The big lie of the elites

from Dean Baker

We all know about the Trumpers’ big lie: somehow millions of votes were stolen from their hero, but the liberals were so smart in their steal that Trump’s team can’t produce any evidence. That one rightly draws contempt from anyone not in the cult, but what about the big lie that the vast majority of intellectuals seem to accept?

Regular readers know what I am talking about. The big lie is that the massive rise in inequality over the last four decades was somehow the result of the natural workings of the market. The standard position among policy types is that the rise in inequality was simply the result of the development of technology and the process of globalization.

We saw this view on full display in a generally interesting column in today’s NYT by Thomas Edsall. The piece looks at the growth in support for Trump, and right-wing populism more generally, among non-college educated white workers. It cites a number of academics who identify this development as a result of being left behind by economic developments, while Blacks and other minorities are perceived as having increased opportunities.

The key point, that is repeatedly misrepresented in this piece, is that the harm to the working-class in the last four decades was the result of deliberate policy, not something that just happened. For example, the first quote from an academic tells readers:

“Education has emerged as a clear cleavage in addition to more traditional indicators of social class. The highly educated fare better in a more globalized world that puts a premium on human capital.”

Note that we are told as a matter of fact that a globalized world leads to a larger wage premium for more educated workers. This is undoubtedly true when the people designing the course of globalization deliberately structured it to put less-educated workers in rich countries in direct competition with low-paid workers in the developing world.

It would likely not be true if globalization had been designed to put doctors, dentists, lawyers, and other highly paid professionals in direct competition with their lower paid counterparts in the developing world. (Yes, we can have testing requirements to ensure they meet rich countries’s standards. Even elites are smart enough to design mechanisms for accomplishing this task.)[1] In other words, we are given as a fact that globalization had to hurt less-educated workers, as opposed to this outcome being a policy choice by the people who crafted trade agreements over the last four decades.

We get another repetition of the big lie a little further down when Edsall discusses the work of Lee Hartwich, Julia C. Becker, and S. Alexander Haslam which finds that neoliberalism can “reduce well-being by promoting a sense of social disconnection, competition, and loneliness.”

It warns of these harms from exposure to neoliberal ideology, which according to Edsall, “they describe as the belief that ‘economies and societies should be organized along the principles of the free market.’”

Edsall is writing this in the middle of a pandemic which has created dozens of billionaires because of government-granted patent monopolies on vaccines, treatments, and other items needed to combat the pandemic, even as millions lost their jobs and struggled with illness.

These government-granted monopolies are antithetical to a free market. They are a government policy to promote innovation, and arguably a very poor one in the case of the pandemic. But the more basic point is that it is a lie to claim that the neoliberal ideology described by Hartwich, Becker, and Haslam is one that holds that economies and societies should be organized along the principles of the free market. In fact, the ideology is consistent with all sorts of government interventions that have the effect of redistributing income upward.

On the whole, Edsall’s piece does a very good job laying out evidence that US trade policy has been a major factor in breeding the resentments that have led to the rise of Trump and support for racist and authoritarian policies more generally. But a key feature missing from this discussion is the fact that the worsening of the plight of non-college educated workers, to the benefit of more educated workers, was by design. There was nothing inherent to the logic of globalization or development of technology that led to this outcome.

Perhaps one factor in the resentment of white non-college educated workers is that they are repeatedly lied to about the causes of their relative decline in well-being. It might be good if it was more generally acknowledged that they are faring more poorly because we structured policy so that they would fare more poorly. In other words, it was not something that just happened, it was something the elites did to them.

[1] To preempt an obvious complaint, this need not be a brain drain story where the most educated workers leave developing countries. We can design mechanisms where rich countries share their gains by paying to educate two or three professionals for every one that arrives from a developing country. As it stands, many professionals from developing countries already move to rich countries, but there is no compensation.