The Trumped Up Working Class
This week included Super Tuesday, that first milestone of election season where things get real. To the unsurprise and maybe dismay of some, GOP candidate Donald Trump took the day and is much closer to winning the nomination, reports the New York Times. Commentators are looking at the Trump phenomenon through a lens focused on the diminishing middle class and working woes. Let start with a cartoon from A.F. Branco:
In the NYT, Thomas Edsall explores why some voters find Trump so appealing:
[T]he economic basis for voter anger has been building over forty years. Starting in 2000, two related developments added to worsening conditions for the middle and working classes. First, that year marked the end of net upward mobility. Before 2000, the size of both the lower and middle classes had shrunk, while the percentage of households with inflation-adjusted incomes of $100,000 or more grew. Americans were moving up the ladder.
After 2000, the middle class continued to shrink, but so did the percentage of households making $100,000 or more. The only group to grow larger after 2000 was households with incomes of $35,000 or less. Americans were moving down the ladder...The second adverse trend is that trade with China, which shot up after China’s entry into the World Trade Organization in December 2001, imposed far larger costs on American workers than most economists anticipated, according to recent studies. And the costs of trade with China have fallen most harshly on workers on the lower rungs of the income ladder.
Similarly, Quartz's Matt Phillips interviews World Bank economist Branko Milanovic to discuss his new book, and looks at the economics fueling Trump support:
The book seems to suggest that inequality can drive politics. Do you see that today? Does inequality help explain Donald Trump?
Definitely. For Donald Trump I would say it’s an easy question.
It was really absence of growth, stagnation of incomes in the US middle class, not only from loss of jobs, but also from loss of dreams of upward mobility for many people. Or perhaps because of imports, or because of direct competition with Asia or other emerging markets. So that was clearly one strong element which explains Trump. I would stop there. But I would actually like to continue on a second point...
I don’t want to go into some kind of catastrophic scenarios. But, if you see inequality driving political processes within countries, it might also have repercussions worldwide. Because there may be some parts of—how should I say, the different social groups—that have interests in sort of aggressive foreign policy and wars and so on. So you know it actually can spillover into a conflict. Again, I don’t want to say it will be necessarily like that, but it could be a conflict like World War I.
Meanwhile, the National Review Online editor Reihan Salam over at Slate says the GOP needs to put the working class ahead of the "donor class":
More than anything else, Trump has demonstrated that white working-class voters have minds of their own. They will not simply line up behind the candidates selected for them by hedge-funders and industrialists during the “invisible primary.” If we define working-class voters as those without a college degree, Ronald Brownstein of the Atlantic estimates that this bloc represents 53 percent of Republicans, split almost evenly between those who are conservative Christians and those who are not. The Pew Research Center reports that in 2012, 53 percent of Republicans were part of families that earned less than $75,000 a year. These groups, which tend to overlap, are Donald Trump’s base. Ever since the Nixon era, Republicans have relied on the white working class to achieve political victories. Now, it has revolted against the GOP elite.
There is only one way forward in the post-Trump era. The GOP can no longer survive as the party of tax cuts for the rich. It must reinvent itself as the champion of America’s working- and middle-class families. In every campaign, Democrats and Republicans talk about getting the working class and the middle class back on their feet. Those are almost always empty words. The GOP must now become a genuinely populist party, putting the concerns of voters ahead of those of donors. The alternative will be a decade or more of marginalization and defeat, during which the left will have free rein.
You also might be interested in this Guardian piece from Ben Fountain on Trump and the so-called Southern strategy that may have "suckered, along with all the other blue-collar and middle-class 'Reagan Democrats' who put their faith in the GOP."
In this recent essay, John Fullerton explores the idea of regenerative capitalism and the future of economic thought:
My premise is that the history of economic thought did not end with Keynes and Hayek or Minsky and Friedman, leaving us nothing to do but shout our ideological beliefs across the public square. I believe this early stage of understanding regenerative economies is the natural next step in the evolution of economic thinking, bringing economics into alignment with our latest scientific understanding of how the universe actually works, building upon the profound advances of ecological economics as developed by Herman Daly and colleagues. The potential and structure of regenerative systems applies to both ecological and humanistic values; it is not simply a ‘green’ idea. We already see expressions of regenerative efforts emerging all around us, although they are often invisible to those observers still trapped in the outdated reductionist paradigm. Until now, this transition has been hampered by the lack of an effective story...
We have identified eight key interconnected principles that underlie systemic health. Note that it is in the pattern, the relationships among all eight (and more) principles, operating coherently within one system, across all scales of the system from local to global, that the ultimate power and potential can be found. In this sense, regeneration is an all-or-nothing proposition. Either a system is healthy and vibrant or it’s not. And it is only as healthy as its weakest link. Aligning the modern global economy with these principles is NOT tweaking around the edges. It represents profound change (threats and opportunities) for many enterprises, entire industries, and public policy.
