, your identity, is a product of choice, as opposed to things that you can't do anything about. And on both the vote left and their equivalents on the right, the new so-called populist right, the idea is that your identity is to a great degree determined by things that are, in some sense, not your choice. You have no say in the matter. The alternative view is that your identity is, or to the greatest extent possible, should be the result of choices that you've made. The kind of beliefs you have, the kind of life you want to live, where you live, what you do, as opposed to things like where you're born, who your parents are, what your ethnicity is, things that you can't shift. On the left, it's a bit more complicated, because things like trans identity, for example, is a very radical assertion of individual choice. The claim is that purely subjective choice can override biological reality. So that's a very extreme version of that kind of, otherwise I would find broadly liberal claim that you should have an identity that's largely driven by choice. But there is a relationship between that kind of identity politics and this new alliance that I'm talking about. But it's rather complicated, and it's not the central thing. The main thing is whether or not you favor a kind of very thick, definite, probably ethnic notion of national identity, or very strong cultural notion of national identity, or whether you're open to a kind of cosmopolitan openness. So I think it's fair to say that your book mainly concentrates on developments in the new right, and then a kind of reactance to that. So first of all, just describe to me like the process by which this realignment occurs, and why you think this is occurring primarily on the right of politics, rather than the left of politics? Well, I think actually it is occurring on the left as well, particularly right now. So the story I give goes like this. Really the old alignment, the division over economics, reached its kind of final conclusion with the fall of the Berlin Wall. Because I think from that point onwards, the idea that there was a radical systemic alternative to a broadly market economy with private property was just gone, a part of a few hardy holds out. As somebody on the left actually said, it became easier to imagine the end of the world and to imagine the end of capitalism. And at that point, politics on both left and right lost a lot of its focus and urgency, if you will. It became a kind of technocratic matter of devising the best policy, the most effective technocratic tweaks, to achieve what were seen as generally agreed upon goals. And so we entered into what is labeled, I think very misleadingly, neoliberalism, which was as much a creation of the left as it was of the right. It was as much a creation of people like Bill Clinton, Gerhard Schroeder, Tony Blair, as it was anybody else. And I do think actually, by the way, that it was in many ways a departure from the politics of Thatcher and Reagan, which had brought it about, but it was not what they intended, but that's another question. So by the time we get to the 1990s, 2000s, you have this kind of very strong consensus, and politics has a lot of the content sucked out of it. Now, there are initial reactions against this on both the left and the right. So you get the kind of anti-globalization black block movement and protests in place like Seattle. And also much more politically consequentially, you get the kind of uprising on the right of people like Pat Buchanan, and his supporters, Paul Craig Roberts and others, who argue essentially that, you know, we've won the argument about socialism, it's time to fight the culture war now. And also that we needed to, you know, control immigration, move towards policy of protectionism, this kind of thing, that they were defeated. And so in the 2000s, if you in one country after another, one of the main most commonly responded responses to questions about what you think about politics is all politicians are the same. And in one sense, that was true, because they had all bought into this kind of technocratic managerial liberalism. And then what you've had since roughly the 2005 period in most of Europe, and perhaps a bit more recently in the United States with Donald Trump, is this reaction against that kind of technocratic politics. And a lot of people have become increasingly exercised by this question of national identity. And they felt that their views were not being taken account of, which they weren't, quite frankly. And so as a result, they then burst onto the political stage with things like Trump's getting the nomination and then winning the subsequent general. And so that's how politics is realigned, because an increasing large and now critical mass of voters feel that what really matters to them is this question of immigration, national identity and the like. And they are now insisting that politics actually addresses that issue. And now this is causing, I think, a kind of realignment on the left. Because if you're on the left, the question is, well, how do you respond to this? And so I think what we are seeing, notably in Europe at the moment, is a sort of realignment going on the left side of politics in response to the questions and challenges being raised by this new nationalist right. So let's think about the process for a minute. How does this realignment actually develop in its political form? Because the way that you've talked about, I certainly remember growing up through the late 90s, through the rest of the 2000s. And when I first made it to Westminster in the early 2010s, that people did feel disillusioned with politics. They did think that there wasn't much substance to it. You're absolutely right. I remember people saying all politicians are the