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.
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.
There 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).
If 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.
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.
When 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.
This 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.