Sutherland: What’s Wrong with America?

mitt-romney-35df95759d8b8e46People have been asking for my take on this year’s presidential race… 

And as someone who’s been a political enthusiast for decades, I should be able to make an informed guess on what’s likely to happen in both parties, right?

However, this year we are in uncharted waters, with voters so angry and frustrated that they are willing to support protest candidates they never would have considered before like Donald Trump and Bernie Sanders.

The first question that must be answered to get even a semblance of an understanding of what’s going on is why are people so upset.

I would submit the answer is so obvious that it is like the Edgar Allen Poe story, “The Purloined Letter,” where the critical evidence is “hidden in plain view.”

The root cause of American anxiety is the precipitous decline in the manufacturing sector of the economy over the last 45 years, a trend particularly marked in heavy industries like steel and automobiles. 

Economists and social scientists agree with impressive unamity that two years are of particular significance in post-war history: 1973, when wage growth stopped for average Americans, and 1979, when the income gap between the wealthy and the rest of society widened significantly.

These trends are usually conflated into the catch phrase, “the erosion of the middle class.” 

I would submit that they are different and distinct phenomena and that what we’re really seeing is the disappearance of high paid (often union scale) blue collar jobs in manufacturing, WHICH AFFORDED WORKING CLASS FAMILIES A MIDDLE CLASS STANDARD OF LIVING e.g. a chance to own their homes and send their children to college.

BwoFG4OCcAAQC8fIn the late 1950’s and early 1960’s, American car makers completely dominated the domestic market, and had 75% of the world’s automobile market share.

If you follow the rise of Japanese imports in the 60’s and 70’s, you can follow the matching decline of Detroit, accelerated by the oil shock of 1973.  By the same token, the surge in imports of foreign steel from Japan, South Korea, and Europe in the 1970’s culminated in the 1982 collapse of the U.S. steel industry in rust belt regions of Ohio, Pennsylvania and upstate New York coinciding with the recession that year.

More recently, environmental regulations, particularly anti-global warming measures, have devastated coal mining in the U.S.  Hillary Clinton did a good job in last week’s debate describing the plight of America’s coal mining regions but with no seeming recognition that the policies of the Obama administration had anything to do with it.

The_Purloined_LetterThere does seem to be a dawning awareness that the white working class has been hit particularly hard hit by these developments.  Candidates in this year’s elections in states like Illinois, New Hampshire, and Pennsylvania have been stunned by the epidemic of drug abuse.   All the statistics of social pathology have soared in this demographic, with working class men even showing a decrease in life expectancy.

As I noted earlier, a large part of America’s decline can be attributed to trade, i.e. a flood of cheap imports and the moving of many jobs off-shore. 

In a particularly worrisome 2010 story from Reuters, a frightening statistic was noted. There’s a whole field of contracting that specializes in dismantling American factories.  The trade journal that covers that specialty showed that after the 2008-2009 recession the number of our manufacturing plants being disassembled and shipped to Third World countries tripled.

Reuters Special Report, 12-16-10, “Is America the sick man of the globe?”

However, technology has also resulted in two social trends that people are bothered by.  Whole categories of workers have been rendered obsolete.  Who hasn’t been to a retail store where there is self-checkout, or tried in vain to talk to a human operator when making a telephone call?  By 2050, the advances in artificial intelligence promise to put an even larger share of the work force into the category of the structurally unemployed. See Rise of the Robots: Technology and the Threat of A Jobless Future, Martin Ford (2015).

poy_cover_z_1215If you are upset by the growing gap between rich and poor, technology is a double whammy.  Not only do those without training or skills fall farther behind, those with technical abilities can amass vast fortunes overnight.  Who are the richest Americans?  Bill Gates, Mark Zuckerberg, et al. all made their fortunes via technology break-throughs.  Even those enriched by more traditional means (finance, oil & gas) have multiplied their fortunes exponentially through technology, e.g. fracking and algorithms to trade stocks.