same. I vote and nothing changes. So is this just a case of political entrepreneurs coming along and offering a product that voters always wanted? Is it a bottom up thing that's a response to events? Why are we seeing a realignment now? Ah, yeah. Well, I think there are a number of things. One of them, it is political entrepreneurs. So you have a mass of disaffected voters. And it's important to realize that the largest part of that block of disaffected voters are people who dissent from the what you might call the neoliberal orthodoxy on two grounds. These people are typically very nationalistic and conventionally patriotic. They do not like the kind of move towards global governance and free trade that you get from the creation of the WTO on. But they're also very often quite clearly traditionally left of center on economics, not all of them, but a large part of them are. And so those people feel disillusioned and disaffected on two grounds, not just one. And so, yes, you do get political entrepreneurs who, no, then speak to and capture this kind of disaffection. Now, if you've got a proportional representation system, as you do in most of Europe, then this is relatively easy to do because the bars are setting up a new party and then gaining electoral success is much lower in a PR system, particularly if you have a very proportional system, like say, the Netherlands or Denmark does. But it still happens, even in other countries in the United States, the key mechanism through which it happens is the primary system, which means a sufficiently key block of disaffected voters can be mobilized and appealed to by entrepreneurs like Donald Trump, despite the opposition of the entire Republican establishment when he was first running for the nomination. Now, why, why though, there is a further question though, why are these political entrepreneurs able to succeed now in this period, when, for example, as in the shape of Pat Buchanan, they did not succeed in the 1990s, early 2000s. And I think there's a number of factors. One is that an increasing number of people are just more and more pissed off, if you will, with from their point of view, what they see going on. The other reason is the rise of social media. And the rise of social media and the loss of the kind of media gatekeeping role of the legacy media has meant that dissenting ideas on both left and right, but in this case, particularly the nationalist right, find it much easier to find expression. And it becomes much cheaper, much more easy for people to mobilize large numbers of disaffected voters, the cost of doing so in terms of communicating with them is reduced dramatically by the rise of social media platforms like Facebook or X or things like that. And so I think that's one of the reasons why it starts to really take off at that point. The other factor, of course, is the financial crisis and the aftermath of the crisis, which has the effect of discrediting a large part of the status quo and making people much more open to looking at or, you know, even voting for radical alternatives. And I think there are also the COVID pandemic then turbocharged that kind of disillusionment with what you might call the establishment, Lucy speaking, and, you know, also enormously increased popular mistrust of official narratives, which is another reason why political entrepreneurs like Donald Trump or Nigel Farage or Marine Le Pen have been able to make such hay in the last 10 to 20 years, it's partly because nobody believes or trusts the official narrative anymore is lost credibility, largely because of things that the establishment have done, I have to say. So one of the core claims of the book is that even though politics is realigning on this new axis, ultimately, this realignment does have kind of economic roots. Can you talk through, can you talk through how these identities actually develop that people are willing to sort themselves into these tribes? Yes, it's so the argument is that the ultimate cause of all this is economic and technological changes of one kind or another. But the thing is that the effects of economic changes have had are perceived and understood through the prism of identity. Now, the main change in my view is the way in which the world economy develops after the collapse of Bretton Woods and the move to floating currencies, floating exchange rates, flexible exchange rates rather, and the abolition of exchange controls in the 1970s and 1980s. And what that has done, in my view, is to create a kind of, it's not just a globalized economy, it's an economy which is no longer organized around recognizable national economies with national companies, a national labor market and things of that sort. Instead, the world economy, it makes more sense to think of it as being made up of about 2000 doably connected city regions, which are connected together by all kinds of train flows, flows of people, flows of capital in a kind of hierarchical network. And at the top of it are a small number of about 20 world cities as they're called, places like New York, Los Angeles, London, Paris, Shanghai, maybe Dubai, Mumbai, places like that. Now, in the process of this, what has happened is that you've had large parts of the traditional manufacturing sector have migrated to other parts of the world away from places like parts of Western Europe or the United States. And this has had a, there's been large parts of the developed world where a whole kind of way of life has been simply swept away by this kind of economic change. At the same time, these economic changes have led to a massive movement of people around the world. And in both directions, by the way, now the thing that everybody notices is the mass movement of typically unskilled, but also increasingly skilled labor