Answering Krugman: How America Got Here

What Krugman got right—and what he missed

It's not one man's dementia. It's fifty years of ideological surrender.

Paul Krugman asks the right question in his latest piece, “It’s Sundowning in America”¹:

“How did a great, sophisticated nation, one of the world’s longest-standing republics, end up so fragile that it can be undone by one man’s dementia?”

He hints at an answer—”the straight line from Bush v. Gore and the Roberts Supreme Court, to January 6th”—but doesn’t develop it. Let me.

The Short Answer

Because for fifty years, one side had an ideology and the other side had procedures.

In 1971, corporate lawyer Lewis Powell wrote a confidential memo to the U.S. Chamber of Commerce titled “Attack on American Free Enterprise System.” It was a battle plan: build think tanks to reshape public opinion, capture the courts, monitor and attack media, reshape university curricula, mobilize corporate political power. Two months later, Nixon nominated Powell to the Supreme Court. The Senate confirmed him without ever seeing the memo.

What followed was the most successful ideological project in American history. Heritage Foundation. Cato Institute. ALEC. The Federalist Society—to name a few. These weren’t random organizations—they were a coordinated network, funded by the same donors, pursuing the same vision, playing a fifty-year game while Democrats played election cycles.

Manufacturing Division

But institutions alone don’t win. You need soldiers. And soldiers need enemies.

The Powell network didn’t just build think tanks—they manufactured identities and moral panics to divide people along lines that served extraction.

Consider: In 1971, the Southern Baptist Convention supported abortion access. They reaffirmed that position in 1974. But by the 1980s, thanks to organizations spawned from the Powell network—the Moral Majority, Focus on the Family, and their successors—a political project to rewrite evangelical identity, independent of any real theological process, had begun. The goal wasn’t saving souls. It was building political power for the broader neoliberal project.

And it worked. Case after case, moral panic after moral panic, the same institutional network drove division across race, class, and religion: Reagan’s “welfare queen.” The War on Drugs. Same-sex marriage. Critical Race Theory. DEI. “Woke.” Gender identity. Each panic manufactured, each enemy identified, each division exploited—all to keep working people voting against their economic interests while feeling righteous doing it.

The extraction machine didn’t just capture institutions. It manufactured the identities that would defend it.

The Democratic Surrender

But here’s where Krugman’s framing falls short. This isn’t just a story of Republican capture. It’s a story of Democratic surrender.

After Reagan obliterated Mondale in 1984—525 electoral votes to 13—Democrats faced a choice: fight back with a competing vision, or survive by accepting Republican premises. They chose survival.

The Democratic Leadership Council. The Third Way. Bill Clinton. The strategy: become more like Republicans. Accept Reaganomics. Embrace deregulation. Distance from labor. Talk tough on crime. Gut welfare.

And they delivered. Clinton signed the 1994 crime bill that accelerated mass incarceration. He signed welfare reform that gutted the safety net. A Democratic president wielded the very weapons Reagan had forged.

It worked—in the narrow sense that Democrats won elections. But survival at what cost? By accepting Republican economic premises, Democrats legitimized the extraction system they should have dismantled. Both parties now served capital; they just differed on how much empathy to perform while doing it.

The Ideological Vacuum

This is what Krugman misses. The fragility isn’t Trump. The fragility is that liberalism—as actually practiced—is a set of procedures without an anchor.

Liberalism tells you how decisions should be made: free elections, free speech, rule of law. But it doesn’t tell you what society should be for. It refuses to impose a vision of human flourishing—that’s supposedly a feature, not a bug.

And here’s the tragedy: all the good things liberalism promised—multiculturalism, secularism, free trade, diversity, feminism, tolerance, democracy itself—could have been used to build broad-based prosperity. Instead, they were weaponized to concentrate wealth for the few by exploiting the many, at home and abroad.

So when working people watched their conditions worsen decade after decade, while being told that free trade and diversity and tolerance were making everything better—is it any wonder they started to see those values as threats? They’re not irrational. They experienced liberalism’s promises as lies. Not because the values themselves were wrong, but because the values were deployed as cover for extraction.