Regardless of what sector of the workforce is hit by the layoffs, the wage losses from unemployment have a ripple effect throughout the entire economy.  It’s an accelerating negative feedback effect, i.e. coal miners who lost their jobs can’t buy cars or trucks, lower car sales means less demand for steel, job losses in a community decimates real estate values and the tax base which supports schools.

These trends, which originated 40 plus years ago, are what have brought us to the present impasse.  These are the reasons labor force participation rates are at historic lows and so many 30 somethings have moved back in with their parents.

UnknownWhile today’s leading protest candidates may be aware of the problems, neither seems to have a clue about what to do.

Globalization causing massive job losses? Let’s just slap a 35% tariff on Chinese imports! (Never mind that an equivalent protectionist measure, the Smoot-Hawley tariff, started a trade war in 1930 and made the Great Depression much deeper and more prolonged.) Let’s do away with the policy of “too big to fail”! (Never mind that the federal government for years put limits on the size of banks so that when the crash came in 1929, fully 40% of America’s banks closed.  This was a policy which could have been called “too small to survive”.)

Why would any sentient person want more banks to fail in the next financial crisis, so more people would be thrown out of work, more businesses and consumers lose their sources of credit, to say nothing of the millions of depositors who would have to be made whole by the Federal government when the institutions which held their accounts failed?(This is the necessary logic of “breaking up the banks”,i.e.if none is “too big to fail”, its failure poses”no systemic risk”,it will be thus easier to let them fail the next time there is a severe financial crisis.)

A big part of the confusion is the indiscriminate use of the term “banks” to apply to a whole range of very different financial institutions.  I feel very differently about a community-based, traditional bank and a Wall Street investment firm which gets in trouble by excessive leverage and speculation.  Why lump them together?

The other source of misunderstanding is the bizarre notion that all these problems are the result of conscious policies by the U.S. Government over many years, under both Republican and Democratic administrations.

I’m constantly amazed at the depiction by presidential candidates of American society as a “stacked deck” or a “rigged game”, irredeemably racist, corrupt, and repressive and incapable of reform without “extreme” or “revolutionary” measures.

I remember segregated bathrooms from my childhood.  I remember when the public schools in Missouri were segregated by law.  I remember when the right of black people to vote was denied in large sections of the country.  I remember when there were only a handful of women in the professions.  I remember when all the institutions of power and influence in the country were almost exclusively comprised of white males of Northern European descent.

I would submit that this country has shown itself quite capable of evolutionary change.  There is no need of going to extremes, especially since the criticisms are so completely off base.

If America’s present unhappy status is the result of a deliberate plan to enrich the plutocracy at the expense of America’s “working families,” why are the same dilemmas being faced by the rest of the developed world? 

Unemployment is double the U.S. rate throughout Western Europe, hitting 25% among young people in Spain, Italy and Greece.  Japan has never recovered from a slump that started in 1990(!), despite all the “experts” who said the Japanese would dominate the world economically into the indefinite future.

If the corporate elite calls the shots and has so rigged the electoral system as to be unassailable, why wasn’t Mitt Romney elected president?  If the campaign finance laws are so stacked against “progressives,” how was Barack Obama able to raise $1 billion for his election and decline public financing? How has Bernie Sanders managed to catch up so quickly to Hillary Clinton in fundraising?  Why did tycoons left (George Soros, Tom Steyer) and right (the Kochs, Sheldon Adelson) spend hundreds of millions of dollars to no avail in the last two election cycles?

The other dismaying thing is that neither of the so called anti-status quo candidates offers any realistic hope of change.

Trump’s entire message can be distilled down to, “Trust me, things are going to be terrific!” Sanders at least has specific proposals (“Soak the rich!” “Jail the bankers!”), but still can’t make the numbers add up in explaining how he will pay for all he’s promised.

I will admit that Sanders has grown as both a person and a candidate over time.  He used to call for liquidating the Rockefeller family as class enemies and confiscating their assets.  Nowadays he’s shifted his focus to the Walton family, of Wal-Mart fame.

Who says Bernie is stuck in the past and hasn’t changed with the times?

Not only does it feel like I’m living in Weimar, Germany, with two equally unpalatable alternatives.  What’s particularly discouraging is that well regarded public figures, who are sophisticated and knowledgeable, are willing to exaggerate or dissemble about the current crisis, with no shame or embarrassment.