from the global south into metropolitan hubs in the global north. And so you've had a massive influx, say of Indians into major metro areas in the United States. So I noticed, for example, that they're currently building a 20,000 seat, I think it is cricket ground in Atlanta, which, like golden news to me as a bridge, but you know, very discombobulating, I should think, to a lot of Americans. And you've similarly got a large scale movement of lots of unskilled labor into countries like Britain to work in sectors like the care sector and things like that. But you've also got, it's worth pointing out, a major migration out of the rich countries into other parts of the world. So as we've just discovered with the current events in the Middle East, there's quite a few thousand Brits living in Dubai these days who've gone there. Similarly, large numbers of Americans, Europeans working all over Africa, the Far East and things of that sort. And so what you've had is this kind of population churn. Now some people welcome this. And others, on the other hand, see this as a threat to their identity. It's an economic change, but they don't perceive it in economic terms. They perceive it rather as a transformation of the society in which they live in which things that were familiar, stable, apparently perpetual, like the demographic makeup of the community or the country within which they live, are now changing very rapidly. And this is as much a matter of sensibility as anything else. Some people do not like this. They just don't welcome that kind of change. There are other people who do welcome it. Now part of what's going on, by the way, is a geographical sorting going on in which if you are the kind of person who does welcome change, a novelty and who is like very keen to travel to other parts of the world, is quite, you know, intrigued and interested or even positive about having lots of people come from other parts of the planet, what are you going to do? Well, you're going to go to college where you will meet lots of people from the rest of the world. You're going to then go and live in a major metropolitan area and work in a sector that typically trades globally traded in non-material products. And you're going to work alongside lots of people from other parts of the world. Conversely, if you find this kind of thing disconcerting and disturbing, you're probably not going to go to university and you're going to stay at home and not move away. And you're going to be increasingly resentful of the way in which you perceive yourself as being patronized and looked down upon by the people who live in the globally connected metropolitan areas. And so that's why this economic change has produced the geographical aspect of the new alignment, which is a divide between global metropolitan areas, which are in American terminology, deeply, deeply blue places like New York City, for example, or Hennepin County, Minnesota, or Los Angeles County, California. And on the other hand, the rural small town parts of the United States, or the ex-industrial areas, places like Mahoning Valley in Ohio or Scranton, Wilkes Barron, Pennsylvania, which deeply resent this and don't only feel or even primarily feel that they're being screwed over economically, what they really are antsy about is the fact that as far as they can see, the entire cultural world that they're familiar with and which they feel gives them their identity is changing. And so that's why they perceive it as an identity threat, even though the cause is ultimately economics. What I really love about that your book is, even though I know your sympathies and you outline them in the book and you're a cosmopolitan liberal and you've always identified that way, you're really describing what you think is is going on as a historian, you know, as if you're looking looking back from the future. We hear a lot of hand-wringing in American politics about populism on the right, about neo-fascism. But you kind of reject those labels and imply that there is some this isn't just reactive protest, this isn't like pure populism, but there is some positive content to what the new right is saying. So can you just elucidate on that a bit? Yes. So I don't like the label populism at all. Because, and in fact, I'm not just in this context, I don't think it's a very helpful label in political science or discussion generally, actually. It has very limited use. Populism is really a description of a particular rhetorical style. It refers to a style of rhetoric in which an antithesis is posed between the people who are virtuous and an elite that is corrupt, and which also identifies a leader who is the voice of the people against the elites. Now, that certainly captures a lot of the rhetoric of many of these new right parties. But it doesn't say anything about the substantive content of what they're doing. And also, it's worth saying that kind of rhetoric and that kind of presentation can be found on other, you know, in other political formations. So Javier Millay, for example, in Argentina, he undoubtedly uses that kind of populist rhetoric. But if you look at what he wants to do and his ideology, he's a long way away from someone like, say, Marion Le Pen or Donald Trump, he's a radical individualist libertarian, which is not what they are, either of them. Similarly, you've got someone like Bernie Sanders, who would also fit the populist description, I would say, but obviously from a left wing perspective, or Mamdani in New York, I think he also fits that kind of perspective. So I don't think populism tells you much. Now, also what I think is that this politics is not purely a protest or reactive. It is generating, at the longer it goes on, a fairly worked out and coherent kind of ideology and program, if you