In the wake of the 2020 presidential election, there is a question that looms large. Was the 2016 election an aberration? Or did it reflect growing anger over stagnant wages, lost jobs and the dislocation arising from globalism? If the former, then 2020 is simply a return to normal. But if it is the latter, the 2020 is an aberration, owing mostly to COVID. Although some might be inclined to view 2020 as a restoration to what might be considered a quieter and more normal politics, such a reading totally misunderstands the real meaning of the 2016 election.
Joseph Schumpeter famously talked about the process of “creative destruction” whereby the old and obsolete would be replaced by the new and technologically more advanced. For Schumpeter, this was the measure of a dynamic capitalist economy. And yet, during the time it would take for this replacement to occur, there would be massive disruption and dislocation. Many would lose their jobs, and the jobs lost would never be returning.
Creative destruction assumes that those who are displaced will be reabsorbed back into the economy, but it doesn’t assume that what replaces the old will necessarily be comparable to what is now obsolete. Many who lack skills but were well employed in manufacturing will be forced into a lower paying service economy. Others will find a place in high tech industries paying very well, but only if they have taken it upon themselves to acquire the necessary skills to work in those industries.
To a certain extent, this model of creative destruction captures the essence of globalism, or at least its effects. With globalism, good paying jobs have left because domestic firms could indeed be more profitable elsewhere. In the wake of capital mobility, we have been left with a two tiered economy: a high paying one employing highly skilled workers and a low paying one employing poorly skilled workers. To a certain extent, those still employed in manufacturing represent the middle.
Nevertheless, their position continues to be precarious. And these are the voters that Trump appeared to appeal to: middle-class blue-collar workers who were anxious that they too would face obsolescence. Much was made following the 2016 election that Trump’s voters were racist who were concerned that the platform of open borders would lead to their displacement. As I have shown in this space in the past, the data from the Current Population Survey (CPS) doesn’t really support this.
The roots of Trump’s victory lay in various state labor markets. Only last time, I talked about how blue state economies and their respective labor markets differ considerably from red state economies and their respective labor markets. Because managerial elites tend to live in blue states where there is greater wage inequality than in red states, how red states view issues like inequality and whether continued globalization is a good thing, will differ considerably from blue states.
If one thing stands out in this COVID environment, and which has not really changed from 2016, is that many of Trump’s supporters were angry then, and continue to be now. COVID and state responses to it, especially lockdowns, have laid bare just how disconnected elites are from ordinary workers. Many among the elite have the luxury of working remotely without any interruption to their incomes. Most ordinary workers, especially blue collar workers, still need to report to a physical work site, and if that site is closed because of a lockdown order, then they suffer loss of income, and possibly the permanent loss of their jobs.
When governors order lockdowns in the name of public health, the ordinary worker views proponents of these measures as simply tone deaf, but it is a tone deafness which might have something to do with the fact that economic elites have historically had nothing but disdain for working class people. The anger that was there in 2016 was pent up anger. As political philosopher Michael Sandel in his new book, The Tyranny of Merit, puts it:
One familiar answer is that white working-class voters swayed by fear of cultural displacement, overlooked or overrode their economic interests to “vote with their middle finger,” as some commentators put it. But this explanation is too quick. It draws too sharp a distinction between economic interests and cultural status. Economic concerns are not only about money in one’s pocket; they are also about how one’s role in the economy affects one’s standing in society. Those left behind by four decades of globalization and rising inequality were suffering from more than wage stagnation; they were experiencing what they feared was growing obsolescence. The society in which they lived no longer seemed to need the skills they had to offer (p. 206).
These last two lines capture the fundamental difference between the red state and blue state economies we talked about last time. In red states there is fear that they will be facing the obsolescence that workers have already experienced in blue states. The anger, then, stems from the observation that blue state elites couldn’t care less about their plight. For blue state elites, creative destruction is progress; for ordinary blue collar workers in red states, it is the path to their obsolescence.
At the same time, progressive politicians, mostly from blue states, miss the point. They are quick to propose any number of policies intended to achieve some measure of equality of outcomes. But that isn’t what these workers want. They want what has been a core value since the nation’s founding: equality of opportunity. They want to have the same opportunities that previous generations had: to work hard and have a decent middle class living for themselves and their families.
To put it simply, workers are angry because they have effectively been denied the equality of opportunity they feel entitled to. Workers in red states simply look at the blue states and see absolutely no opportunity, because the skills that red state workers have to offer are no longer needed in blue states.
The 2020 election in no way reverses the economic transformation that led up to 2016. On the contrary, many of those angry workers still supporting Trump may see the Biden victory as a return to the era just before 2016 and an embrace of continued globalization. On the campaign trail, Biden kind of let the cat out of the bag when he said that workers will simply have to learn how to code. Although workers may intuitively understand that the onus is always on them to retrain for the new, they continue to be angry over the indifference and lack of sensitivity to their loss. It is for this reason that the election of 2016 was no aberration.