462964299When Robert Reich spoke here on his new book, Saving Capitalism, on October 5th, he said that believers in a market economy know that there have to be rules under which free markets operate in order to be regarded as fair in the results they produce.

Reich (Rhodes Scholar, Harvard Law Graduate, cabinet member and longtime professor) said that an example of a lack of rules that led to a perception of unfairness, was the fact that it is not illegal in the United States to engage in trading securities based on confidential, inside information.

rewrewrr435435345This would come as news to domestic goddess Martha Stewart, or hedge funder Raj Gupta (Kansas U.S. Senate candidate Greg Orman’s business associate), or the thousands of other people investigated, prosecuted, and jailed for insider trading under Section 10b-5 of the Securities Exchange Act of 1934 over the years.

If someone of his background and record of achievement can engage in such blatant falsehoods in front of an audience of over a thousand people AND NOT GET CALLED ON IT, we are truly at a turning point as a nation.

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21 Responses to Sutherland: What’s Wrong with America?

  1. First off only stomp asked you to write…no huge outpouring for your opinions.
    But there are some excellent parts in this story. congrats southy…this is probably
    one of the best articles in a long time on kcc.
    I have to wonder how we stop the companies relocating to other countries
    when the costs of production and labor are so much lower overseas.
    But the pols have been taken over by the large corps. Saw where Koch brothers
    are spending 10 million a year to shut down the electric car industry which if
    it takes hold would create millions of new jobs….reduce emmissions…..but these
    corp pirates want to protect their interests and so they will try to disrupt the
    forces that see billions in new dollars turning in this nation.
    They want to keep the ethanol subsidies for the corn growers…the sugar subsidies
    for that industry….even subsidies to the rum industry/farm industryies/and special
    government boondoggles that give tax breaks to projects that go bk or cost
    the government billions of taxpayer dollars over long periods of time.
    change is needed….there are 3-4 million job openings. Go to indeed.com.
    We just don’t have the skilled workforce to fill them.
    I could go on…time is short…
    but I hope you haven’t fainted after my compliments but this was a very
    good article .
    And Robert Reich knows insider trading is illegal. But with their algorythms and
    super speed computers the wall street and financial institutions know they got
    the economy in their pockets.
    And it’s me…me…..me…..me……and people are wanting a change but the pols
    and government is so satiated with money it will be near impossible to
    really change the path we’re on.

  2. Jack Springer says:

    Honestly, I have no idea where we are headed. Our current presidential candidate class is sorely underwhelming — is this group a reflection of what we have become as Americans? I hope not, but I think it may be.

    Our current President seems to relish the fact that he has created a greater divide within America similar to the 1960’s — I assume that was his opportunity to ‘forever change America’. He’s succeeded.

    However, it’s not all Obama’s fault, America has lost the furor it had in the 1940’s, 50’s, 60’s, and 70’s. Our families have fallen apart, our entertainment is watching murder and violence on tv and at the movies, we gossip on facebook and twitter, as a country we’ve stop going to Church — we’ve lost our way.

    Where do we go from here — that’s what everyone needs to answer and do something about it.

  3. Stomper says:

    Great piece, Dwight. Well thought out and well supported.

    Yes Harley. I did ask Dwight to offer his unique insight but the unique insight that I wanted was his take on who was going to end up getting the GOP nomination. As noted, Dwight has been active in GOP party politics for a long time and has attended multiple national conventions as a voting delegate. He has seen first hand the machinations of the party establishment as well as the party outsiders in maneuvering to select the candidate to face off against the Democrats in the general election. What I was hoping for was his educated guess on who among the current candidate would be the last one standing.

    I have expressed multiple times here that I did not believe that any of the “outsiders” (currently Trump, Cruz, and Carson) would make it to the end and the eventual winner would be from the establishment group of Rubio, Trump, and Kasich. My belief is based on my perception that the “establishment”, especially on the GOP side is extremely powerful and would flex the necessary muscle to ensure one of their own would triumph. I still think that.

