Monday, January 16, 2017

Shattered expectations and economic anxiety: It WAS the economy, stupid

Two essays lend support to the notion that the economy played a big role in the 2016 election. The economic trends over the last four decades culminated in the high level of dissatisfaction among voters. More important than present day hardship was the anticipation of declining prospects for the future and the resultant anxiety.

Shattered Expectations

Andrew Bacevich at The Nation examines How Decades of Disappointment Won the Election for Donald Trump. Lost wars, globalization, and the resulting bitterness brought a vote against shattered expectations.

Where the expectations came from

… when the Berlin Wall fell and two years later the Soviet Union imploded, leading members of that establishment wasted no time in explaining the implications of developments they had totally failed to anticipate. With something close to unanimity, politicians and policy-oriented intellectuals interpreted the unification of Berlin and the ensuing collapse of communism as an all-American victory of cosmic proportions. “We” had won, “they” had lost—with that outcome vindicating everything the United States represented as the archetype of freedom.

… In remarkably short order, three themes emerged to define the new American age. Informing each of them was a sense of exuberant anticipation toward an era of almost unimaginable expectations. The twentieth century was ending on a high note. For the planet as a whole but especially for the United States, great things lay ahead.

Scriber: I am going to focus on the first, economic theme.

Focused on the world economy, the first of those themes emphasized the transformative potential of turbocharged globalization led by US-based financial institutions and transnational corporations. An “open world” would facilitate the movement of goods, capital, ideas, and people and thereby create wealth on an unprecedented scale. In the process, the rules governing American-style corporate capitalism would come to prevail everywhere on the planet. Everyone would benefit, but especially Americans who would continue to enjoy more than their fair share of material abundance.

… globalization created wealth on a vast scale, just not for ordinary Americans. The already well-to-do did splendidly, in some cases unbelievably so. But middle-class incomes stagnated and good jobs became increasingly hard to find or keep. By the election of 2016, the United States looked increasingly like a society divided between haves and have-nots, the affluent and the left-behind, the 1 percent and everyone else. Prospective voters were noticing.

What we might do about those expectations

… The principles that enjoyed favor following the Cold War have been found wanting. What should replace them?

Efforts to identify those principles should begin with an honest accounting of the age we are now leaving behind, the history that happened after “the end of history.” That accounting should, in turn, allow room for regret, repentance, and making amends—the very critical appraisal that ought to have occurred at the end of the Cold War but was preempted when American elites succumbed to their bout of victory disease.

Don’t expect Donald Trump to undertake any such appraisal. Nor will the establishment that candidate Trump so roundly denounced, but which President-elect Trump, at least in his senior national-security appointments, now shows sign of accommodating. Those expecting Trump’s election to inject courage into members of the political class or imagination into inside-the-Beltway “thought leaders” are in for a disappointment. So the principles we need— an approach to political economy providing sustainable and equitable prosperity; a foreign policy that discards militarism in favor of prudence and pragmatism; and an enriched, inclusive concept of freedom—will have to come from somewhere else.

For more on Bacevich’s themes, as suggested by the final sentence above, you should consult his essay.

Economic Anxiety

There are two ways in which expectations and reality might be in conflict. The status quo may not be what you had expected it to be. In this sense, you are disappointed because of your past anticipation of, for example, a level of prosperity that has not been realized in the here and now. The second discrepancy between expectations and reality is the difference between what you hope for the future and what you predict it to be. It is this sense - the anticipation of a declining prosperity - that a 538 author claims contributed to the votes for Trump.

Ben Casselman (FiveThirtyEight) says we should Stop Saying Trump’s Win Had Nothing To Do With Economics.

In the months leading up to Election Day, a heated debate broke out among political commentators over the source of Donald Trump’s support. Was it driven primarily by economic anxiety, as the early conventional wisdom often argued, or more by racism and other cultural factors?

Yes, sure, all of the above. But what puzzled me was that my retirement community did not appear to be suffering economic hardship - the kind of hardship you might have guessed afflicted the rust belt - and yet most of that community voted for Trump. I failed to understand a key distinction that Casselman now makes clear.

Correctly assessing the forces that led to Trump’s victory is more than an academic exercise. It’s central to figuring out what happens next — what Trump’s supporters expect him to do, what Democratic counter-measures would be effective, what metrics we should use to gauge his success. But the recent debate has missed an important distinction: Economic anxiety is not the same thing as economic hardship. And the evidence suggests that anxiety did play a key role in Trump’s victory, though it was by no means the only factor.

What’s the difference between hardship and anxiety? Hardship, as I’m using it here, refers to a person’s present-day economic struggles: poverty, joblessness, falling wages, foreclosure, bankruptcy. Anxiety is all about what lies ahead — concerns about saving for retirement or college, worry of a potential layoff, fears that your children’s prospects aren’t as bright as your own were.

Economic hardship doesn’t explain Trump’s support. In fact, quite the opposite: Clinton easily won most low-income areas. But anxiety is a different story. … for example, the slower a county’s job growth has been since 2007, the more it shifted toward Trump. (The same is true looking back to 2000.) And of course Trump performed especially strongly among voters without a college degree — an important indicator of social status but also of economic prospects, given the shrinking share of jobs (and especially well-paying jobs) available to workers without a bachelor’s degree.

The list goes on: More subprime loans? More Trump support. More residents receiving disability payments? More Trump support. Lower earnings among full-time workers? More Trump support. “Trump Country,” as … isn’t the part of America where people are in the worst financial shape; it’s the part of America where their economic prospects are on the steepest decline.

None of this is to say that economic issues are the only, or even the primary, explanation for Trump’s success. [Nonetheless,] economic dissatisfaction was an important factor. In other words, the “economics or culture” argument is a false dichotomy. There’s no reason that both forces couldn’t matter; in fact, both did.

Scriber, now employing the lens of hindsight, notes that the those economic issues were not prime time in the election coverage. Identities won more air time than did issues. And when economic issues were covered, Trump’s ignorant, one-liners without any details got the attention. Casselman wraps up.

This debate isn’t merely an academic curiosity. The role of economics in the election matters politically: for Trump, because voters may turn on him if he doesn’t deliver on his economic promises, and for Democrats, because they will struggle to win back the White House if they don’t find ways to speak convincingly on these issues. And it matters in terms of policy: Trump’s economic plans may not make much sense, but the problems identified by his supporters are real. Manufacturing jobs really have disappeared, and we haven’t yet found a source of similarly stable, well-paying jobs to take their place. Wages really have stagnated for much of the past 15 years, and economic mobility, at least by some definitions, really has fallen. College costs really have risen, and our retirement system really is broken. Until politicians and policymakers find ways to address those issues, economic anxiety — and its political consequences — isn’t likely to go away.

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