Donald J. Trump will be the 45th President of the United States of America and one-half of the country are ecstatic and one-half are fearful of it.
This election season was one of the worst in modern times as our top aspirants to the presidency abandoned facts, reason, common sense, and collegiality. This isn’t just about Trump: both candidates are guilty. It has given birth to a new Right-Left populism based on economic and social myths.
Before we talk about the “will of the people”, it is sobering to discover how few voters it took to elect Trump. Of 227 million eligible voters, only 200 million registered to vote, and only 125 million actually voted. Based on the popular vote, only 26% of eligible voters elected him. Hardly a mandate.
Who voted? Again, the data belie the myth. 53% of all men and 42% of all women voted for Trump. That does not sound like a wholesale rejection of him by “women”. Remarkably, 29% of Hispanics voted for him. To assume uneducated rural white men elected Trump is also a myth considering that only 19% of Americans live in rural areas. College grads? To put that in perspective, only 32% of Americans can claim that status, that leaves 68% (twice as many) who are not college grads. Even assuming college grads register to vote in higher numbers, it’s obvious that it is the 68% non-grads who are going to carry the day. Even so, 45% of all college graduates voted for Trump (49% for Clinton).
What were the issues driving voters? The top two for Trump voters: immigration and terrorism. For Clinton voters: foreign policy and the economy. 65% of Trump voters believe foreign trade takes away American jobs; 59% of Clinton voters said it creates American jobs. There were strong opposing feelings on Obama, Obamacare, the Federal government, and the deportation of illegal immigrants. The ability to bring about change was rated as Trump’s top quality by his supporters whereas Clinton’s top quality was experience. Change won over experience.
Were voters cheated by the Electoral College since Clinton won the popular vote? She won by 2.9 million votes, which, considering the electorate is 200 million, is not a national mandate (a 1.45% margin of victory).
What does all this mean?
Conventional presidential politics died. The Clinton machine died. The Beltway political establishment is on life support (pollsters, consultants, pundits).
Populism won. Radical change won. Incumbency won.
Donald Trump was seen by his supporters as an agent of change. Trump’s negative view of America resonated with them. He tapped into deep resentment based on popular memes that have been hammered into them for years by the Left (mostly) and the Right. Despite evidence to the contrary Trump’s supporter believed that they were worse off and that politicians and Washington D.C. were largely responsible for it.
Trump presented himself as the unscripted non-politician who spoke to those concerns, and, with billionaire credentials and his naïve promises to fix what’s wrong with America, gained an enthusiastic following. Clinton was seen as a symbol of everything Trump’s supporters resented: a corrupt insider, a representative of special interests, and Leftist political correctness. Many Progressives were lukewarm to Hillary.
The popular memes that got Trump elected were simplistic economic and social myths. The main ones were:
- Immigrants (Mexicans) are ruining America.
- Foreign trade has caused job losses and economic decline.
- The middle class is not getting ahead.
- Trump is an outsider who can fix things.
As H. L. Mencken said, “For every complex problem there is an answer that is clear, simple, and wrong.” This is what our politicians are feeding us.
Donald Trump launched his campaign by accusing immigrant Mexicans of being criminals. He tapped into fears that Mexicans are taking away jobs from Americans and that they bring crime. Many Trump supporters resented what they felt was the waning of traditional America.
As to crime, the data is exactly the opposite of the myth. Immigrants as a group commit fewer crimes than native born Americans. They work hard to take care of their families. But Trump kept repeating the myth that they represented a criminal element.
Trump appealed to his supporters’ fears that immigrants take jobs away from Americans. But that is not true. Since 1990, the height of Mexican immigration, U.S. inflation-adjusted GDP, a measure of economic productivity, has doubled. Which means, despite the influx of 12 million Mexican immigrants, and despite 3 recessions, the economy expanded at roughly the same rate of growth as before.
Immigrants like everyone else earn money and spend it, and create demand for housing, food, autos, restaurants, and cell phones. That creates jobs and growth. Immigrants are very entrepreneurial: they start businesses at twice the rate of native born Americans (Kaufman Foundation study). Another study showed that one in ten Mexican immigrants started their own business. Entrepreneurs create jobs. They are good for America.