    Dwight, who do you think wins the GOP nomination ?????

    • the dude says:

      The real people in power (not the electorate) wanted Obama to be president, Dwight. That is why Mittens didn’t get elected.
      If people really wanted to change the course of our government they should pay more attention to congressional elections but they don’t. For most purposes the President is a figurehead with limited powers.

    • Stomper says:

      oops, I see I included “Trump” in the establishment group in my initial comment above when I meant Bush. It’s hell getting old.

  4. stomp….if you read my articles going back months…I said it would be hard to
    beat trump with the other candidates splitting up the so called “establishment”
    vote.
    This weekend bush and possibly carson fall out…maybe Kasich…which leaves
    cruz and Rubio to split the 60-65% of repugs that would not vote for trump.
    Again…its the Hispanic vote that determines the winner in 2016…and I doubt
    any of them (repubs) can get over 15-20% at bestwhich makes this election of landslide proportions.
    stomp: Harley was right on perfect in 2012. you can waste your time but
    Harley will be right in 2016.
    proportions

  5. Dwight D. Sutherland, Jr. says:

    Isn’t the idea that the “real people in power”,which I assume means the corporate oligarchy,the” Millionaires & Billionaires” who Bernie keeps screaming about,can manipulate the electorate to vote the way they’re supposed to? Why would they want Obama over Romney? What good has the Republican control of Congress done them,if that’s really where the power lies? Why haven’t they been able to give HRC an easy walk to the nomination and the general election,if that’s there current preference? I’m sorry, I don’t think that there is an Establishment anymore! If it still exists,here in KC,as well as at the state and national levels,its a shadow of it’s former self.

    • Stomper says:

      Ok, maybe that’s the answer I wanted from you, Dwight. If you don’t agree with my thought that the GOP establishment will be strong enough to stop Trump or Cruz, despite the fact that they don’t want either to win, maybe you DO believe that the anger with the voters will push Trump to the nomination.

      I don’t agree but your street cred trumps mine (pun intended :))

      Thanks,

  6. this isn’t over…and there are many twists n turns to come.
    As the “establishment” candidates willow down those votes in repug primaries
    will go to others than trump.
    When the dem campaign gets out of “white country” Hillary will get stronger
    but she’s made some strategic mistakes especially with her money.
    Trump will be the nightmare for repubs once the primaries are over.
    I have seen what his record is…his stances…and his skeletons and
    even though he “knows” how to operate in the politicial world he will
    make Romney look like an angel.
    The repug establishment has done nothing for their base. That’s why they
    are upset.
    Eventually Obama will come in and swing primaries to Hillary and get out
    the AA vote which will make a huge difference…but Hillary has to get someone
    in there who knows how to handle campaign capital….and real fast!

  7. streamfortyseven says:

    The reason that Trump is getting so much support is that he appeals to those workers who have become structurally unemployable, due to the government-aided destruction of US manufacturing. People who had unionized skilled labor jobs, the income from which could go to supporting a middle-class lifestyle, lost them, forever, when the companies outsourced their manufacturing. This trend continues today, with the closure of Carrier HVAC manufacturing in the US and its transfer to Monterrey, Mexico. 1400 workers will lose their jobs – and so will lots of other people in their communities. They won’t be able to afford retraining, either. Donald Trump tells them that he’ll bring their jobs and security back. No other Republican candidate has said anything like that. Can you blame them for supporting Trump?

    Same case, pretty much, for Sanders, except that the majority of his support comes from people who are about to become structurally unemployable, and who at the same time, have amassed unpayable and undischargeable debts from their mostly unmarketable college degrees. They naturally see that “capitalism” has failed them – as the current system has, although it’s more socialist in a lot of ways than they’d like to think – and when Bernie promises them relief from debt, free college, free medical care, and jobs in federal programs akin to the Civilian Conservation Corps or the Works Projects Administration, they look to him for help out of their horrific situation. Hillary promises the status quo, more of the same. Who do you think will get the enthusiastic support?

