What the next President should do – and Donald Trump will not
The entire world is undergoing a major historical transition. The technological changes we are experiencing are occasioning an upheaval on a scale of the Agricultural and Industrial Revolutions. In all revolutions, there are winners and losers. Vast numbers of Americans perceived themselves to be the wrongful losers in the current changes. They wanted to reverse that. Now, they will.
In post-election analyses for Aspenia since 2008, I have been warning that, in contrast to their historic role as voices of the economic underdogs, Democrats were instead turning into the party of the economic and cultural elite and offering nothing relevant to the vast majority of Americans. Besides condescending remarks describing them as “clinging to guns and religion,” a “basket of deplorables,” and “garbage,” what do working Americans get from Democrats? College loan amnesties that have nothing to do with two-thirds of Americans, and economic visions that promise to move them into “jobs of the future” when what they want are the jobs (… and industries … and communities) of the past.
Not surprisingly, what was previously the Democratic working class base has shifted its allegiance to the Republican Party, and particularly Donald Trump. But Trump offers these voters panaceas rather than policies, like solving all economic problems from jobs to housing by deporting virtually every non-white immigrant; tripling the price of most consumer goods in the US, and hitting middleclass households the hardest in the process, through counterproductive tariffs; extending his first-term tax cuts whose benefits went almost entirely to the wealthiest Americans; and calling for workers who go on strike for higher wages to be fired.
Despite the rhetoric, then, neither party today offers a real agenda for working Americans. Had our country’s institutions and leaders been addressing these concerns for the last ten years, they would not now be asking why a majority of Americans voted this week to tear them down and throw them out. It may now, unfortunately, be too late to succeed. But it is never too late to try. Here is what such an agenda might look like:
1. Grow Manufacturing Jobs. The US needs to make a solid commitment to the return of manufacturing jobs. One thing the COVID-19 pandemic and its aftermath have demonstrated is the high cost of offshore, global supply chains; the ever-more-volatile 21st Century will make the dangers and costs of attenuated supply lines even clearer. Businesses will need to move supply closer to demand – and that means primarily the United States. Besides tax breaks for onshoring and tax hikes for US corporations with earnings and jobs outside the contry, there is a need to get past ideological denial over the growth market for renewable energy systems and electric vehicles. The US is letting countries like Germany and China have all these jobs and exports while Democrats have misbranded what is needed as the “Green New Deal”: a steel-gray New “Works Progress Administration” would be more like it. These are not New Age-y “weightless” industries – they are heavy-industry, with big metal parts that demand traditional, burly manufacturing labor to assemble and traditional construction workers to install. We should be investing more in these jobs and bringing them home.
2. Promote Circular Economies: Go Local. A related challenge is that globalization has drained the country’s interior of both jobs and capital: These flow out of local economies in return for finished products centrally produced elsewhere and sold at high mark-up over the original raw goods. There need to be more local and regional “circular economies,” where what is extracted locally is also then manufactured, sold and consumed locally. This would also reduce transportation and environmental costs that constitute a high proportion of the cost of goods everywhere. There need to be more local financial institutions, more local investment, more local production, particularly in the tertiary markets that – unlike major metropolitan areas – are suffering today.
3. Enact Smarter Trade and Immigration Laws. Tariffs drive consumer prices up and drag the world economy down; intelligent policy can instead lift both American workers and the world economy up. Instead of tariffs that Trump just pulls out of thin air, the US, as I have argued for forty years, ought to level-up prices on imported goods based on the wage levels in producing countries, helping American workers by raising wages globally. People flock to the United States for higher wages; making companies pay them more in their home countries is a much cheaper way to keep them there than building thousands of miles of wall and deploying the army and national guard. Meanwhile, bipartisan immigration reform keyed to needed workforce skills, while keeping America a haven for those suffering political or religious persecution, could finally pass now that Trump no longer needs to scuttle it for his own electoral purposes.
4. Raise US Wages. Immigration consistently has been shown not to affect the wage levels earned by existing American workers – except at the lowest levels. More minimum-wage workers will not depress salaries for everyone else; the existing low minimum wage does that by itself. The minimum wage reached its peak in terms of actual value in 1968 and has been declining ever since; it is time the richest and most powerful nation on earth guarantees that everyone who works full-time can actually support their family by doing so.
5. Invest in Non-College Education and Jobs. Consistently raising worker earnings across the board requires consistently raising the value of what they produce, and this means consistent national investment in human capital. Two-thirds of Americans are not going to receive college degrees, and the vast majority of jobs will not require them – but will require more than what the educational system currently delivers. Far more investment is needed in non-college post-secondary education: Workers, especially at the low end of the wage scale, rarely have the means to finance such investment themselves, and private companies lack adequate economic incentives to make such investments since they cannot capture the full value (and often lose it to competitors); that’s why education and workforce training remain public goods. Governments can help form industry collectives for this purpose.
6. Think About Labor as Capital. You know who can deliver even more on job-training? For centuries, Anglo-American law has favored combinations of capital and land, but fought combinations of labor. Imagine, however, if someone created a business that pooled labor (instead of just other inputs) and made it available at a profit: Sounds like something conservatives could get behind. And such businesses exist – they just do not do much to raise the value of and returns on labor for the workers. Unions, however, can – and, through many of the country’s (and certainly other countries’) better training programs, do – make such investments. If one cares about working Americans, maybe he/she needs to be empowering them and their collective economic impact more.
7. Ask the Real Elites to Pay. The growing revolt against all elite American institutions – including Big Government, Big Science, Big Universities, and the “Mainstream Media” – will not spare Big Business. Prosecuting corporate profiteers, price-gougers, and corporate cheaters – as well as making them “pay their fair share” – is the one “progressive” policy popular across the political divide.
8. Demand New Leadership at the Federal Reserve. Costs have been rising the last few years not because of increased government spending – that actually started under Trump and a Republican Senate – but because of post-COVID supply-chain disruptions (upon which we’ve touched) and Federal Reserve policies that have made housing in particular way too expensive. Bring back full-employment and broader consumer credit as objectives of monetary policy. Want one thing on which to disagree with Joe Biden? Reappointing Trump’s Fed Chair, Jerome Powell.
9. Address the Caring Economy. The other great unaddressed economic challenge today is the cost of the caring economy. Most American families are caught between caring for their children and caring for their parents, both at exorbitant cost: Many families now cannot afford to work, and cannot afford not to. Raising dependent and childcare tax exemptions is a start, but the government needs to do more to expand the availability of caregiving and to make it affordable. These also represent jobs that cannot be outsourced or effectively automated. Since the Trump Administration is likely to do what it can to dismantle Obamacare’s attempts to help Americans pay for health care, it is unlikely it will do anything about the far-more-costly long-term Someone needs to.
10. Develop a New Model for Government in the 21st With Elon Musk and the crypto industry in charge of “reinventing government” under Trump, we’ll be looking at a further governmental hollowing-out. The US instead ought to move past our stale ideological divide and make meaningful change in our governmental “business model”: investing in the needs of middleclass Americans upfront instead of paying far more for our failures to do so – through police, jails, welfare, and drug rehab – on the back end. Creating systems to “pay it forward,” such investments would (like any good investment) produce real financial gains for taxpayers, working people, and the country generally.
Perhaps the next next President can do all this.
