Income Voters

The mindsets of bond investors versus stock investors came to mind as I was pondering the current political climate.

Bond investors have a limited upside; the best they can do is get their interest checks and their principal back. That gives them a limited upside and a more drastic downside. Bondholders and stockholders can both lose their investment, but stockholders have (in theory) an unlimited upside, giving stockholders a higher tolerance for risk than bondholders; bondholders often put covenant clauses in bonds limiting the financial risk the company can subject them to.

Blue collar voters are more like bond investors. They have a limited upside to their income barring going to school or starting a business, but can be devastated by economic downturns or added economic competition, be it from imports pressuring the business they work for or immigration creating direct competition for their labor. That's going to make them risk-averse on economic change, anti-immigration and anti-imports. Their precarious economic position has them cast as the Precariat by some sociologists.

That's not the mindset of your typical white-collar Republican leader. They'll be pro-free trade, pro-economic growth and not all that worried about immigration. Thus, we have a disconnect between the blue-collar conservative and the GOP establishment, just like bondholders and stockholders have in the corporate world.

That's also not the mindset of your typical white-collar Democratic leader. They have a shot at appealing to this block with stronger union rights giving unionized folks a better negotiating position (along with more donations to their cause) and a higher level of skepticism of free trade. However, their party bosses have a different set of priorities and often a different spiritual and cultural world-view that's not threatened by globalization and immigration.

In the political world, there aren't many good analogs to bond covenants keeping the party bosses from ignoring folks with different risk-tolerance sets. A sense of patriotism and traditionalism on moral issues and on guns can placate the GOP-leaning folks, but it doesn't address the core economic anxiety they have.

The Donald appeals to that blue-collar conservative, being anti-immigration and a free-trade skeptic. He can also appeal to patriotism (Make America great again) and at least a tribal-level defence of "Christian" values. He's not all that conservative outside of being patriotic and nativist, but neither are his core fans, who have little upside in a libertarian vision of America.

The German elections of Sunday show an interesting variant of that. German patriotism has been a dirty word post-Hitler and the Church isn't all that strong, so their mainstream conservative parties don't have the "God, the flag and guns" shtick to work with nearly as much as their US counterparts do. That will leave blue-collar folks, especially in eastern Germany where the DDR days nuked Christianity, natural leftists... 

.... Unless a leftist faith in European integration, globalisation and xenophilia runs counter to the fears of their precariat. Thus, you saw the anti-immigration AfD drawing more from the left than the right.

There's more than a knee-jerk redneckism in Trump voters, and folks dismiss it at their peril. Those voters often have different economic and cultural priorities than elites in both parties, ones the elites would rather not address.