    And both parties definitely have an Establishment, especially the Democrats, under the eagle eye of Debbie Wasserman Schulz, an old buddy of Hillary’s, who has shown no compunction about changing the rules to favor Hillary and put Sanders at a disadvantage. And this Establishment is the same set of people who make up the Superdelegates – and Hillary’s got them squarely in her pocket, all 712 of them. And she only needs 2932 delegates to clinch the nomination. Of course, if she plays these cards, she’ll get the nomination, at the cost of directly demonstrating that the Democratic Party “democracy” is a rigged game.

    As for the Republicans, it’s not quite so definite, but it’s obvious that Trump is the outsider, and that the Party Establishment has its own favorite – anybody but Trump. It used to be Jeb Bush, but he’s down for the count; currently, it’s Cruz, but he’s got a bit of a problem now, because a federal district judge has allowed a lawsuit to survive a motion for summary judgment, which may put him out of the race, “God’s Will” or “God’s Anointing” notwithstanding. The new Great White Hope for the Republicans may be Rubio – and if the GOP pull a Ron Paul on Trump, it’ll show, similar to the Democrats, that the Republican nominating process is another rigged game – and Trump’s supporters are not likely to be pleased.

    The difference between Trump and Sanders is that Trump can afford a third-party run, like Ross Perot, whose Reform Party is still on the ballot in many states, including Kansas. A race between Hillary, Rubio, and Trump might well put Trump in office with a plurality. If Trump is forced out of the race by some means, fair or foul, then the risk is the alienation of a large percentage of an angry, aroused electorate. History has shown that this sort of thing does not turn out well.

    Recall the Weimar Republic, where most of the workers were structurally unemployable or about to become so, the Establishment was thoroughly corrupt and had electoral processes thoroughly rigged (or so they thought), and a fellow came along with a program to make Germany Great Again… What will the new version of Die Fahne Hoch be?

  8. Orphan of the Road says:

    Glad to see this piece. Whether we agree or disagree, it is good to see events and patterns laid out for us to examine. Kudos to the author for expressing his observations in such clarity.

    As a radical Conservative ala Studs Turkel, I find myself more in align with the Libertarians. But, alas, I am not selfish enough. Nor do virtues rise to the top but rather values invented by those who can fool the public.

    PJ O’Rourke has been popping up on CNN lately Said he’d vote for Hilary over Trump. That was an eye opener for sure!

    “At the core of liberalism is the spoiled child — miserable, as all spoiled children are, unsatisfied, demanding, ill-disciplined, despotic and useless. Liberalism is a philosophy of sniveling brats.”

    “The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. Republicans are the party that says government doesn’t work, and then they get elected and prove it.”

  9. chuck says:

    D.S.

    Excellent article and excellent comments for the most part, but, I think there is a “yuge” hole in your article. There is no mention of the exponential growth of the Federal Government and the resources arrogated from middle class tax payers to fund the necrosis. You mention the Fed obliquely in conjunction with environmental issues and banking, but not the actual costs that is assigned to the shrinking middle class tax payer, in terms of support for the Kleptocrat/Plutocrats that suck the life out of our nation with out of control salaries and pensions acquired by way of government union power.

    The costs of maintaining enormous and expensive legions of government workers who “earn” twice as much as their private sector counterparts should be noted not only for actual costs, but as a driver and issue in this election and in this winter of our discontent.

      • chuck says:

        I like that he mentions the fact that “Significant Others” vote with Government Employees. 21,000,000 Government employees.

    • chuck…the fed government is now smaller .
      taxes are lower and remember brownie in Kansas raised sales tax 17%
      and that’s where the real hurt is being put on working class families.
      the answers to our problems are real simple…but the pols and their
      masters won’t let the answers be initiated…hence we have these
      problems…
      but the economy seems to be picking up steam. had the rethugs let
      the jobs bills go thru we would have had a booming economy…but
      they said from day one that Obama would get nothing even if it
      was positive for the econmu.
      17 million amereicans with insurance….ACA changes and improvedments
      were being suggested and presented by dems but repubs said no.
      Kasich was the best of these rethugs……7 years and they’ve present not one
      rational plan on the high cost of insurance……..out they go folks. They’ll
      really feel the “bern” when the milliiions Bernie brought into the system
      come out and vote democratic in November…
      bye bye southy and your gang of fools….you’ll deny trump the nomination
      then he’ll help you implode your party.
      rip rethugs!

