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Why Trump Won?

“the surge in inequality and the stagnation of wages”

from Peter Radford

I listened last night to Matt Dickinson from Middlebury college give a talk about the recent election. This is my synopsis:

  1. The election did not represent much of a change in voter patterns. Trump’s victory was based more on a tweak rather than a reconstruction of the voting patterns of the 2012 election. So this was not a revolutionary moment, marking, instead, a logical further step in a longer term trend. That trend was the steady shift of lesser educated white voters in old industrial areas towards the Republican party. Looking at the 2016 result we see this trend manifested in the very small margins of victory for Trump in states such as Michigan, Pennsylvania, Wisconsin, and Ohio. The entire election outcome hinged on about two hundred thousand votes in those states. The immense dissatisfaction with the economy within those few states was sufficient to put Trump into the White House.
  2. Conversely, the Democrats failed to stitch together a repeat of Obama’s winning formula. This is particularly true of the combination of the black and Hispanic vote. Prior to election day there had been heady talk of a surge in Hispanic voters whose activity was thought to be a counter-punch to Trump’s repeated criticism of illegal immigration, his advocacy of mass deportation, and the construction of a wall to keep illegal immigrants out. This surge turns out not to have been a factor. Instead a sizable portion of the Hispanic vote — which did rise slightly over 2012 — went to Trump, partially, as it turns out, because many legalized Hispanic voters resented their illegal brethren as much, if not more, than their white compatriots. As for the black vote: it remains a Democratic monolith, but was not as enthused, naturally, over Clinton as it was for Obama. The diminution in the black vote alone can account for Clinton’s loss in a couple of the rust belt states.
  3. Incredibly the Clinton campaign completely misread the national mood: it utterly failed to pick up on the devastation that neoliberal economics has produced in the ranks of ordinary families. Indeed, in stark contrast to Trump’s relentless economic populism, Clinton scarcely mentioned the economy at all. She mentioned the economy or jobs less frequently than any other post-war candidate. Instead she focused on whet she presumed to be Trump’s disqualifying personality traits. Unfortunately for her voters were prepared to accept Trump’s boorishness in exchange for his advocacy of economic change. In particular his attacks on free trade, which translate into economic fairness in the minds of displaced workers, were enough to motivate many more of them to vote than had before.
  4. The thought that the polls “missed” the result is wrong at the national level, where the outcome is almost exactly what most polls predicted, but is correct at the local level where there were too few polls to pick up the trends, especially in the rust belt.
  5. The non-poll based predictions of political science, based as they were on macro trends such as GDP and income changes, were startlingly accurate. This was a predictable result if we had simply focused on the economy and the resentment against the incumbency.
  6. The Democrats have declined sharply as a national force in the past decade. The loss of power is very sharp at all levels of government. They are now clearly in need of renewal. Yet their leadership remains eerily familiar.
  7. Lastly, with respect to the Democrats and renewal: if they focus on the loss to Trump as one of a consequence of bigotry, misogyny, or other rejections of progressive thinking they are doomed to miss the point. This was a result that hinged on economic misery and the perception of lost opportunity. This latter issue being paramount: voters did not simply vent about their own condition, which in many cases has begun to recover, what they resented the most is the thought that the constancy of improvement is gone and that further generations will live diminished lives compared with their own.

In this light allow me to sigh.

This message of economic turmoil and of the consequences of the combination of globalization and automation is one that I have been talking about for years. The evidence was there for all of us to see — especially in the surge in inequality and the stagnation of wages. That the Clinton faction missed all this is testimony to its incredible ignorance of the real world. The resentment vented in the election is not a rejection of capitalism as such, it is a cry for the reinstatement of social justice. It is a demand that the outcomes of hard work and endeavor ought to be shared and not simply concentrated in the pockets of the few who control the political agenda and who thus enjoy the privileges that such control confers.

That ought to be a Democratic message.

That a petty and brutish plutocrat understood this and Clinton did not is astonishing. Then again she was a child of the so-called “New Economy” so lauded in the 1990’s. That decade cemented in place the pernicious notions of neoliberalism and created a near consensus on free market ideology. Indeed it was the Clinton era that saw the apogee of neoliberal anti-social thought. Consequently the Democrats are no longer the party of the New Deal.

So what are they?

  1. December 8, 2016 at 1:10 pm

    ” The Democrats have declined sharply as a national force in the past decade. The loss of power is very sharp at all levels of government. They are now clearly in need of renewal. Yet their leadership remains eerily familiar. ”

    The Democrats national leadership is THE problem. If it is incapable of learning any lessons from this political train wreck, then it deserves to be purged. That is, in the absence of a clean sweep within its ranks, the party’s power and influence will continue to decline.

  2. Paul Davidson
    December 8, 2016 at 2:42 pm

    In my 2009 book [ manuscript written in 2008] THE KEYNES SOLUTION , Chapter 7, I pointed out that free trade’s law of comparative advantage only applies to natural resourcea and climate affected industries [a point Keynes had made] and that free trade in mass production industries has created a political problem where high wage economies that had civil laws protecting workers are losing jobs to low wage nations that produced goods using uncivil conditions for workers. Thus the loss of high wage blue collar worker jobs — and the resulting severe damage to workers psychology, self esteem, mental health and social family behavior –including more divorce, etc.

