The American economy has been stagnating since the end of the 20th century and has grown especially slowly (2% per year on average) since the end of the Great Recession in June 2009. This slow growth has various unpleasant causes and consequences:
Men without Work. The political economist, Nicholas Eberstadt, has pointed out that the work rate for prime working age (25 – 54) men has dropped from 94.1% in 1948 to 84.3% in 2015. This translates into 9.5 million prime working age men who are not currently in the workforce.
Mortality Crisis. The economists, Anne Case and Angus Deaton, show that the mortality rate for working class whites in America, aged 45 – 54, has doubled since 1990, and that these new deaths are largely “deaths of despair.”
Complacency. The economist, Tyler Cowen, makes a strong case that too many Americans are so comfortable in their own worlds that they have become complacent about the structural problems facing American society.
Segregation by Class. The political scientist Charles Murray has described a separation of American society into a new Upper Class (20% of all Americans) and a new Lower Class (30% of all Americans) with the Upper Class enjoying the four deepest satisfactions of life: family, vocation, community and faith while the Lower Class is largely left out.
What can be done to improve the fortunes of America’s blue-collar workers? There are actually a lot of things:
Greatly improve vocational training for the millions of skilled jobs for which there aren’t enough qualified applicants.
Revitalize America’s job-generating capacities. More businesses have closed than opened each year since the Financial Crisis.
Reverse the perverse disincentives against male work embedded in our social welfare systems. The Earned Income Tax Credit should be extended to single adults without dependents. Eligibility for disability income should be tightened considerably.
Come to terms with the enormous challenge of bringing convicts and felons back into society. The huge increase in incarceration rates in recent years has coincided with a dramatic drop in rates for both violent crime and property crime.
Conclusion. It’s a scandal that so many blue-collar workers are struggling to live a fulfilling life. There are many different actions government can take to improve their lot.
One thing you should think about (very seriously) is whether Trump is set to become an autocrat and whether the institutions in the US are able to prevent this. There is the constitution, laws and norms (by which all Presidents or all Presidents for the vast majority) have conformed to. Trump is a master at recognizing the norms and blowing them off. The truth matters and when Trump says the press is the enemy of the people, you need to think about this. Very scary. Maybe, perhaps likely, our democracy is very fragile and not able to contain him. When I think of economic progress, my first thought is how long it took the Germans to overcome Hitler’s rule, 50-60 years. You seem to be willing to cut him a break, thinking our institutions will contain him. I think the German intelligentsia in the 30’s felt the same way about Hitler.
My last post, “A Tale of Two Trumps,” compared what Trump is doing well with what he is doing poorly and how he has modified some of his extreme rhetoric. Of course the truth matters but the truth is highly subjective. To say that the press is “an enemy of the people” is asinine but Trump has made a lot of outrageous statements and will surely continue to do so. I simply ignore them. He backs down when it matters.
I think it is farfetched (for the time being) to compare Trump to Hitler. Hitler arose in a Germany devastated by WWI, with terrible economic conditions including extreme hyper-inflation. The U.S. is still the world’s overwhelmingly dominant superpower and enjoys the highest level of prosperity in the world.
Trump was elected because this prosperity is enjoyed most prominently by the elite professional class. He has convinced blue-collar workers that he will be able to improve their lot. If he succeeds his grossness won’t matter. In the meantime the courts will continue to slap him down when he steps out of line.
As I like to remind my readers from time to time, I am a non-ideological fiscal conservative. I simply want to solve our two most fundamental fiscal and economic problems:
Slow economic growth, averaging just 2.1% since the end of the Great Recession in June 2009,
Massive debt, now at 76% of GDP (for the public part on which we pay interest), the highest since the end of WWII,
by whatever means it takes.
Donald Trump won the presidential election contest because he convinced blue-collar white voters that he would do something about their declining economic prospects. But can he actually deliver for them? Yesterday’s New York Times has an excellent analysis of this problem by the economic journalist, Eduardo Porter, “Where were Trump’s votes? Where the jobs weren’t.” Mr. Porter points out that, in fact, Hispanic, Black and Asian workers have all done much better than white workers since November 2007 (see above chart). He also points out that all three of these minority groups live primarily in metropolitan areas where jobs have been growing much faster than in nonmetropolitan areas (see above chart).
He further points out that while the number of manufacturing jobs has been flat since 1978, the number of service jobs has been increasing rapidly and that most of these new service jobs are in the cities where minorities are clustered (see below). The question then is what Mr. Trump (or anyone else!) can do to help his largely rural blue-collar constituency? Mr. Porter recognizes that faster economic growth will have to come from investments in technology and human capital. But he thinks that this will happen mostly in the cities and thus help minorities proportionally more than whites. Conclusion. Helping blue-collar whites is Mr. Trump’s fundamental economic problem. Faster overall economic growth will help to some extent. Trade restrictions will not help. Immigration restrictions might help but could also hurt the overall economy if employers can’t hire enough workers. Better education and vocational training will help in the long run but not immediately. This is a very tough problem to solve!