Meanwhile Robert Samuelson also looks at the past century and argues we should be less pessimistic:
Every so often, we need to take note. For all of today's pessimism, long-term trends in the United States are mostly positive. We tend to forget that and the parallel lessons. First, dramatic change is a constant; the notion that we're living in a period of exceptional upheaval is a shortsighted fiction. And second, the United States has a solid record of adapting to change, albeit with some setbacks and regrets...
The way we were in 1915 no longer describes the way we are. Some of today's problems stem from yesterday's successes. Take health care. In 1915, life expectancy at birth was 54.5 years; now it is 78.8. Infant mortality has dropped from one in 10 babies to one in 168. On the other side of the ledger, today's high health costs are a major challenge.
Modern appliances, cars, airplanes and universal electrification have transformed everyday life, as has more protective government (which has reduced, though not eliminated, insecurity). The question now is whether we will be as adaptive in the next 100 years as in the last. History offers a cautious case for optimism.
This Harper's article examines the work of the Clinton Foundation and the downsides of pushing microlending. You also might be interested in why Neva Goodwin Rockefeller gave away her Exxon Mobile shares. Meanwhile NPQ's Ruth McCambridge looks at a recent Alliance Magazine piece on what might have gone wrong with philanthropy's "impact revolution":
They claim there were two major problems with asking nonprofits to measure their own impact. First, nonprofits may get nervous about exposing negative findings and do marketing instead to ensure their own funding. (The authors admit they themselves have done so, and we believe them.) Second, those deep longitudinal studies can be pricy to undertake. What’s never said straight out: “We realize our prescriptions for this hardworking sector would have ended up favoring the well-capitalized and that there would be a necessary winnowing in all of that—a marginalization of the less well funded, a starving of the ordinary heroes that inhabit every community and the anointing of stars.”
There is another jobs report, which Mark Whitehouse over at BloombergView says didn't deliver the one thing workers were looking for—higher wages:
Nonfarm employers added an estimated 242,000 jobs, and the unemployment rate held steady at a low 4.9 percent. The demand for workers, though, didn’t translate into better pay. The average hourly wage actually dropped 3 cents to $25.35. That left it up just 2.2 percent from a year earlier, well short of the pace that prevailed before the recession.
So where will the raises come from? One odd fact about the current expansion is that workers' total income growth, meager as it is, has outpaced the broader economy. Since the recession hit bottom in mid-2009, the combination of hiring and increased wages has caused aggregate weekly earnings of production and nonsupervisory workers to grow at an average annualized rate of 4.2 percent, well exceeding nominal gross domestic product growth of 3.7 percent -- something that hasn't happened in any of the previous four recoveries.
Also in Quartz is this piece on how platforms like drivers' app Uber and vacation rental app Airbnb illustrate "the classic divide between capital and labor, now at play in America’s new digital economy":
A new study from the JPMorgan Chase Institute, a think tank under the bank, finds that people who rent out assets on “capital” platforms like Airbnb or car-sharing site Turo are bringing in supplemental income. That’s starkly different from people who sign up for “labor” platforms like Uber or TaskRabbit. They’re typically working to offset shortfalls in their monthly earnings...
In other words, Americans who already have more money and stuff to spare also have a leg up in the new digital economy. “On the margin it is helping people who already have assets earn a little more income,” says Diana Farrell, CEO of the JPMorgan Chase Institute. Lower income people who turn to companies like Uber, Lyft, and TaskRabbit are basically treading water.
In the Boston Globe, Sash Abramsky looks at why evictions are as much a cause of poverty as a symptom in our increasingingly unaffordable cities:
Evicted from one property, tenants find they are excluded from many other rental units, including state-voucher-subsidized and publicly-funded housing. The private landlords who accept them, despite their damaged rental records, tend to run bottom-of-the-barrel operations, failing to maintain their properties in safe, habitable conditions and threatening to evict any who complain.
Increasingly, desperate tenants, caught in this trap, pay far too much rent for far too shoddy living spaces. They stay until they are evicted for failure to keep up payment and then move on. With each uprooting, their children are pulled out of schools, and any semblance of structure is once more shattered.
In some good news, a new smartphone app is helping fight against wage theft and being tested by day laborers in Jackson Heights, NY, reports the New York Times:
Workers will be able to rate employers (think Yelp or Uber), log their hours and wages, take pictures of job sites and help identify, down to the color and make of a car, employers with a history of withholding wages. They will also be able to send instant alerts to other workers. The advocacy group will safeguard the information and work with lawyers to negotiate payment.