will. Now, I don't like this program myself. But there's no point in like wringing your hands and saying, either, oh, this is just like nonsense, or that, which is much worse, and it's a very widespread reaction, you shouldn't be allowed to raise these issues or talk about it. That's, that's actually an extremely foolish way of responding to this, because it's just going to make the people who have these views madder than ever. And it's going to make them more and more extreme and radical. And the analogy I make is with the rise of socialism in the late 1930s, 20th century, where you had this emergence of an organized working class movement, and a lot of the established political elites at the time just refused to talk about it and try to use things like the anti socialist laws in Germany to suppress it. And all that did was make the movement turn to even more radical, you know, forms of socialism. So instead of being Fabians, they became communists, you know, it is. And the danger is that if you don't actually engage with these kind of politics, you're, you're not, you're going to have something similar happen there. Now, I think the word fascism is misleading. I'm not saying that these people are liberal. One of my crucial arguments is that actually they are deeply and explicitly anti liberal. Increasingly, there's a kind of intellectual wing to this new politics, which defines itself in complete rejection of any kind of liberalism, broadly defined, an increasingly American context, bizarrely, but interestingly, rejection of the Constitution, and of the whole American project, if you will, if you read people like Patrick Dunin or Adrien Vermeul. But it's so it's not a kind of politics I welcome, but it's not fascism, it's something else. A critical part of it is a kind of populist or radical democracy, because one of the central elements of this new politics is an argument that the public's will is being ignored, or crucially is being thwarted by unelected people like judges. And so a crucial part of this new kind of politics is an advocacy of majoritarian democracy, and the idea that if the public wants something, they should get it, and that you can't have laws, judges being used to check what the public wills. Now, I think that's a very dangerous politics, but I think that's a critical part of what is coming up here. So you argue in the book that the US is actually a clear case where it seems this realignment is already all down the tracks and seems durable rather than just an episode. So let me put a couple of like different data points to you and then see how you react to them. I think you could probably count on one hand the number of people who in the Senate, for example, on the Republican side identify explicitly as national conservatives or post liberals. We see on the left many trying to revive a class-based economic form of politics, whether that be Mamdani or AOC. As you suggested, Bernie Sanders, if you think this identity framework realignment is right, should arguably be on the same side on many issues, or perhaps even in political terms with Donald Trump and the post liberals, but it doesn't appear to be. So why are you so certain that this realignment around this framework is here to stay? Well, I think if you look at the Republicans in Congress, first of all, that you talk about there, it's true that the number who are explicitly and overtly on the side of this new kind of national conservatives, people like Senator Josh Hawley, for example, is quite small. However, the ones who aren't on it, there are very, very few of them, perhaps a few people like Mitt Romney, who are prepared to go out and live and say that they're opposed to Trump or never Trumpers. That may go up a bit more in the near future, I imagine, but even so, it's quite limited. Now, why is that? Well, it's because the political class in the United States is more subject to popular pressure than is the case in, say, the United Kingdom, because of the primary system, part of anything else. And so all those Republicans in Congress, they are, if you like, legacy representatives. They're the people who were elected when the old alignment was in full flow, and they come out of the old Reagan-Fusionist coalition, basically, combination of free markets and social conservatism with one or the other being predominant. And they now know that if they don't, if they depart too far from this new kind of MAGA nationalism, then they're going to be primaried out or face a very serious primary challenge. And so that's partly the reason why I think it is structural on the right. On the left, you do mention people like Bernie Sanders, and it's true, there is this interesting economic overlap. So if you look at, say, the policy positions and indeed the actual cooperation between, say, Elizabeth Warren and Josh Hawley, their remark would be close. You know, their view of what is wrong with the American economy, and a lot of what needs to be done about it, like, for example, reining in big corporations like Big Tech, they're pretty much on the same page. And the way the American congressional system is worked or is supposed to work is that you would expect to see quite a lot of collaboration about on that. Now, the reason why people like Bernie Sanders and Elizabeth Warren or others like, you know, AOC, Mamdani are not pursuing those avenues of economic cooperation is precisely because the major issue is now not economics. So let's say you are someone like Elizabeth Warren, you can tell that you agree a lot with some of the MAGA Republicans on economics. The trouble is, that's not the really big issue. The big issue that divides right from left is things like immigration, national identity, and the like. And on that, there's an unbridgeable gap. And