October 10, 2018

America was great(er) before Trump. This administration is on the wrong track. The focus is on military power and border security, and domestic policy caters to corporations and the wealthy. We are bullying allies over the balance of trade, while virtually all economists see this as a straw man, the real economic issue driving  trade balances (or imbalances) being national savings and relative costs of production.

As Trump tries to retreat to the manufacturing era of our past, we are dangerously delinquent in addressing the most important problem and opportunity for America–creating jobs for the future in the knowledge and service economy–our proper destiny.

While in most respects, America has always been great, we have flaws, and some have been compounding. Our infrastructure is decades behind. Wages for the working class have been stagnant since Reagan. Our pell mell approach to globalization has been without attention to the downside for at risk members of our working class. Our shortcomings have become increasingly evident to voters, and, indeed, became the fulcrum for the Trump ascendence to President.

I believe the worst of our problems is inequality. We’re tragically deficit in reaching reasonable levels of inequality in our treatment of race, religion, gender, disability, and many other measures. But the most important of these is economic inequality–because, without enough for shelter and food, good education and health care, and all the rest fade in importance. Economic sufficiency is simply fundamental to life.

Economic inequality has been rising steadily since the 1980s, and has now reached the level of the Robber Baron era of the 1920s. See previous posts.

To be fair, the fundamental problem needing to be addressed is not of Donald Trump’s making. It has been advancing (worsening) for 40 years, under both Republican and Democratic administrations. It is true, however, that President Trump seems oblivious, and only seems certain to further advance the fortunes of the well to do (e.g., his tax relief legislation).

So, what could an administration do to actually reduce inequality (not to total equality, of course, but to a level which preserves motivation, but enables all of us to have decent lives and opportunity)?  The answer is in jobs and a constant focus on shared prosperity.

It’s not on more welfare (or “handouts,” as Conservatives call social safety net programs). Those are necessary in the interim, but not the long term solution. The ideal is for everyone who wants a good job to be able to find a path to one–with a little help.

In his campaign, Trump capitalized on the key problem–jobs. He offered a convenient  and appealing solution: He identified the culprits to the deterioration in good jobs as immigrants, globalization, and foreign nations. He promised to bring back manufacturing by bullying US manufactures to stop producing abroad and forcing foreign companies who want to sell here to produce here. Immigrants, China, and Mexico became the primary enemies.

No decent economist bought these arguments, but a huge swath of America did. A big segment of support came from blue collar workers who hadn’t seen an increase in real wages in 40 years. They had struggled through the jobs losses of the Great Recession begun under George Bush. Another segment of support came from the wealthy, who liked his plans to cut taxes and eliminate regulations. Few on the political right chose to point out the obvious that bringing back manufacturing was impossible–in fact, manufacturing jobs had been declining steadily for 30 years, an irreversible factor of cheaper labor elsewhere. That cheaper labor elsewhere meant cheaper products for blue collar workers at US Walmarts, but somehow this advantage seemed lost on his supporters.

An intelligent President could collect a panel of the best known experts on the nature of work. Here are a few of the most significant findings he would discover:

• It’s not possible to bring back traditional manufacturing.
• The obvious future of work in the US is in skills based work, and the better paying jobs are in the service and “knowledge economy,” meaning technology, science, engineering, and such as AI, robotics, and the like.
• Our education system has fallen prey to reduced funding and a widening differential between cost of education and wages.
• Opportunities in trades are short of vocational training opportunities which need to be local and affordable.

The objective of a plan to fix inequality would not be to build a permanent welfare state–socialism. The objective would be to restructure our capitalistic workplace such as to best enable a continuing flow of entrepreneurism driven by scientific and technological experimenting and creativity.

And here is some of what must be included in an intelligent approach to fixing jobs of the future, wages, and consequently, inequality:

• Education
• Collaboration between local employers, local educational institutions, and local governments, supported by federal government incentives
• Government investment in basic research
• Immigration–more of it, at all skills levels–proven to raise economic growth
• Foreign countries–partnering to allow other countries to use their natural advantages to our benefit
• Infrastructure

Since Trump regards himself an expert at virtually everything, listening and learning not among his limited skills, there does not appear much opportunity for anything like this to begin to materialize–until perhaps 2020! Don’t hold your breath for a greater America in the meantime.

*I must give credit to my Harvard Professor Dr. Roberto Unger for thoughts on work of the future in the US.