      • chuck says:

        “Sorting through the numbers used to calculate the total federal workforce can be tedious, but the insights gained are valuable. Of particular importance, the size of the federal workforce, including the shadow, is far greater than the usually cited statistics reveal. For example, the true federal workforce accounts for about 60 percent of all government employees, compared to the 13 percent claimed by the Office of Management and Budget (OMB). Similarly, true federal employment accounts for sixty-four jobs per thousand, a figure nearly equal to that of the manufacturing sector, not the mere eleven per thousand indicated by the official statistics.”

        http://www.independent.org/publications/tir/article.asp?a=208

        Not only is the Fed growing in relation to GFP and just about every other measure used for comparison, the make up of the UNION FEDERAL GOVERNMENT boots-on-the-ground-enforcement of all things Federal, is dramatically Liberal.

        Almost 30% of the Federal G0vernment’s employees are minority. my guess is that 75% to over 80% of those who execute the laws selectively enforced by that same Federal Government (Sanctuary Cities? Weed? Border Patrol? IRS? etc. etc. etc.) will vote Democrat.

        We are essentially moving towards a One Party System, exactly in the model of the African National Congress in South Africa. At that time, we will have, elected officials running our country, who are every bit as qualified in their positions to write, enforce and prosecute the laws of our country, as Harley is by way of his “J” School Sheepskin from M “BLM” U to master Latin Declension.

        Welcome to the new America.

        • chuck says:

          If you want to know how Government pensions work, check out Chicago and the Poster Girl for sucking the life out of what is left of actual working tax payers.

          Valerie Jarrett.

          “Jarrett was appointed CTA [Chicago Transit Authority] board chairman in 1995 by then-Mayor Richard M. Daley. She left the $50,000-a-year part-time post in 2003 and began collecting her $35,660-a-year pension three years later, at 50 — the minimum age at which former board members can take their pensions.

          Now 59, Jarrett had collected a total of $306,080 in pension payouts as of last summer, records show. That’s more than 27 times the $11,132 that she paid toward her board pension through payroll deductions from her CTA paychecks.

          Besides her CTA pension, she makes $173,922 a year in her role as Obama’s senior adviser — a job she has held since his first term in the White House in 2009.”

          Hell of a deal, huh?

          Chicago just raised Property Taxes 524 million a year, to cover government employee pensions.

  10. miket says:

    and I thought I was depressed BEFORE reading the article and comments…

    (btw… nice to see you back mr. sutherland!)

  11. RDJ in foot high lifts says:

    GOP delegate reveals that your vote will change nothing- so don’t vote for any outsider candidate!

    Also more bonus lines on how he is smarter than Robert Reich (no mention this time of his academic prowess).

    There is something sick about this country when the heir to a lumber fortune tells everyone how the system works perfectly and you are just an unlucky millionaire.

    Don’t be a bunch of dumbasses and vote against your economic interests. If you aren’t a millionaire, don’t vote for the GOP.

  12. Dwight Sutherland says:

    Where did I say that the Establishment candidates in either party had any answers ? Far from claiming I had more academic credentials than Robert Reich,I expressed bewilderment that someone with his distinguished record would find it necessary to prevaricate on a point that was demonstrably untrue in front of a mass audience. I thought I made it very clear that I feel that things have not worked well economically for a great many people in this country for a long time. That is not the same thing as saying that there is a group of people who have set out deliberately to destroy the middle class.If ever you had a lumber yard in a place like Ft. Wayne,Indiana,where the biggest employers WERE(past tense) International Harvester and General Motors, you would know my concern for the working class is reinforced by the not-so-invisible hand of self interest,a sure sign of sincererity. You also don’t have to be a Republican or a millionaire to believe that the economic self-interest of noone will be advanced by voting for irresponsible demagogues like Trump and Sanders,with even many liberal academics now pointing out the unrealistic premises behind most of the Green Mountain Trotsky’s policies.

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