November 27, 2016

DONALD WHO?:

Donald Trump and the Sense of Power (Robert J. Shiller, 11/21/16, Project Syndicate)

Those on the downside of rising economic inequality generally do not want government policies that look like handouts. They typically do not want the government to make the tax system more progressive, to impose punishing taxes on the rich, in order to give the money to them. Redistribution feels demeaning. It feels like being labeled a failure. It feels unstable. It feels like being trapped in a relationship of dependency, one that might collapse at any moment.

The desperately poor may accept handouts, because they feel they have to. For those who consider themselves at least middle class, however, anything that smacks of a handout is not desired. Instead, they want their economic power back. They want to be in control of their economic lives. [...]

Katherine Cramer, author of The Politics of Resentment, gained some insight into this outcome in Wisconsin, where, like Trump, the state's governor, Scott Walker, has been popular among working-class voters. After he was elected in 2010, Walker cut taxes on higher incomes, refused to raise the state minimum wage above the federally-mandated minimum, and rejected the insurance exchanges created by President Barack Obama's signature 2010 health-care reform, which would benefit lower-income people. Instead, Walker promised measures that would take power away from labor unions, actions that usually are perceived as likely to lower working class incomes.

Cramer interviewed rural working-class voters in Wisconsin, trying to understand why they supported Walker. Her interviewees stressed their rural values and commitment to hard work, which have been a source of personal pride and identity. But they also stressed their sense of powerlessness against those perceived as unfairly advantaged. She concluded that their support for Walker, amid evidence of economic decline, reflected their extreme anger and resentment toward privileged people in big cities, who, before Walker, had ignored them, except to tax them. And their taxes went, in part, to pay for government employees' health insurance and pension plans, benefits that they themselves often could not afford. They wanted power and recognition, which Walker seemed to offer them.

Such voters are also almost certainly anxious about the effect of rapidly rising information technology on jobs and incomes. Economically successful people today tend to be those who are technologically savvy, not those living in rural Wisconsin (or rural anywhere). These working-class voters feel a loss of economic optimism; yet, admiring their own people and upholding their values, they want to stay where they are.

Trump speaks these voters' language; but his proposals to date do not seem to address the underlying shift in power. He stresses cutting domestic taxes, which he asserts will unleash a new flurry of entrepreneurism, and renegotiating trade deals in a protectionist direction, to keep jobs in America. But such policies are unlikely to shift economic power to those who have been relatively less successful. On the contrary, entrepreneurs may develop even more clever ways to replace jobs with computers and robots, and protectionism may generate retaliation by trading partners, political instability and, ultimately, possibly even hot wars.

To satisfy his voters, Trump must find ways to redistribute power over income, not just income itself, and not just by taxing and spending. He has expressed only limited ideas here, like subsidizing school choice to improve education. But powerful economic forces such as technological innovation and lower global transportation costs have been the main drivers of increasing inequality in many countries. Trump can't change this fact.

Nor can he change the fact that those voters also don't want jobs that require actual labor..They only want their sweet union sinecures back.

Posted by at November 27, 2016 10:52 AM

  

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