Middle Class Angst

Trump is benefiting from the angst the middle class is feeling. The middle class has been hammered for 30 years, and while the middle class may not understand it, they feel it. 

First, what do I mean by middle class? This would be what used to be called blue and white collar workers. Here is one definition from a small business website: 

The terms "blue collar" and "white collar" are occupational classifications that distinguish workers who perform manual labor from workers who perform professional jobs. Historically, blue-collar workers wore uniforms, usually blue, and worked in trade occupations. White-collar workers typically wore white, button down shirts. and worked in office settings. Other aspects that distinguish blue-collar and white-collar workers include earnings and education level.

There are differences between these two groups. The office and lower managerial part of the middle class, white collar, have not been affected as much by the generation-long malaise that the statistics say the middle class is experiencing. The office staff does not care where the widget their company sells is made, New Jersey or Taiwan, they just don't care. The worker making the widget obviously does care.  

The obvious solution from the blue collar perspective is tariffs against the lower wage countries.  Trump and Sanders are the only ones talking about this, and the other Republican candidates are opposed to tariffs for ideological reasons. Of course the fact that those who give money in Republican primary elections tend to be of the class that benefits from a lack of tariffs is just a coincidence.  

The ideology advanced by free trade advocates is supported by what was called "comparative advantage," invented by an Englishman 200 years ago. Of course it is again a coincidence that the country that invented it at the time had all the trade advantages. 

What is comparative advantage? 

Concept in economics that a country should specialize in producing and exporting only those goods and services which it can produce more efficiently (at lower opportunity cost) than other goods and services (which it should import). Comparative advantage results from different endowments of the factors of production (capital, land, labor) entrepreneurial skill, power resources, technology, etc. It therefore follows that free trade is beneficial to all countries, because each can gain if it specializes according to its comparative advantage.

While this is "settled science," I am not at all convinced. First it needs to be pointed out that the playing field between countries is not at all level. I am not talking here about the low wages, although that is a significant factor. A good example is the fact that a modern industrial society's that does not have to properly dispose of its toxins has a much lower cost factor. Health and safety, the lack of worker's compensation, and lower taxes all play a part. Modern economic theory has turned American manufacturing into a wasteland of abandoned factories. 

Russia has also learned that relying on others for essential goods leads to economic dependency, and when sanctions are installed, essential products are no longer able to be purchased. We will see how this plays out as Russia implements a policy of import substitution, where domestic goods are used instead of foreign imports. 

As for the coming election, the number of people that are hurt by free trade are greater in voting power than those that benefit. It is, of course, just a coincidence that those that are hurt are powerless and those that benefit hold the reins of power. Trump is tapping into the angst of the middle class, and Trump will receive a lot more votes from this angst than anyone realizes. This includes tripling the black vote that Romney received in 2012. Ridiculing this phenomenon as "angry white men," in addition to being inaccurate, has increased the alienation felt by the middle class. 

While I still expect another President Clinton in our future, Trump is being lifted up by real economic trends that the establishment refuses to recognize, or gives lip service to without any intention to act on it.