Donald Trump and Being Deplorable

November 05, 2020

As it increasingly looks like Joe Biden has won the election, I see many people around me appalled that so many of their fellow citizens can vote for someone as racist, sexist, and otherwise offensive as Donald Trump. Given what we know about the guy, and think everyone else should know about him as well, it is hard not to be appalled.

But we will not get anywhere politically by looking at half the country with disgust. Trying to win over some of Trump’s voters doesn’t mean giving in to Trump’s racism and sexism, it is about recognizing that large segments of the country have not benefitted from the economy’s growth over the last four decades as a result of deliberate policy.

This group does not at all coincide perfectly with the group of people who support Trump. Many Trump supporters have done quite well economically. There are also many among those who have been pushed behind who do not support Trump. This is especially the case for Blacks and other people of color who do not see a happy home for themselves in a party dominated by Trump’s racism.  

Progressives have no reason to try to appease affluent Trump backers, but we should be looking to help the pushed behind among the Trump backers. Policies that benefit this group may not mean that they will turn to backing progressive candidates, but it is the right thing to do in any case.

The first part of this strategy is simply to state the facts. There is a conventional story that dominates economic and policy discussions, in which people without college degrees (still a majority of the workforce) have lost out because they don’t have the right skills to prosper in today’s high-tech global economy.

That is nonsense. The high-tech global economy was deliberately structured to redistribute income away from workers without college degrees to those at the top.

In terms of the impact of globalization, our trade deals were quite explicitly designed to make it as easy as possible for U.S. manufacturers to locate their operations anywhere in the world and to then import what they produce back to the United States. This puts U.S. manufacturing workers in direct competition with low-paid workers in the developing world. This had the predicted and actual effect of putting downward pressure on the wages of manufacturing workers and on non-college-educated workers more generally.

There was nothing natural about taking globalization in this direction. We could have focused on making it easier for highly educated professionals in the developing world, like doctors and dentists, to train to our standards, and then practice in the United States. This would have put downward pressure on the pay of our most highly paid workers.

Putting highly paid professionals in the United States in direct competition with their counterparts in the developing world have led to the same sort of gains from trade that economists always tout in pushing trade deals. However, in this case, the losers from globalization would be the most highly-educated workers. (I discuss this at more length in chapter 7 of Rigged [it’s free].)

There is a similar story with the impact of technology. The huge sums going to the tech sector, and the stockholders and workers in it, are almost entirely due to the government-granted patent and copyright monopolies that allow them to charge prices far above the free market price.

Here too, economists do a great act of not-seeing. If you suggest that we get rid of patents and copyrights, they will all jump up and down and insist that people would then have no incentive to innovate and do creative work. But somehow, they avoid the unavoidable implication, the amount of incentive that we provide with these government-granted monopolies is entirely due to policy choices. We can make patents and copyrights shorter and weaker, or longer or stronger, as we have done. There are also alternative mechanisms for financing innovation and creative work. (I talk about this issue in chapter 5 of Rigged.) If we had gone the route of providing less incentive, then less money would have been redistributed upward from people without college degrees to the tech sector.   

With almost no exceptions, the people you see in policy debates ignore these basic facts about income distribution in the modern economy. While they may support measures to help non-college-educated workers, they almost invariably treat their fate as an unfortunate outcome of natural developments, as opposed to a deliberate design by those who held power.

If we want to reach out to non-college-educated workers, who may have supported Trump, a really good first step would be to acknowledge that their poor prospects in the economy were the result of design. It might still be good for them, as an individual matter, to get more skill and education, but as a group they are hurting because people in power wanted to redistribute income upward.

Reversing this upward redistribution is a long and complicated story that I write about all the time. A big part of the picture is reversing the policies that led to this upward redistribution. My favorite place to start is to move away from the patent monopoly financing of the development of prescription drugs.

If drugs were sold in a free market, it would save us more than $400 billion a year on drug spending. That comes to more than $3,000 a year for an average family. It would also eliminate the perverse incentives created by patent monopolies, like pushing opioids by falsely claiming they are not addictive.

Anyhow, we can start by having President Biden invoke Section 1498 of the Commercial Code, a provision commonly used in defense contracting, which allows the president to essentially over-ride a patent while compensating the patent holder. Biden can do this for a number of expensive drugs, say some of the cancer drugs selling for more than $100k a year, so people can see what they would cost selling as free-market generics.

In the same vein, he can arrange for some portion of the National Institutes of Health $40 billion budget to be designated for developing and testing drugs and bringing them through the FDA approval process. This is essentially what we did with Moderna in its development of a coronavirus vaccine, except we let them keep patent rights, even though we paid for the research upfront. With the policy I am proposing, the new drugs developed would be sold as generics from the day they are approved. Cancer drugs might be a good place to start and set a model for other areas of research.

We can also look to cut into the waste and great fortunes made in the financial sector. Having the government prepare people’s tax returns for them would be a great place to start. This has been the practice in several European countries for decades. It would save people hundreds of dollars each year that they now pay to tax preparation services, in addition to an enormous amount of anxiety. Requiring public pension funds to fully disclose the terms of their contracts with the funds they invest might also bite into the big fortunes made by private equity partners.

And, if we tried to improve corporate governance, we might put an end to CEOs ripping off the companies they work for with their $20 million a year salaries. My preferred route is to put some bite into the “Say on Pay” votes that shareholders vote on every three years. Suppose the boards of directors, who set CEO pay, lost their annual stipend if a Say on Pay vote was defeated. My guess is that this will cause them to think much more carefully about whether they could get away with lowering CEO pay. And, the issue is not just the CEO. The outlandish compensation packages at the top contaminate the pay structure throughout the economy.

If we adopt a broader inequality fighting agenda will it make non-college-educated whites more likely to vote for progressives? I don’t have the answer to that question. We do know that college-educated whites are more likely to vote Democratic than non-college-educated whites. If that pattern held, and we saw the same increases in college enrollment since 1980 as we did prior to 1980, the Democrats would have much more sold majorities in large sections of the country.  

Of course, this inequality fighting agenda will benefit many more people than non-college-educated whites. It will benefit people of color without college degrees. It will also benefit non-affluent college graduates. A large share of college grads, especially recent college grads, have not been faring well in the last two decades.

Whatever the political implications, we should pursue an anti-inequality agenda because it is the right thing to do. It is also the honest thing to do. Telling the victims of a four-decade-long policy of upward redistribution that it is their fault, is a lie of Trumpian proportions.


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