so it's not going to happen. Now, what you have got going on at the moment, though, I think on both sides of the aisle, if you will, is a kind of internal division. So if you look at the Supreme Court decision recently about tariffs, I think you can see the justices there actually split four ways. So you had three justices who supported the Trump administration, who basically took what you might call a populist line if you want to use that label. Then you had three justices who previously were often lumped in with the first three, Chief Justice Roberts, Neil Gorsuch, and they went with the majority, in fact, broke the majority opinion, striking down the tariffs. And they basically articulated something like the old fusionist position. And then on the other side, you had three liberal justices, so-called, who also supported the majority. But interestingly, one of them, I think, Justice Jackson, did so on different grounds to the other two. Because I think if you look at Justice Jackson's, you know, supporting judgment, her line essentially was all about history. And it was not that there was any principled objection to this use of the executive branches powers, but that it was being done in a way that hadn't got enough historical backing, and was being done for the wrong reasons, which is not the view that her other two liberal colleagues had, Kagan and Sotomayor. So I think what you had there was four blocks. Now, I think that actually the long run tradition in American politics is there's four basic political traditions, progressives, liberals, conservatives, and populists. And right now, what has happened is that there's been a populist mutiny in the Republican Party, which has gained control of that party and reoriented it around these new issues. But there's going to be increasingly severe pushback, I think, as we get closer to next federal election from the people like the three conservative justices who struck down the tariffs, who support the old fusionist conservative position. Similarly, on the left, you've got an increasingly clear division between liberals. And on the other hand, populist left populist leftists, who actually in many ways are on the same page as the populist rightists on economics, as you say, but have a different view about, you know, international relations and the place of the United States and the world and immigration and the like. And so one of the things I think it's worth taking a bet on is I think there's quite a reasonable possibility that for only the third time in its history, the United States will have four serious presidential candidates at the next election. The last time it happened was 1948. And previously it happened in 1860. And I think it could, it could well happen again, we could well see a very divisive primary season in both the Republican and Democratic parties because of that. And then what you'll have is a knockdown drag out fight to see which ones come out on top. And I think on the Republican side, the conservative, the right side, it will be the populists, I'm afraid. And on the, because they've got the votes on that side. On the other side, it's up for grabs really, but I suspect the liberals will ultimately come out on top, but it's a close call there. I want to leave some time for the implications for both economics and libertarians. But before that, I just want to kind of broaden this out a bit and look at the global context. Because I think, I think there's a view perhaps naive among many people in our world, you know, the post liberals and the national conservatives, they came along and were trying to put intellectual meat on the bones of Donald Trump's musings. And that this was a kind of after the event attempt to construct a an ideological framework around Trump. And I think for many of those people, they look at events elsewhere in the world and the way that this politics seems to be developing. And they presume that to a certain extent, this is an export from Brexit and Trump rather than all being driven by this kind of same underlying structural forces in each country. So can you just like contextualize for us for a second, how widespread this this realignment actually is in global politics? Yeah, the answer is it's happening pretty much everywhere. It does take slightly different forms in different countries, as you'd expect. In particular, I think Latin America has a slightly different kind of populism to much of the rest of the world. But yes, it's happening all over the place. There are very few places where it's not happening, actually. So it looked for a while as it wasn't happening in Japan. But the current Prime Minister in Japan comes very much on that kind of direction herself. And the the recent upper chamber of the Diet elections in Japan saw major gains for new party of this nationalist anti immigration type. And in fact, it is, it is not at all the case that this is a kind of export from the United States, quite the opposite. One of the striking features of the post liberals in the United States is the degree to which they look to foreign models. Now, the best known example is Hungary, where Victor Orbán, and the current Fidesz government in Hungary, is the kind of model that they seek to emulate. But it's a lot more than that. There's a serious kind of looking at intellectual arguments, as well as policy positions on the part of American and British conservatives and drawing on models originally developed in continental Europe. And I have to say that, you know, in the on the continent in pretty much every country in France, in Germany, in these European countries, even Scandinavia, and in Italy, you get the development of this kind of politics, and it's got an increasingly serious intellectual content. And actually, if anything, Europe