- Foreign trade
This is probably the greatest myth. Adam Smith in Wealth of Nations figured out back in 1776 that free trade among nations creates wealth for all. As commentator John Tamny puts it:
“The beauty of free trade is that it means we not only have producers within these fifty states fighting to serve our needs, it also means we have producers around the world feverishly working to give us a bargain.”
What Trump, Bernie and other anti-free traders would have us do is pay more for the things we buy every day. Instead of $15 for that t-shirt you would pay $30. Erecting trade barriers would make most Americans poorer while benefiting special interests who ask government to protect them from competition.
There is so much misinformation about free trade that it is difficult to know where to start but, despite the free trade deals that Trump knocks, if you look at the actual data over the past 35 years:
- We are still major exporters;
- We’ve gained more jobs than we’ve lost;
- We have a thriving manufacturing sector—since NAFTA industrial production has increased 58%;
- Capital investment into efficient automation has been the prime reason manufacturing jobs have declined—we now create 100% more in value with 37% fewer workers;
- Nonmanufacturing jobs pay as well if not more than factory jobs. Or, to put it another way, we lost 7 million “good” jobs but gained 32 million jobs that pay equal or better wages.
If Trump voids our trade deals, we will have a world-wide depression.
- Stagnating middle class
This is false yet the Left persists in perpetuating it.
The middle class is shrinking because more of them have reached higher income levels. U.S. Census data bear this out. In a roughly 35-year period, the percentage of low- and middle-income folks declined and the percentage of people in upper income levels ($100,000+) increased dramatically (12%). It turns out that much of the data used to support the stagnation theory is manipulated and false: they left out rising fringe benefits and transfer payments, they incorrectly gauged inflation, and failed to account for the influx of women in the workforce.
Instead of stagnating, the middle class has more purchasing power today than it ever had. The cost of necessary consumer basics in 1950 required about 50% of household income; today it has fallen to 32%. This means that we have more money to spend on other things, belying the idea that middle class buying power has gone down. In fact, consumer goods are cheaper, more abundant, and better: large flat screen TVs, computers, iPhones, iPads, abundant entertainment, cheap airfares, durable automobiles.
Middle class folks are far better off today than at any time in history.
- Trump the outsider
Trump is a political outsider but he is unlikely to solve problems with bad ideas. He still appears ignorant of the basics required to create good policies. As such he is relying on his advisers to come up with ideas.
He is bringing many Beltway insiders into his team which belies his outsider status. Most are politicians or hedge funders. With Reince Priebus, chair of the Republican National Committee, as his Chief of Staff we have an idea of what may come.
So far, his policies are not groundbreaking or even new, other than the fact they are cobbled together from both Right and Left. Anti-free trade and anti-immigration are not new ideas in America. Of course, we don’t know the details of his policies yet, but from what has been revealed, they are familiar. Daily we hear Trump or his advisers appear to back off the harsh edges of his campaign promises so the future of his policies is unclear.
Trump’s problem is the mainstream Republican Party which still controls the House and the Senate. If you think this election brought about change, note that Americans almost unanimously voted in incumbents. For example, not one California Congressional precinct changed party affiliation. Trump is not a Reagan who swept to power on policies that appealed to the Republican mainstream.
Those policies that do appeal to the Republican mainstream, such as deregulation, lower corporate taxes, and reform of Obamacare will have Congressional support. Trump’s harsh rhetoric on immigration will be stalled or result in watered-down legislation. Congress will be especially wary of wasteful spending schemes such as Keynesian infrastructure spending, an expensive Wall, and a costly beefed up Border Patrol. There will be strong Congressional opposition to Trump’s anti-free trade proposals.
We must wait to see what emerges during his first 100 days, but Trump the negotiator will be seriously challenged by Congress. The danger is what he can do by presidential edict which illustrates the danger of a powerful Executive branch of government. Congress has gradually acceded power to the president and now we will see why that was a mistake.
Trump the outsider is right in line with most politicians who promise things they can’t deliver. He will eventually be subsumed into the mainstream political structure.