The USA does have a real problem.
Donald Trump has a campaign slogan ‘Make America Great Again’. So has America stopped being great? The USA has changed from a country where most people saw their incomes increasing and saw themselves getting richer, to a country where most now see themselves getting poorer. For people seeing themselves as becoming poorer, America seems not as great as it was. Donald Trump may not have the answer, but so far he is the only one in the campaign saying he sees that there is a problem, and he recognises the pain, and that America is as great as it should be. I suggest this is propelling Trump forward, and if the Democrats keep denying there is any problem, then Trump could go all the way.
Look at the graph to the right. From the mid 1920s, until the early 1980s the gap between the rich and poor in the USA closes. Most of the population were getting closer in wealth to the rich, so they also felt richer. This was also a period overall of real wage growth, people not only felt richer, the were getting richer. From the early 1980s gap between most people and rich started widening again, making people feel less and less rich. Over this same period most data sources has seen no real median income increase and many suggest for the most recent few years there has been an income decline. So while middle America is at best going nowhere the rich still get richer than ever making everyone else feel relatively increasingly poor.
The promise has been ‘the rich get richer, but we will all get a share’ is looking more and more to deliver only for the rich. So the politicians are only delivering for the rich, and the system is broken.
Along comes Donald Trump. People are feeling pain and he acknowledges their pain and even suggest he will help, declaring ‘Make America Great Again’. Trump states what everyone ‘knows’ but only Donald and Bernie are saying: the system is broken. Just stating the system is broken, and being ‘outside the system’ is different enough to get attention. Trump may be rich, but at least he is not the puppet of the rich is the proposal.
Trumps states that foreigners are taking American jobs. For manufacturing all profits and work is moving offshore, mostly to China. The foreigners taking American jobs may generate more than they take and lower cost of products from China may help with the cost of living, but logic counts for little with a population who are disenfranchised and are looking for people to blame.
So Trump is sympathetic to the pain and even states he has identified those to blame.
The problem is that the real blame lies with the move ‘beyond growth age’ for a system that rewards the rich first and then has almost nothing left to distribute amongst the general population.
What Trumps is lacking is actual solutions other than bullying those he blames. Even those he does not blame. Why are iPhones not made in America? It seems more that Trump would force them to be made in America rather than try to remove the reasons this activity has moved offshore. But even solving the ‘not made here’ problem would simply be an attempt to again increase growth, within a system that is still increasingly broken in terms of distribution of wealth. America has sufficient wealth to be great for all its citizens, if only there was a better way to share that wealth.
Greater wealth distributed even more unevenly solves nothing.