is exporting that kind of politics, or certainly the more intellectualized forms of it to the United States. And it's catching on everywhere, in a way. So it looked for a long time as Australia, for example, had escaped this. But not so now. All the current polls in Australia show that in terms of first preference votes, the traditional center right party, the liberals have now collapsed through a low third place. And second place is held by Pauline Hansen's One Nation, which is this classic, it is a popular party, basically. But it's also very much a party of the nativist nationalist right. And the recent election in South Australia, they came second in the first preference count, which is the first time this has happened since, I think, the 1920s, certainly a very, very long time. So it's, you know, every time you think there's a country that has resisted this realignment of politics, the rise of this kind of right, it's caught on there. And it would be a huge mistake to think that this is a kind of anglophone phenomenon, all the people, things like Brexit and Trump are leading to emulation elsewhere, if anything, as I say, it's the opposite. And on the case of Brexit, particularly, I wrote another book about Brexit a few years ago. And my argument in that book is that it was not that Brexit produced a realignment, it was that there was already a realignment amongst voters, which was stymied or held back by the political establishment, but which then found expression and was crystallized in the Brexit vote. So Brexit is a consequence of realignment in Britain, rather than a cause. Yeah, I think one of the really interesting things with Brexit is that there wasn't really a big pro-Europe movement in Brexit prior to the referendum. And as a reaction to this, this identity, national sovereignty grounded politics that arose from the referendum, you did see creation of this counter-identity, particularly on the center-left of politics. But in the interest of time, I want to move on to the implications for libertarians, because you kind of implied early on that ultimately politics is binary and there are two major overarching tribes. So where does that leave those of us who are in favor of kind of radical liberalism on all fronts? I have a view on that, which is very strong and very definite, but which a lot of people are very uncomfortable with. And that is, I think if you're a radical liberal, you have to realize in the world we are now in, or at least moving into, but I think we're in, if you are such a liberal or radical libertarian, you're on the left. You're on the left of the new political divide. In many ways, what has happened is that we are reverting back to the kind of politics we had in the 19th century, where the real division was between conservatives and, on the one side, liberals and radicals on the other. And so we're in that kind of position again. Now, as I said at the start, at the top of this recording, this show, there are free marketeers and limited government people on both sides of this new divide. So it could be that if you're a classical liberal, you could go on the nationalist side with a lot of the people you used to work with and try to persuade them to support free markets, limited governments. However, I think that that's a fool's errand. And here's why. I think that as is becoming increasingly apparent to people on the right, they cannot do the things they really want to do, like stopping immigration and deconnecting the US economy or other economy from the world economy in the world economic system without abandoning free markets. They're going to have to move to a more dirigist, directed and controlled kind of economy. For example, you can't simply stop immigration large scale without having major controls over the domestic labor market. For one thing, you're going to have to spy on and severely punish and regulate employers to stop them employing migrant labor. But you're also going to have to, in order to meet the labor shortages that stop and immigration would produce, you're going to have to have a very active policy of managing the labor market. So I think that if you believe in limited government, low taxes, free markets, as you and I do, ultimately, you're on a losing wicket, as we would say in Britain. If you go and try to persuade this populist new right for a back position, you can try doing it. And I know some people will and good luck, I say, but they're not going to do it. So I think what you have to do is to realize that you're actually on the left side of the new politics. And the target has to be then to persuade people who do support liberal principles like constitutional government, the rule of law, restraints on executive power and things of that sort, that the logical fit with that and the way they have to go is to support limited government. Now, you know, it's amazing how resistant people are to this. You would have thought that having seen the kind of nonsense the Trump administration has been getting up to, that this would persuade people that you really don't want to give the executive branch this kind of complete power, because you never know somebody that you really don't like might get it and use it for bad ends. But at the moment, no, there does seem to be this view that, oh, he's just an aberration. And, you know, all we need to do is to get the right person in charge, President Mandani or something, and they'll use it for good ends. But I think that, you know, that's the argument we have to make and win really, that, you know, you really do not want, if you do believe in liberal principles broadly defined, like the rule of law, and individual liberty and free association, you do not want a large and expansive and powerful state and all the rest of