    Interestingly, I was invited to present these views via a memo to the 2008 Obama transition team.. I do not know hat happened to my memo but apparently the neoliberal economists who advised Obama did not think much of it – and Obama did nothing to resolve this issue — although my memo provided several policy suggestions .

    so the Democrats were warned — but did not notice– while the Donald recognized the problem and ran to victory with it in 2016..

    perhaps the fautt was partly mine in presenting the argument i such a civilized manner. Had I made a more forceful presentation such as : If a foreign nation used SLAVE labor to manufacture mass production goods, would the neoliberals still champion free trade with such a nation??
    Paul Davidson

    • December 8, 2016 at 4:01 pm

      I have had similar experiences trying to alert both Obama and Trump to the real issues, though I have to admit I wrote more in hope than expectation. (“If you don’t try” etc).

    • robertreno
      December 8, 2016 at 9:32 pm

      Thank you for your comment Paul. What was done to blue collar workers – outsourcing to countries where cheap labor labors under uncivil conditions for workers is now being done to white collar workers (engineers, software engineers, project managers, nurses, etc.) in high-tech/high-skilled fields. It’s just harder to detect because of the rise in the number of workers forced into accepting jobs on a contingent basis. They are forced to work for so-called “staffing” companies that are given “preferred” status by companies like Microsoft, which in turn fives these “preferred vendors” a quasi-monopoly power. Rather than contracting directly (1099) with direct clients, the worker is remove from direct contact and which removes the workers ability to see the direct bill rate (and hence their real market value) and forces them to accept what is offered by the “staffing” company – a predatory middle tier exploiting information asymmetry – which in turn wage-scalps the high-tech/high-skilled worker by extracting 50% or more right off the top of the direct bill rate. I have real data on the software industry showing exactly how this done, including a look behind the technological smoke screen used by these so-called recruiting outsourcing services (RPOs) hired by US/UK/etc. “preferred vendors” where they actually tell their Indian outbound call center employees to misrepresent themselves as local US/UK/etc. recruiters and lie about substantive employment related issues (e.g., Microsoft requires W-2 status with third party when they don’t). But no one (democrat or republican) cares enough to even listen. I have these third party agents on audio recording getting caught lying and admitting it and spilling the beans and telling me anything I ask them. They use proxy servers to spoof their email’s X-Originating-IP, PBXes to spoof their Indian phone numbers, and misleading email façades and fake LinkedIn profiles in which they blatantly violate LinkedIn’s own professional guidelines and utilize Identity Deception and shape-shifting profiles to deceive potential job candidates. I have all the digital evidence unmasking this perverse global value[less] supply chain. I used reverse deception and technology (i.e., honey pots like techniques) to document hundreds of companies doing this on a global scale. I then researched the professional economic journals that describe to a tee just what is being done. And then I creates a business plan of tech startup bases upon Shared Capitalism and Social Benefit Corporation status that is aimed at correcting this perverse exploitation of workers. Align it with an NGO designed to fight this kind of corruption and perhaps we have a fighting chance to create an impactful solution. But neither democrats nor republicans care enough to even listen.

      • Paul Davidson
        December 9, 2016 at 4:42 pm

        if you have such evidence why don’t you send it on to Bernie Sanders, Elizabeth Warren and Chuck Schumer of the US Senate. I am sure at least on of these people will make it public and try to do something abou it.

      • robertreno
        December 9, 2016 at 10:53 pm

        You really think they would listen? Here are just a few examples I posted online (soundcloud: https://soundcloud.com/user-295952651/yogesh-yogi-marge-for-xoriant-lying-and-saying-its-my-job) There are literally hundreds of so-called RPOs using the exact same script I have documented (but that is only a fraction) with the intended goal of getting an unwary high-skilled worker to accept the low-ball wage rate on W-2 status. Then these predatory middle-tier recruiting companies can farm the worker out reaping huge profits for being little more than a payroll processor. In most cases there are little or no benefits offered by these predatory “staffing companies.” We know because we have actual data on personal friends who went from working for Microsoft one day with a decent salary and benefits to working for one of these “preferred vendors” that are the software version of sweatshops (i.e., bodyshops). I can show a time-series of one so-called recuiters LinkedIn profile as it shape-shifts as he takes on different roles, replacing his fake education data with different fake education data as he assumes a different role. How many cases must be produced to prove this is happening on a massive scale?

      • robertreno
        December 9, 2016 at 11:01 pm

        We also have multiple anecdotal stories from Microsoft employees we know who told use some pretty sad stuff they knew about, like a Chinese staffing company bringing in H1-Bs from China and not actually paying them any wage at all but working them like slave labor. People talk, the grape vine listens, and this is just one example of many how H1-Bs are abused by the companies that hold their H1-B status. But no one wants to actual step forward and witness as then their job and livelihood is at risk. You see, the way the real economy works is very different from text book economics. It is more akin to manipulation and deception as described by George A. Akerlof and Robert J. Shiller in their book Phishing for Phools (http://a.co/eCE0xs1 ).

