Posts Tagged ‘economy’


We’ve just learned that the corporate payouts—dividends and stock buybacks—of large U.S. firms are expected to hit another record this year. At the same time, John Fernald writes for the Federal Reserve Bank of San Francisco that the “new normal” for U.S. GDP growth has dropped to between 1½ and 1¾ percent, noticeably slower than the typical postwar pace.

What’s the connection?

Fernald, as is typical of many others who have concluded the United States has entered a period of slow growth, blames the “new normal” on exogenous events like population dynamics and education.

The slowdown stems mainly from demographics and educational attainment. As baby boomers retire, employment growth shrinks. And educational attainment of the workforce has plateaued, reducing its contribution to productivity growth through labor quality. The GDP growth forecast assumes that, apart from these effects, the modest productivity growth is relatively “normal”—in line with its pace for most of the period since 1973.

What Fernald and the others never mention is that American companies’ embrace of dividends and buybacks comes at the expense of business investment, which is an important contributor to worker productivity and long-term economic growth.

In other words, what they overlook is the possibility that the current slowdown—which, “for workers, means slow growth in average wages and living standards”—may be less a product of exogenous events and more the way the U.S. economy is currently organized.

When workers produce but do not appropriate the surplus, they are victims of a social theft. And then, when a larger and larger portion of of the surplus is distributed to shareholders (both outside investors and corporate executives)—that is, the tiny group at the top who share in the booty—workers are, once again, made to pay the cost.


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We can thank Donald Trump for one thing: he’s put the white working-class on the political map.*

In recent months, we’ve seen a veritable flood of articles, polls, and surveys about the characteristics, conditions, and concerns of white working-class voters—all with the premise that the white working-class is fundamentally different from the rest of non-working-class, non-white Americans.

But why are the members of the white working-class attracting so much attention? My sense is, they both represent a threat—because many plan to vote for Trump and, more generally, reject much elite opinion (including, but not limited, to Trump)—and, at the same time, are assumed to be a dying breed—as the U.S. working-class becomes more female, more racially and ethnically diverse, and increasingly employed in non-manufacturing jobs. So, the argument goes, the white working-class, supposedly radically different from the rest of Americans, is motivated by fear and resentment occasioned by a loss of identity and standing.**

Hence the curiosity—best exemplified by a new CNN/Kaiser Family Foundation [ht: ja] poll, about what white working-class Americans think. The results of the poll are interesting, if only because on many issues (aside from support for or opposition to Trump and immigration) the white working-class holds views that are not all that different from other whites, blacks, and Hispanics.

The fundamental problem with CNN/Kaiser poll (as with so many others) is its basic definition of the working-class: “those who have attained less than a four-year college degree, excluding those between the ages of 18-24 who are currently enrolled in school.” As I have argued before (e.g., here and here), that’s not the working-class. It’s just people who never went to or didn’t finish college. What they’re using is a definition of the working-class that doesn’t include all those other people, many of whom have college degrees, who are forced to have the freedom to work for someone else in order to make enough money to support themselves and their families. Together, most Americans with and without college degrees work for the boards of directors of large corporations—and they don’t manage the production process or supervise other employees.

As Vivek Chibber explains,

Workers show up for work every day knowing that they have little job security; they are paid what employers feel is consistent with their main priority, which is making profits, not the well-being of employees; they work at a pace and duration that is set by their bosses; and they submit to these conditions, not because they want to, but because for most of them, the alternative to accepting these conditions is not having a job at all.

The working-class, as I am defining it then, turns out to comprise the vast majority (70-80 percent) of the U.S. population. And most of them, of course, are white.

So, what does the CNN/Kaiser pool reveal about the views of, to be clear, one portion of the white working-class? As I wrote above, on many issues, they’re not all that different from other whites or blacks and Hispanics without college degrees. In terms of their own lives, most of the so-called white working-class, as the other poll respondents, are not angry, worried, pessimistic, or unhappy. But they are dissatisfied with the country’s economic situation and with the influence on the political process of people like them. In recent years, they report it’s become harder for them to get ahead financially and to find good jobs. Finally, they blame the federal government much more than their employers or Wall Street for the economic problems facing the working-class and they believe the federal government helps wealthy people too much and members of the working-class too little.

That’s exactly the set of answers one would expect from the American working-class—white, black, and Hispanic, with and without college degrees—right now. They’re getting screwed and, while they may not be dissatisfied in their own lives, they certainly think both the economic and political systems are stacked against them. Perhaps the only surprising item in the survey is the extent to which they blame the government, and not their employers or Wall Street, for the economic problems facing the working-class.

The only major differences within the working-class have to do with Trump and the role of immigrants. While 56 percent of whites without a college degree would consider voting for Trump, most other respondents would definitely not vote for him. A similar difference emerges with respect to immigrants: a much smaller percentage of the so-called white working-class believe immigrants “strengthen our country” and a much higher percentage thinks “immigrants today are a burden on our country” than the other groups.***

In the end, those two differences—on Trump and immigration—are what make the so-called white working-class interesting to the media. It’s not their conditions or their grievances, much of which they share with other members of the working-class. It’s only the fact that they threaten to vote for the renegade presidential candidate and they’re wary about the role played by other, immigrant members of the working-class. And, of course, many of them are thrown into the “basket of deplorables” by the opposing campaign.

Both presidential candidates, then, are sowing and exploiting those differences to their own advantage, which is what U.S. politicians have always attempted to do when it comes to real or imagined divisions within the working-class. That’s how they campaign and that’s how they hope to get elected.

Trump and Hillary Clinton (and their echoes in the mainstream media) have created the “white working-class” and they hope to ride it—as a source of support or a specter—to victory in November. And then, whoever wins, they’ll abandon it—along with the rest of the working-class.



*Actually, Bernie Sanders also played an important role in focusing attention on the white working-class, especially with his stunning primary victories in Michigan and West Virginia. Since his loss to Hillary Clinton, however, the white working-class (along with the rest of the American working-class) has virtually disappeared from Democratic discourse.

**As Connor Kilpatrick has explained, the Democratic Party “has established a clear line on the white wage-earning class: they’re all either dying (demographically or literally), irrelevant in an increasingly nonwhite country, or so hopelessly racist they can go off themselves with a Miller High Life-prescription-painkiller cocktail for all they care.”

***There is one additional difference that requires mention: while a majority of whites—with (62 percent) and without (69 percent) college degrees—believe trade agreements cost the United States jobs, a much smaller percentage of blacks and Hispanics without college degrees (both 37 percent) think that’s the case.


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