Friday, March 11, 2016

It Ends Not with a Bang, but a Whimper

Here's a moving piece from a small-town lawyer who's waking up to the misery of "Trump's America, where working-class whites are dying from despair." He's Michael A. Cooper, Jr., from North Wilkesboro, North Carolina, where the manufacturing and the furniture factories got up and left.

He sounds like a Democrat trying to be fair. Here's what went wrong, according to Cooper.
As productivity climbed, working-class Americans wanted their wages to rise also. Instead, Republicans gave them tax cuts for the rich while liberal Democrats called them racists and bigots.
Actually, the Reagan and Bush tax-rate cuts lowered tax rates on everyone and removed a ton of middle-income taxpayers from the rolls.

But I get what Cooper is saying. Neither Republicans nor Democrats did anything to help the good-jobs-at-good-wages workers of the 1950s adjust to the new world of rising East Asia.

No doubt the white working class has suffered from the move of manufacturing to East Asia. But the political class could not have provided absolute protection from this economic tidal wave. You can do a bit of tariff protection; you can limit immigration. But workers in the First World have to learn First World skills if they want to earn First World wages.

The tragedy of the white working class is not that the Republicans and the Democrats betrayed them in the years since 1973, either by immigration to lower their wages or by globalization to outsource their jobs. The tragedy is that the 20th century ruling class offered the white working class a lie, that they could graduate from high school into lifetime jobs at unionized corporations at good wages. The lie was that their social insurance programs actually delivered social insurance.

The truth about our modern economy is the truth of Schumpeter's "creative destruction." The Great Enrichment of the last two centuries is built on creative surprises in a succession of economic revolutions. The good news is that the revolutions lifted all boats. The bad news is that there were victims all along the way. First there were the peasants thrown off the land by the enclosures. Agricultural prices came down, but the peasants lost everything. Then there was the textile revolution that in stages destroyed the cottage textile industry: first hand-spinning, then hand-weaving. Then there were the railways that demolished the coaching industry and the horse-and-cartage industry. Now we have smart manufacturing that has taken the jobs of the rust-belt manufacturing workers.

In each revolution the political system had nothing to offer the revolution's victims except welfare. The Elizabethan Poor Law was a pathetic effort to respond to the agricultural revolution. When the machine weaving came along, its victims like Andrew Carnegie emigrated to America. But we don't really know what happened to the carters, like Barkis in David Copperfield.

The awful truth is that politics is clueless. It knows nothing except rallying people with words, and anesthetizing them with money. President Obama didn't have a clue when he uttered his famous "bitter clingers" riff in 2008. Let's reprise his fundraiser speech.
You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them... And they fell through the Clinton Administration, and the Bush Administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.
Obama understood the problem. But he had nothing to offer. Conservatives have sneered at his detached attitude, but the truth is that neither party had anything to offer.

Nor can they now. The truth is that when people get into their 40s they lose their get-up-and-go and when things go wrong they try to live by gaming the system. They live off their families, or off welfare, or off disability, and they slowly spiral down into oblivion.

If there is a villain here it is the conceit of the educated ruling class that they could manage economic change with politics: with education, with training, with economic manipulation. But tax cuts don't solve it, naming and shaming of bigots doesn't do it; education doesn't do it; minimum wage doesn't do it.

Just look at the ruling class misjudgments of the last ten years. They said that the earth was burning up; instead we have had a "pause" in global warming. They said we could give mortgage loans to people with low credit scores; instead we got a financial meltdown. They said that we were running out of fossil energy. Instead the fracking revolution has mad energy cheap again. They said they could reform health care to give affordable care to the marginal people between Medicaid and employer health insurance. Instead costs have gone up for everyone.

This is not the incompetence and the corruption of the ruling class.  This is the ruling class doing things using political and administrative power that cannot be done with political power.

There are things we can do to help the white working class. We can enforce the laws on illegal immigrants. We can limit legal immigration. We can reduce regulations on corporations so that it makes sense for them to locate in the United States. We can probably stiffen up welfare and disability so that more people choose work over idleness.

But we cannot save the white working class from its despair. Only the white working class can do that. Maybe Trump can raise its morale. But how much did Obama's Hope and Change help the Democratic faithful? We can only do what government has always done, and put the victims on the dole.

But for you and I, the misery of the white working class is a warning, for there but for luck and pluck goes each one of us. Lee Iacocca's dictum still applies. You can lead, follow, or get out of the way.

Above all, everyone of us must surrender to the market. All the market asks of us is to offer a product or a service that other people want to buy, and if at first you don't succeed, then try, try again.

All it asks of us!

But the alternative is despair and oblivion.

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