        I wanted to put what I have found into economic context and have found a few papers that seem to be relevant. But I am not a professional economist. I thought this evidence might prove useful for doing an economic analysis of the real value lost for workers by such a predatory middle tier wage scalping workers.

      • robertreno
        December 9, 2016 at 11:06 pm

        I know they are not calling from where they say because I used reverse deception and digital IP tracing to get their butt-in-seat-IP (which is not in their email as it has been spoofed) and then when I confront them and tell them where they are they usually spill the beans.

  3. Jeff Z
    December 8, 2016 at 3:21 pm

    The Sanders campaign should also have served as a warning to the DNC about the dissatisfaction among workers. Clinton ran a campaign that looked and smelled like a continuation of Obama’s policies. Obama, elected on the basis of hope and change, did nothing of the sort, and massively betrayed the energized young people that gave that campaign some much energy in 2008. So many voters in key states perceived Clinton and the DNC as having lied to them, that it finally caught up to them in this election.

    Paul, excellent points as well. So Many holes in comparative advantage, I am somewhat embarrassed to have to teach it. Still, you must know the arguments of the opposition.

  4. Paul Davidson
    December 8, 2016 at 3:37 pm

    to Jeff Z:
    you should take on the defenders of comparative advantage n early 19th century “truth” when trade was basically natural resources and agricultural products– as the industrial revolution was still in the making.

    See Chapter 7 of my book THE KEYNES REVOLUTION` for answers to those defending free trade.. Or even better, see my textbook POST KEYNESN MCROECONOMIC THEORY for Keynes Type answers provided to tell students to all free market advocates. Also see my latest book POST KEYNESISN THEORY AND POLICY to tell politicians what to do to end the great recession and resolve the USA persistent balance of payment deficits with countries like China –without resort to tariffs a la Trump..

  5. Craig
    December 8, 2016 at 4:14 pm

    Excellent analysis from all. Economic theory not only needs re-working it requires a new philosophy around which policy can be crafted. The pace of change is now becoming the major factor in change itself, and we are still stuck in the “economic theory progresses one funeral at a time” pace. At the same time change needs to be grounded in pragmatism. Hence in order to get ahead of the curve instead of behind it we require a new philosophy which simultaneously integrates rapid, decisive, actual and ethical change with what works best for all given the real world circumstances. As wisdom is the process of integration itself and also the best integration of the pragmatic and the ideal I suggest that what we actually require is a Wisdomics, a new philosophy of economics actually mirroring the pinnacle concepts of Wisdom themselves. That would be actual wisdom, not bias parading itself as change but an actual integration of only truths and workabilities from apparently opposing ideologies. A science of wisdom that is.

    And again the pace quickens toward an unhappy and not peaceful convergence of crises so a Wisdomics, a science of wisdom in all spheres of human activity, most urgently and importantly in economic theory, is strongly advised.

  6. December 11, 2016 at 12:56 pm

    I find little mention of anything akin to “justice” in any of the economic theories. In democratic societies the results of democratic processes such as elections are described as just and reasonable. But in those same societies the results of market operations are also considered just and reasonable. How can this occur since these two results are incompatible. Decisions in the two instances are based on wholly antipathetic beliefs and values.

    • December 11, 2016 at 4:10 pm

      As the modern (quantitative) forms of democracy and markets were developed by the same people and amount to the same thing (winner takes all) I am with Craig on this one. Justice amounts to equal exchange, but need and ability to meet it act in opposite directions even if they are quantitatively equal, and in reality peoples needs are usually both qualitatively and quantitatively different anyway. Wisdom, then, is not to pursue justice but to give freely and be grateful if one receives back freely, for then goodwill and trust are likely to be sustained. “To each according to his need, from each according to his ability”, indeed, but what’s missing from that is its motivation. Self-sacrificing love – giving what one can or forgiving with no strings attached – is needed to start the process and restart it when it breaks down. Most of us get that from our mothers, and need to be grateful for it when pride, ambition or despair obscures our minds.

  7. Craig
    December 11, 2016 at 5:21 pm

    If we’re trapped in Dualism we’re really and fatally trapped, because we’re then trapped in opposition and contention only. And being so stuck inevitably degenerates into ego involvement in opinion, conflict and resistance to the other. But, you say, “a third opinion is subject to these same things” and you’d be right. And that is why understanding what an actual integration is, which is the combination of only truths, only workabilities, only applicabilities, only solutions and only what is ethical for the individual….is so important. And of course beginning with the conscious intention to care, to love if you will, is the first step. And this is no parochial religiosity only, simply an integrated/integrative statement that this underlying intention inherent in every major wisdom tradition….is an essential aspect of any actual solution in any human sphere of activity, most especially one that effects everyone like economics

    It is this integrated scientific, philosophical and loving/spiritual process of refinement that can guide us forward to a genuine third and unifying economic future.

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