it, because that's actually going to work against other values you want. Yeah, I find some of that a little depressing. I mean, I think I've heard you say elsewhere that trying to ride a kind of national libertarianism or national free marketism is kind of doomed to failure. It's an unstable equilibrium. You just articulated why there, I guess, Victor Orban is actually in some ways a good example of that. He started off as a relative free marketer and over time has become more and more interventionist on authoritarian and a whole host of fronts. But then I read, then I read like Cass Sunstein's Big 10 liberalism essay in The New York Times, and it appears to me on economic issues, he basically says, well, as good liberals, we can agree to disagree on, on everything here, you know, minimum wages, the size of the welfare state, what the tax system should look like. So for those of us who economics is our primary thing that we're working on, it seems like in terms of economic policy, we could be in for quite a depressing period. I'm actually a bit more optimistic than that, because I think one of the more interesting signs is the growth of things like this abundant movement with people like Ezra Klein. So I think there is a growing sentiment on what you might call the American style liberal left, to recognize the fact that a lot of regulations, a lot of the kind of judicial regulatory state is now actually defeating its own purported ends, basically, where I think there is still tension, where, you know, people coming from what you might call a classical free market liberal position, like us do have, you know, a harder row to hoe is on the question of egalitarianism. So I think that the, the issues that Sunstein identifies, what they're mainly about is not as much regulation or state direction of the economy. I think actually that's an argument we can win. It's the argument about how much egalitarianism they should and redistribution there should be. And it may well be that, you know, that there's going to have to be a lot of give and take on both sides. The point, I think, though, actually, and you can see this very clearly, for example, in France at the moment, is that both left liberals and right liberals are going to increasingly recognize they're facing an anti-liberal threat from not just the nationalist right, but also the radical left, which is what you saw very clearly in the recent local elections in France, where both the RN was checked in some places, and the LFI, the radical left party, was totally stuffed because of the, you know, center of left and red center right coming together against it. And so I think that that's what is likely to happen. And what you'll probably get is so-called left liberals, social democrats, if you will, moving towards free market positions on things like the overall size of government and levels of government spending, government regulation, things of that sort. But the more free market liberals probably compromising on things like equality through redistributive measures of one kind or another. But that's just pure speculation in my part. But I think that's, it is, you know, it is going to be a kind of challenging period. There's no doubt about that. But then, when has it not been? Is what I would say? So I'm conscious of the fact that we're over time, but there's two more questions I really die into asking you. So the first is, where does this leave federalists? Because it seems to me, if these two identities are structured around having nationhood being key, then that perhaps lends itself in many areas to a strong national government here in Washington DC. But at the same time, if the left identitarian in this framework is kind of more globalist and in favor of global governance, where does that leave those of us who believe in the inheritance of federalism to the American system? Well, in the case in the American context in particular, I'm afraid I take a rather cynical view of this, which is that whichever party or side is elder power tends to favor federalism. You know, so whenever the Republicans are not in power in, you know, controlling Congress or the White House, they're always banging on about state rights and how we have an almighty federal government. Conversely, when they are in power, it's suddenly the Democrats who are going on about all this. And then this takes the form, of course, of states obstructing policies that the central government has done. So right now, over issues like the ICE raids and trap tariffs and things of that sort, you've had the quite a most amazing assertion of a kind of national popular will argument on the MAGA right. I'm quite sure that if the Democrats were to win the next election, federal election, that is general in two and a bit years time, you would have the reverse happen and you'd find lots of red states now looking to block federal action and lots of claims that you know, the national government should have the final say. Now, where does this leave it? Well, actually, I think paradoxically, in the United States, it may well actually ultimately end up strengthening federalism in the sense that the two sides will ultimately have to realize that neither of them can gain a decisive victory or easily do so at the national level, given how evenly divided the American people are. And therefore, it makes a lot more sense to actually try and do things to a local, more local level. The problem, and this is a big challenge, is in many ways, the big divisions are within states rather than between states. And you can see that in the electoral system. And then that's quite a big, the electoral results, I should say. And that's quite a big challenge. If you think about a state like Georgia, for example, Metro Atlanta and the rest of Georgia, they've