Whoever has the most power gets to decide what the procedures are used for. And when people turned against liberalism’s tools, they weren’t wrong to do so. They were wrong about why.

The problem was never diversity or tolerance or free trade. The problem was that these values were never anchored to human flourishing. For example:

• Multiculturalism: Used to justify cheap labor

• Feminism: Wielded to normalize two-income households—not as liberation, but because one income no longer paid the bills

• Free trade: Shipped high-paying jobs overseas

• Democracy itself: Used to capture courts, entrench power, and legalize corruption

These are just a few. Each made people more productive—and each siphoned that productivity to the top. Decade after decade, everything liberalism promised would make our lives more prosperous ended up doing the opposite for vast swaths of the population.

And each step of the way, there was no real opposition. No alternative vision. No meaningful counter to the moral panics or the scapegoating. Just two parties fighting over how to manage the decline.

We Knew Better

None of this was inevitable. We were warned.

The U.S. Army told us in 1945, as they fought the Nazi scourge:

“Lots of things can happen inside of people when they are unemployed or hungry. They become frightened, angry, desperate, confused. Many, in their misery, seek to find somebody to blame. They look for a scapegoat as a way out. Fascism is always ready to provide one... Only by democratically solving the economic problems of our day can there be any certainty that fascism won’t happen here. That is our job as citizens.”²

We failed to heed that warning. For fifty years, wages stagnated while productivity soared. Debt became the new chains. Healthcare, education, and elder care became extraction points. The bottom 50% of Americans saw zero net wealth growth since 1989 while the top 1% tripled their share. And when people are desperate, frightened, and looking for someone to blame? Fascism provides the scapegoat. Christian nationalism provides the identity.

Trump isn’t an aberration. Trump is the logical conclusion. Fifty years of stagnant wages. Fifty years of manufactured moral panics. Fifty years of both parties serving capital while performing different flavors of concern. Fifty years of liberalism offering procedures while the other side offered a vision—even if that vision was extraction dressed in freedom’s clothing and sanctified by a Christ they’d remade in their own image.

When the system stops working for people, they stop believing in the system. That’s not dementia. That’s math.

The Only Way Out

So what’s the answer? Not better procedures. Not more tolerance. Not trusting that voters will eventually see reason.

The answer is a competing worldview. A vision of what society should actually be for—one anchored in human flourishing rather than shareholder value. A framework that doesn’t just constrain extraction but builds something worth defending. One that understands it’s in a fight against a fifty-year-old ideological machine—and has the teeth to win.

I’ve spent several years working on exactly that question. The Freedom Illusion is a five-part series that builds the full case I’m summarizing here:

• Part I: The current architecture of extraction

• Part II: Its 400-year history

• Part III: Why liberalism couldn’t fight back

• Part IV: The human toll

• Part V: A blueprint for the solution we need

The entire series is free. No paywall. Because the seriousness of this moment demands that the solution not be gatekept. If Krugman’s question matters to you—and it should—the answer isn’t in another election cycle. It’s in building something worth fighting for. Come see what we’re building. And help us bring it to life.

Read The Freedom Illusion →

1. Paul Krugman, “It’s Sundowning in America“, Paul Krugman Substack, January 20, 2026.

Krugman’s piece documents Trump’s deteriorating mental state and asks how America became fragile enough to be undone by “one man’s dementia.” He identifies enablers—Stephen Miller, Scott Bessent, Pete Hegseth, Kristi Noem, Kash Patel, and cowardly Republicans in Congress—and hints that the answer lies in “the straight line from Bush v. Gore and the Roberts Supreme Court, to January 6th,” but explicitly declines to develop the argument, calling it “an important question” while focusing instead on the immediate crisis.

2. U.S. War Department, “Army Talk Orientation Fact Sheet #64 - Fascism!“, U.S. War Department, March 24, 1945.

An official Army orientation document distributed to American soldiers during World War II, explaining the nature of fascism and how to recognize it. The document warns that economic desperation creates fertile ground for fascist movements, and that “only by democratically solving the economic problems of our day can there be any certainty that fascism won’t happen here.” Eighty years later, we failed to heed that warning.