In this issue, more on the white working class, why inequality isn't inevitable, truth and lies about jobs, the urban rural divide and the fall of "third way" economics.
JD Vance's, Hillbilly Elegy, will likely be considered one of the most timely books of 2016. In this Atlantic podcast, Propublica's Alec MacGillis narrates his analysis of why everyone seems to struggle with how to understand poor and white working class America, which is the country's original underclass.
The Nation's Michelle Chen looks at recent analysis that finds inequality is getting worse in America and that anxiety is playing out in our politics:
Social-inequality trends over the past half century indicate that class divisions are growing more rigid, most are getting worse off, and those at the bottom are falling further, faster by the day. It’s the momentum of change that is causing much of the pain and anxiety, as many self-identified “middle-class Americans” are realizing the truth only now: They were never as well-off as they thought they were... For households losing wealth, Pfeffer found that social insecurity hurts from many different angles: not just in the evaporation of housing and retirement wealth but also through declining health, diminished prospects for their kids, and ensuing despair and anger...
But white anxiety about middle-class precarity is only part of the picture because the middle-class was always built on structural inequality and social exclusion. The anxiety Trump manipulated so deftly on the campaign trail expresses real agony that working people are feeling. Yet the people who aren’t represented in Trump’s support base are in many ways suffering the most from long-term economic polarization.
Compared to whites, the downward trajectory has been steeper in communities of color. A typical low-income black kid has even dimmer college prospects, having been deprived of early education and decent housing and health care from birth.
In the American Prospect, Robert Kuttner argues that inequality is not inevitable and largely the result of bad politics:
A close look at political history suggests that this widespread inference is convenient nonsense—convenient to economic elites. In fact, the distribution of income and wealth has bounced around a lot in the past century and a half. It was extreme in the first Gilded Age of the late 19th century, a little less so in the Progressive Era, extreme again in the 1920s, and remarkably egalitarian in the period between the New Deal and the early 1970s—and now extreme again.
Does anyone seriously argue that these shifts reflected changes in technology or skills? No, they reflected changes in the political power to set the ground rules of capitalism. And that’s what should command our attention today.
The remarkable income equality of the postwar boom was built on a political transformation, which in turn allowed a suite of equalizing policies. It had little to do with shifts in the technical structure of the economy.
Most fundamentally, the power of finance was “repressed,” in the phrase of Harvard economists Carmen Reinhart and Kenneth Rogoff, both economically and politically. That in turn weakened both the ability of financial elites to capture such a large share of the total product, and to influence the rules of the game...Unions, in turn, influenced wages, not just of their own members, who were about one third of the workforce in labor’s heyday during the ‘40s and ‘50s, but the structure of earnings and the terms of employment generally. Minimum wages were far higher in real terms.
You might be interested in this Demos report looking at the strength of wealthy donors in American politics and what it meant for 2016:
[W]hile campaign donors are frequently discussed in the media and in political reform circles, both individually and as a group, questions of who the donors are, demographically, and what their policy views are, remain largely unexamined. In a time when growing economic inequality has increased the political power of economic elites, it is important to understand how the donor class is different from most of the rest of us. It’s not simply that its members have more money; indeed, there are deep divides between the donor class and the rest of us along race and gender lines, as well as class lines.
Though history will consider 2016 one of America’s most extraordinary elections, one thing remained unchanged: presidential donors were white, male and wealthy. Although the voting age electorate was more diverse (26 percent people of color) than ever before, 91 percent of donors were white. A woman was on the ballot for the first time, yet only 47 percent of donors were women...Demos believes that the data analyses presented here sharply underscore how the big-money system is skewing our democracy in favor of a small, homogeneous minority, whose interests diverge substantially from the preferences and needs of ordinary Americans. Although we do not go into detail on policy solutions in this report, our findings clearly speak to the need to amplify the voices of low- and middle-income Americans through public funding of election campaigns and other immediate reforms that reduce the power of big money in elections.
The New Times' Neil Schwartz reports on how 2016 ended with jobs numbers showing some good news for the average worker post recovery but that did not prove enough to shift the electorate:
It has been a long time coming — eight years, in fact — but the economic recovery is finally showing up in the average American worker’s paycheck in a big way.
There have been plenty of winners in the recovery, which began in mid-2009: companies, homeowners, investors and, especially, households at the apex of the economic pyramid. But the paucity of gains in take-home pay has stoked anxiety and frustration for many others, a factor in the wave of discontent that President-elect Donald J. Trump rode to victory in November.
Over at Bloomberg, we have a retrospective on President Obama's employment performance in relation to former presidents:
To be sure, presidents tend to get undue credit or blame for the economy's performance. The winning records of Johnson and Clinton owe much to timing: Both came into office at or near the bottom of economic slumps, when rebounds were all but inevitable. Still, policy does matter. Economists on both sides of the political divide agree that Obama's fiscal stimulus made Americans better off than they otherwise would have been.
In the New Yorker, Ed Kilgore looks the shaping of Trump's "miniture jobs strategy":
From time immemorial corporate executives have played a certain back-scratching if fundamentally dishonest game with politicians, usually at the state or local levels. The corporate types make an investment or employment decision that appears to benefit a particular place, maybe because it makes sense generally, maybe in response to government inducements (maybe disclosed publicly, maybe not). And then they cooperate by giving credit to a friendly politician, who gets to announce a ribbon-cutting or ground-breaking or “jobs saved” claim which is supposed to symbolize the pol’s economic development chops. Usually the economic impact of the “deal” is small potatoes, and may even be offset by the cost of inducements. And in most cases the positive development would have probably happened anyway. But it is in not in the interest of any of the players in the game to admit that it’s all a shuck.