got radically different politics and policies. And that's why the state itself is always on a knife edge these days, similarly, North Carolina, similar kind of division. Personally, I think, you know, you should look at breaking up the states into smaller units, but that's my kind of, you know, view for an outsider looking on. But I actually think that federalism is probably going to actually grow in importance in years to come. Once it becomes clear that neither side is going to get the decisive knockdown and the argument victory that they currently each think they're going to get. So if you think about the realignment framework and the aligning issue framework, you said for a long time, it was capitalism against socialism or some form of social democracy. And that ended in a degree of consensus, right? You had fairly liberal capital markets, fairly liberal migration flows, but at the same time, extensive welfare states in many of those countries are now experiencing this realignment. I'm going to ask you to put your predictive hat on and recognize there's no kind of final victories in politics. If in 40, 50 years time, somebody's talking about the consensus that emerged from this realignment, what would the policy bundle look like? Oh, now that's a big question. And I honestly, I'm not trying to duck the question. It's impossible to answer that. So let's say you had been asking me this kind of question in the 1920s about the new alignment that began to appear in Europe, and also even in the United States at that time. Progressivism versus, you know, old style American individualism, as they would have said. The answer is that the outcome of that was determined by political contestation, by intellectual debate, by election campaigns, by political victories, political losses, and also by political compromise, because the nature of politics as a process is that it's a process in which nobody gets all that they want. Because politics is a way of settling differences of view and conflicts of interest without resorting to violence. And what it normally does, but it takes several typically 45 years, is it develops a modus vivendi. But what that modus vivendi, this thing that everyone accepts as, you know, their second best option, or maybe third best option, but still what they can live with, that depends entirely on how the politics works. And it'll be different from one place to another. So I don't know what that will be. What I would say, by the way, it was one other thing, which is that I'm quite confident about this prediction, which is that in any stable alignment, there's one big aligning issue, but there's also typically one, sometimes two secondary aligning issues, which divide the two big blocks into sub blocks. And from the 1960s through to about the 1990s, the second big dividing issue was social conservatism versus social liberalism. And that issue has pretty much gone away. The old economic divide is now the secondary one. Now, I think we are probably going to arrive at some kind of economic consensus pretty quickly, which I think is going to be broadly a private enterprise economy, a smaller state in some ways, certainly less spending, but a more active state in other ways. And various kinds of measures which are intended to promote gradual quality, I'm not, you know, happy with that, but it's better than some of the kind of radical alternatives like state-owned grocery stores and that kind of bloody nonsense. So I think that's what we'll end up with. Now, I think what will happen pretty quickly is that actually that issue will be replaced as a secondary issue. And I think the secondary issue is going to become how you feel about technology, and particularly whether you are a kind of techno enthusiast or a techno skeptic. And that's an issue which in the classic nature of the secondary ones cuts right across the new alignment. So on the nationalist side, you've got people like, say, Peter Thiel or Elon Musk, who are transhumanist, you know, technophiles, think we should be colonizing Mars and, you know, changing, uploading ourselves into silicon and this kind of thing. And on the other hand, you've got people like the aforementioned Patrick Deneen, who are very much techno skeptics, do not like this at all, and you get exactly the same divide on the left. There are people who are deeply skeptical of and hostile towards, say, modern communications technology, social media, things of that sort, and other people who are like Ezra Klein, for example, who are big fans of new technology. So I think we're going to see, if you go forward about 10 years, certainly 15 years, but I would say as soon as 10 years, we're going to have huge arguments about science policy and the attitude we take towards technology, particularly as AI starts to eliminate an enormous swathe of graduate middle class employment. I think that's going to spark off a really big argument around that. Well, I'm afraid we'll have to speak more about that another time. We did have a recent episode about AI and the techno skepticism among people in the general population about AI is really quite profound at the moment. So that's something that we need to watch. Steve, I really appreciate you being here and abusing your time like this. That's all we've got time for here today. Just a reminder to our regular listeners that at the moment we're engaging in a podcast survey exercise. If you feel like there's things that we could be doing better on this podcast, you can go to kato.org slash podcast survey. That's kato.org slash podcast survey. Let us know what you think about our current formats and how things could change. But again, Steve, thanks so much for being with us and we'll see you all next Tuesday for the next edition of the Kato podcast.