Lower-middle-income workers comprise the majority of Trump supporters. According to a recent Cato Institute study written by John F. Early, former assistant commissioner at the Bureau of Labor Statistics, those in this income group often have more than one job and work 2½ times more hours per year, on average, than so-called poor Americans. Yet after paying taxes, they have only about the same share of spendable income as the poor.
This suggests that Trump’s supporters are beasts of burden. They are squeezed economically by those below and by those above. No wonder they’re so angry and want to get even with the political and media establishments, even as they are hurt by Trump’s trade policies.
Unlike studies of income inequality by the left, the Cato study counted as income such transfer payments as welfare and such tax benefits as the earned income tax credit. The left, as well as their comrades in the media, count only earned income, thus making it seem that lower-income Americans are poorer than they really are.
It’s a positive sign that due to Trump’s election, the nation’s intelligentsia are finally taking note of the plight of the working class; but they still don’t have the complete picture. Because most of them do not live in working-class towns and have never set foot in a factory or mine, they don’t realize that there is more to the picture than declining or stagnant wages for the working class.
The rest of the picture is what has happened to many working-class towns: the boarded-up shops, deteriorating infrastructure, broken families, declining test scores, widespread addiction to legal and illegal drugs, homes falling into disrepair with blue tarps covering leaking roofs, and a decline in civic mindedness, community spirit, and mutual-aid organizations.
Working stiffs care about this deterioration of their hometowns as much as they care about their wages.
To make it worse, working stiffs in small towns also see up close and personal the dark side of the welfare state. In small towns, families have known each other for generations, and different socioeconomic classes often live in close proximity to each other. As such, it is common knowledge who is industrious and who is lazy, who is frugal and who is a spendthrift, who has a legitimate disability and who is a malingerer, and who truly needs public or private charity and who games the system.
For example, every day in my wife’s hometown in northwest Penn., residents see the guy who had the physical and financial means to maintain his house but let it deteriorate as he sat on his ass smoking and drinking on a broken-down sofa on a broken-down porch. Somehow, he got money from the local housing authority to rehab the house instead of relying on his own sweat equity.
They see single mothers and their unruly kids who live in subsidized houses, where the ne’er-do-well fathers of the kids sometimes stay and deal drugs. Many of the subsidized homes are newer and nicer than the homes of the working stiffs.
They see school buses pick up the kids, most of whom are overweight, to take them to summer programs at the local public school, where, no doubt, they get free meals.
They also see the elites in town: those who work for the government and have relatively rich pay, benefits, and job security. They’re employed by the state or county highway department, by local and state law enforcement agencies, by the local housing authority, and by other city, county and state agencies. Other elites work in industries that are heavily dependent on government money, such as the medical industry.
The elites and those on welfare tend to be diehard Democrats, members of a political party that has forsaken working stiffs, especially white ones.
Establishment Republicans also have forsaken working stiffs. The same with free-market intellectuals and think tanks. They refuse to acknowledge that because the return on capital is higher over time than the return on labor, the income gap between the working-class and the upper classes also grows over time.
Yes, that has Marxian overtones. No, I am not a Marxist, but I am stupid enough to open myself to brickbats by saying that Marx had some good points among many really bad ones.
The gap was lower during the glory years of American industry after the Second World War, when much of the industrialized world was in tatters while the USA was unscathed. It began to widen in the early 1970s for various reasons, including globalization, immigration, and the financialization of the American economy.
General Electric is an example of financialization. For decades, the diversified holding company transferred cash from its industrial subsidiaries to its financial subsidiary of GE Capital, which, until the banking crisis of the Great Recession, accounted for most of GE’s profits. Although it wasn’t a bank, per se, GE Capital was saved from going under by the bank rescue program of the Federal Reserve and Treasury.
The employees of GE’s locomotive business in Erie, Penn., weren’t as fortunate. For years they were threatened with the prospect of the business moving to Dallas, even though the Erie facility had the highest productivity. GE decided to move most of it anyway, and just recently, has put the entire business up for sale. Meanwhile, in a sign of the times, Walgreens has replaced GE on the Dow Jones Industrial Average. In other words, a former industrial giant has been replaced by a company that is part of the half-socialist medical-industrial complex, a complex that depends on Medicare, Medicaid, and government price-fixing.
You’ve probably heard the expression, concentrated benefits and dispersed costs. It describes the problem in a democracy of politically-powerful interest groups being given handouts, rents, and favorable regulatory treatment at the expense of everyone else. An example would be a company that gets a $320 million government subsidy. Because the cost to all Americans is only one dollar apiece, it is not worth the time, expense and trouble for an individual to organize a movement to stop the subsidy.
To describe what has happened to the working class, the expression should be turned on its head, as follows: concentrated costs and dispersed benefits. The working class has borne the socioeconomic costs of globalism, creative destruction, and immigration, while everyone else has reaped the benefits.
Why wouldn’t working class Americans vote for Trump?
The Bureau of Labor Statistic (BLS) released new jobs data on Friday. According to the report, seasonally adjusted total nonfarm jobs rose 517,000 jobs, which was well above expectations. The words used by the media to describe the report included “stunner” and “wow.”...