It is increasingly apparent that one of the distinctive features of the Trump administration will be raising that particular game to the national level.
The New York Times Editorial Board penned an editorial on why they think corporations are helping Trump lie about his supposed job creation even before he takes office:
Mr. Trump said Sprint’s top executive had told him the company would add 5,000 jobs “because of what’s happening and the spirit and the hope.” But it turns out that the jobs are part of a previous commitment by Sprint’s parent company, SoftBank, whose chief executive said at Trump Tower in December that it would invest $50 billion and create 50,000 jobs in the United States. And even that promise was part of a $100 billion technology fund that SoftBank announced in October, before the election. In sum, Mr. Trump’s statement was hot air, just like his tweet in which he thanked himself for an increase in a consumer confidence index last month.
It’s easy to see why SoftBank and Sprint might want to help Mr. Trump take credit for creating jobs. SoftBank’s chief executive, Masayoshi Son, wants the Department of Justice’s antitrust division and the Federal Communications Commission to allow a merger between Sprint and T-Mobile. In 2014 regulators appointed by President Obama made clear to Mr. Son that they would not approve such a transaction because it would cut the number of national wireless companies to three, from four, greatly reducing competition in a concentrated industry. Mr. Son sees a new opening for his deal in Mr. Trump, who has surrounded himself with people who have sided with large telecommunications companies in regulatory debates and have argued against tough antitrust enforcement.
This is crony capitalism, with potentially devastating consequences.
Meanwhile, over at the Big Think we have more alarm sounding on the wholesale disappearance of jobs in the next 25 years:
The Trump campaign ran on bringing jobs back to American shores, although mechanization has been the biggest reason for manufacturing jobs’ disappearance. Similar losses have led to populist movements in several other countries. But instead of a pro-job growth future, economists across the board predict further losses as AI, robotics, and other technologies continue to be ushered in. What is up for debate is how quickly this is likely to occur...This coming technological revolution is set to wipe out what looks to be the entire middle class. Not only will computers be able to perform tasks more cheaply than people, they’ll be more efficient too.
Accountants, doctors, lawyers, teachers, bureaucrats, and financial analysts beware: your jobs are not safe. According to The Economist, computers will be able to analyze and compare reams of data to make financial decisions or medical ones. There will be less of a chance of fraud or misdiagnosis, and the process will be more efficient. Not only are these folks in trouble, such a trend is likely to freeze salaries for those who remain employed, while income gaps only increase in size. You can imagine what this will do to politics and social stability.
One of the biggest issues of the 2016 election is how rural America, with far less people, managed to have outsized influence over far more populous urban America. In the Atlantic, Jon Emont looks at how this is playing out here and around the world at a time of increasing urbanization:
In over 20 countries, from Argentina, to Malaysia, to Japan, the structure of the electoral systems gives rural voters disproportionate power, relative to their numbers, over their more numerous urban-dwelling counterparts. And on certain issues, this can shift national priorities in favor of rural ones. In the United States in 2016, for example, the Republican platform called for eliminating federal funding for public transit, arguing that it “serves only a small portion of the population, concentrated in six big cities,” implying that Trump’s expected infrastructure bill could focus on highways rather than on urban transit networks. Global warming, of special concern to urban coastal voters, has been described essentially as intriguing speculation by the president-elect...
There is already reason to worry that Donald Trump will exacerbate this divide. He has emphasized social issues that strongly polarize rural and urban voters, by promising to appoint judges who will modify Roe vs. Wade as well as protect the second amendment. His economic policies may be just as polarizing. “If his economic policy is primarily an effort to bring back manufacturing in the Rust Belt and bring back coal [at] the expense of the innovation economy and knowledge economy in the cities … that would presumably have an impact on how people evaluate” the fairness of the constitutional system, Rodden said. The risk for the United States is that a failure to reform its democratic system will lead to the same crises of legitimacy seen in democratic systems elsewhere, as its urban majorities question why their priorities go ignored.
Think Progress' Neil Resinikoff looks at the fall of Bill Clinton's "third way" economic/political agenda that was supposed to bridge right and left in a centrist coalition. Resnikoff says that center has fallen and white populism has flooded the vacuum:
America’s next president will not be a centrist, managerial liberal in the Clinton mold. Instead it will be Donald Trump, an authoritarian demagogue who is in thrall to a league of white nationalists. Even before he won the 2016 presidential election, Trump was chipping away at bedrock democratic safeguards by flirting with political violence, casting doubt on the legitimacy of democratic institutions, and undermining the electorate’s perception of reality itself. “The final form of human government” is now in grave danger.
Trump has also destroyed crucial elements of Third Way’s economic agenda. His candidacy signaled the end of any bipartisan support for neoliberal trade deals. And instead of taking a technocratic, managerial approach to economic policy, he has personalized it. In the weeks between his election victory and his inauguration, he has struck backroom deals with individual manufacturers and investors in order to keep jobs in the United States — or, at least, in order to look like he’s keeping jobs in the United States.
The collapse of the Third Way project is not confined to the United States. The European Union, as both a liberal internationalist project and an experiment in continental free trade, is bleeding out from a thousand cuts...A new political order is being forged in front of our very eyes, and authoritarian white populists are swinging the hammer. The leaders of this movement want nothing less than ideological hegemony across the entire West — an end to history, of sorts, but not anything like what Fukuyama had in mind. Even if they fall short of that lofty goal, they will have nonetheless reshaped Western politics for at least a generation.