And the blue states have never been more blue.
By now, practically every obituary for 2017 that can be written within the confines of conventional wisdom has been filed and placed in the ever-expanding library of hot takes. And as usual, most of those hot takes have to do with Donald Trump.
We are told, for example, that 2017 was a year where Trump ultimately triumphed, a year where he miserably failed, a year where he did both at once (?!!!) a year where he missed too many opportunities, and a year where he fulfilled many of his core campaign promises. And conversely, the fate of Trump’s political rivals, both Right and Left, has been debated endlessly. Those debates are worth having, even if by this point they’ve been done to death.
However, in all this discussion, a key question seems to have been overlooked, and that is the question of money. Who ends 2017 with their pockets flush, and who ends it pulling out their pockets looking for loose change? In this respect, I think the answer is obvious: 2017 is the year cultural liberalism – and its bastions in the United States – began to show noticeable financial strain: strain that will likely only get worse in the coming year.
Let’s start with the most obvious, albeit the most recent, sign of this collapse: the passage of the Tax Cuts and Jobs Act. As James Piereson notes at American Greatness, this bill marks the death knell of the so-called “blue state model,” which relies on high taxes and oppressive regulatory schemes in order to function. Because the Trump tax bill caps the amount of state and local taxes that can be deducted from one’s tax return, the ability of those states to effectively charge their richest residents through the nose for the privilege of living within their borders will be severely curtailed, as rich taxpayers suddenly begin to pay attention to tax hikes. A state that cannot keep its richest citizens is not only a state where revenue is sure to decline, but also a state that is less likely to see investment, as business owners and employees will be leery of working in states where higher rates of return on investment could translate into higher taxes for them personally.
This is particularly problematic for landmark blue states like California, and New York, where large amounts of very rich and very financially aware people make their homes. The only ones who stick around will likely be from legacy industries that may soon found themselves outcompeted by cheaper, lower-taxed versions of their products elsewhere.
In fact, let’s stick with California as our example on that front, because, as it happens, its two biggest legacy industries — the film industry and the tech industry — have been melting down through much of last year. In film, the zealousness of the #MeToo movement has wreaked havoc on the business model of Hollywood by exposing some of its biggest titans and names as sexual predators, while also veering ever close to McCarthyism in its own enthusiasm. How long before new, upstart talents and film studios decide they would rather avoid both forms of toxicity and do business someplace other than Hollywood, CA?
And Silicon Valley? Aside from Amazon, the troubles they face could fill a book, and have. While the biggest black eye suffered by the industry was no doubt the fall of FCC’s Net Neutrality regulations, which were ended last year in spite of massive public pressure from Valley-backed forces, leading to a politically senseless tantrum by the industry, the troubles of the region had been building for a while before that. The increasingly dubious decisions by Facebook to censor private users, while looking the other way at paid advertisements from foreign governments, and the wild, senseless purges conducted by Twitter intensified suspicion and disgust toward social networks. Google’s decision to throw out a conservative engineer for no other crime than being conservative, and then to force firing of a liberal anti-trust scholar for calling out their abusive behavior, turned the search engine giant from an image of benevolent user friendliness into a terrifying, Orwellian Big Brother that arrogated to itself the power to act as an HR Department to the world. And the sharing economy, as embodied by Airbnb, went from defiantly airing Super Bowl ads reminding President Trump that #WeAccept to discovering that what they were actually accepting was everything from spying on residents to money laundering to prostitution, to drug dealing by preteen children.
And now, having gone on the aforementioned tantrum against the FCC for repealing net neutrality, which saw tech titans do everything from publicly speculate on how to shut down FCC Chairman Ajit Pai’s internet connection, to actually silence Pai himself on YouTube, how long before the Trump administration starts considering actually putting the screws to tech titans through mechanisms such as antitrust laws? And if it does, how long before more mercenary and less Social Justice-inflected alternative tech companies spring up elsewhere, ready to sweep up the exodus of users and money?
The fact is that 2017 looks like the prelude to a much larger story: the story of how the Trump era’s political battles were settled not so much by President Trump’s virtues, but by his opponents suffering endless self-inflicted wounds. For now, at least, those wounds have done worse than draw blood: they have made their sufferers bleed money.
Picasso’s Blue Period (YouTube)