May 26, 2018

As the subway train pulls up to the platform in Hong Kong, the announcement is “mind the gap.” It’s really a small gap between the platform and the train, but it’s wise to pay attention.

We have failed to mind the gap as it relates to income and wealth inequality in the US. The gap has been steadily widening across both Republican and Democratic administrations since Reagan in 1980. What is the outlook for the gap under Trump?

Inattention to the gap is all the more true under the Trump administration. Economic inequality is never even mentioned by this administration, and nothing this administration has done is likely to narrow the gap. Infrastructure improvement would better enable workers to get to work in expensive cities, from the distant suburbs they can barely afford. Health care for all, promised but not being addressed, would significantly improve lives and income for the middle class and below. These things are not being worked on.

The massive tax cut enacted went 80% to the wealthy and corporations. The rhetoric about restoring manufacturing jobs is only talk. It’s not happening, except in higher tech manufacturing, with an education/skills gap that is also widening as fewer youth can afford the cost of colleges.

Trump inherited a robustly growing economy. He added a little steam with his tax cut and loosened regulation. We are now near full employment and wages have increased modestly, the first real increase in years. This is welcome to the working class, many of whom are heralding the prowess of their idol, while failing to understand the source–the global recovery momentum largely driving wages and jobs. And, most don’t understand the dangers of Trump policies for future years, although many credible economists (e.g., Larry Summers, Jason Furman, and others) see this spurt in growth and wages as temporary, predicting the $1.5 trillion debt financing of the tax cut will come home to hamstring the economy in the future.

While Trump doesn’t seem to understand economics, he may be the luckiest President in ages. He inherited an economy that was already producing much of what he promised, not of his making. He quickly claimed it as his own, with daily compliments to himself, via FaceBook, Twitter and rallies held wherever he could find Americans fed up with decades of stagnant wages and rising inequality, and told them immigrants were responsible for all that, plus foreign nations cheating on trade. Suddenly the unemployment statistics were proclaimed as accurate, whereas the same statistics from the same sources during the election were “fake.” He boasts as if the employment gains all occurred in his first year, whereas in fact, this is the 9th year of a global recovery.

The current issue of The Economist tackles the question of whether US capitalism under Trump is delivering for more than just shareholders, benefits for all. They ask whether investment is rising and whether employees are benefitting.

The answer is “yes, but….” They find a “tech-centricity” of investment, suggesting a possible future trend of jobs and payrolls declining. That’s because tech firms, where most investment is occurring, on average create fewer jobs for the same amount of investment. Many traditional firms are  experiencing slower growth as they compete with the likes of Amazon. “Spillover” jobs which economists predict as replacements to those lost to automation, are generally at much lower wages. Examples are home health care, paying $22,000, or driving for Uber.

The Trump administration is trying to offer the same bargain China has had with its citizens across its rapid growth era since 1979. The deal is that as long as China can sustain an economic growth rate that produces full employment and slowly increasing wages, citizens will tolerate steadily increasing inequality, and other problems. But if the growth rates falls to insufficiently providing these modest advances, there will be an uprising.

The Economist finds it is unlikely the current administration and its policies can yield sustained growth with adequate benefits for all. An NBER study found that between 1978 and 2015 the share of income losses sustained by the bottom 50% of American workers were far greater than those sustained by the the bottom 50% in China.

In US inequality parlance, “we don’t care how much the wealthy get, as long as we are getting increases and doing ok.” Workers are getting a little now, while the wealthy are raking it in.

The American workers’ willingness to tolerate increasing inequality baffles American political scientists. The poor don’t vote for redistribution. Is it because of the uniquely American ideology of personal independence–the Horatio Alger story? Is it because the poor hope to become rich and they don’t want to share those riches when they do? Or, is it because the wealthy are so effective at bundling their proposals with gun rights, abortion, anti-immigrantion, and other themes popular among the lesser privileged?

No one knows, but in the meantime, no one is minding the gap. Trump isn’t. Congress isn’t. And, regrettably, the Trump voters aren’t, although this demographic has the most to lose.

The gap is so wide already, that millions of Americans cannot make it to the train. What is it going to take to wake us up?

May 22, 2018

There is no “Deep State” in the US.

It’s that simple. This subject doesn’t justify a study, a committee, an investigation, or anything. This is a simply a politically based fiction of the Trump organization, supported by paranoid ultra Conservatives.

The only thing that deserves studying is this: How could the United States of America, of all nations, come to the stage that this kind of fabricated danger has gained traction?  How?

Just look at the Trump feed on FaceBook and you’ll be shocked. There are a LOT of Trump supporters who have somehow been deceived into truly believing this ridiculous lie.

Of course, the problem is that this kind of science fiction cannot be disproved, just as the belief that UFO’s exist cannot be disproved.

And, this fabrication is fed on the rare, but occasional discovery that perhaps (not for sure, but alleged) some government operative may have behaved in a way that can then be used by fiction writers on the ultra right, to provide a fake kind of “evidence” that something nefarious is going on. There may have been an FBI operative engaged in the Trump campaign–but only to determine the activities of Russians trying to support the campaign.

The Trump MO with this kind of lie is to embellish and repeat constantly: That this person must certainly have been working in some kind of highly organized secret underground network which is planning to overthrow the present government.

While many, including Trump Jr. have said publicly that the “deep state” exists, no one who believes it has published even a smattering of the names of those who are alleged to belong to it.

For the Trump supporters, such a diabolical network was not in place when Obama was President, but has suddenly emerged to try to overthrow Trump. And, for many of them, Obama is now one of them–he’s part of the “deep state,” trying to overthrow Trump. His name and that of Hillary Clinton are the only names thrown out–and with no evidence.

Nothing could be farther from the truth.

Writing in his column of today, Gideon Rachman of the Financial Times points out that this is a fabrication of the Trump supporters to distract citizens from the reality that his administration is under serious legitimate scrutiny and threat, as it relates to possible collusion with the Russians and whatever other crimes which might be under examination by the Mueller team. He also points out that a variation of such extremist thinking can sometimes be found among ultra leftists, who believe that capitalist interests constitute such a malevolent and secret organized force to take advantage of the masses.

Neither of these extremist views is correct. There is no “deep state.”

There are many of us who would like to see the Trump administration overturned (by legitimate and legal means), just as there are many on the Left who would like to see the power of capital diminished. But neither side has a clandestine secret underground network of the powerful who are highly organized and will stop at nothing to see the destruction of that which they abhor.

As Rachman points out, this is the stuff of third world countries where coups do indeed occur, but simply is not the case here.

Whatever flaws may be found with our form of government (and these days there seem to many), and whatever damage you may feel the Trump administration is doing to our nation, we have abundant and adequate protection from anything resembling a “deep state.”