Trump’s major economic theories, if he has economic theories or just “economic impulses,” are anchored by two core assumptions: One – What’s good for business is good for everyone. Two – The United States has been robbed of wealth and jobs by cheap overseas labor. Both approaches are either flat wrong or dealing will issues that have not been relevant for well over a decade.
I’ve pretty much decimated the first assumption in dozens of my blogs; the hard numbers simply do not support the underlying “trickle down” or a “rising tide floats all boats” model. The latest failure comes from the massive GOP/Trump tax cut, which was supposed to create tons of cool new, well-paying jobs and give everyone more money. Reality: 8% of the corporate savings from that tax give-away went towards those new cool jobs and capital upgrades. 3.7% of American workers may have received either a small, one-time bonus or a small raise, but the rest of that economic windfall went to shareholders in the form of big dividends and stock buybacks that increase the value of their holdings.
In short, rich folks don’t create lots of new jobs when you give them a giant cash windfall. They keep the money and increase their wealth. We still have 70% of working Americans holding to the same effective earning power (or less) that they had four decades ago. But with Trump’s healthcare policies and trade wars, the cost of living is skyrocketing, so that 70% just holding their ground might finally see a change… downwards.
It is funny that while twenty or thirty years ago, cheap labor overseas absolutely displaced a lot of lesser-skilled American labor, that issue has just faded away. It is equally true that America did not adequately address that displacement, so lots of workers fell out of the workforce, never to return. Many of those displaced harbor the ill-will of having been ignored for decades, still assume that cheap foreign labor is the bane of their existence.
This angry group now forms a central core of Trump’s base. They know why they lost their livelihoods, why entire industries disappeared, and assume that those economic realities persist into the present day. They don’t. There is almost nothing that cannot be manufactured here in the United States, given sufficient capital investment, that would cost more if cheap foreign labor were used instead. We just make stuff with machines with minimal labor. Understanding economic trending and change is not for the faint of heart. It is complicated, but as much as down-home folks want simple explanations – a Trump specialty – there are no simple answers to complex economic seismic shifts. The minute you get a simple explanation, the only thing that you can assume is either that the explanation is wrong or that if fails to address genuine causation.
For example: Remembering that consumers prospered at those less expensive foreign manufactures and that the money may have gone out of the country, it was hardly robbery. America actually received at least as much value in those imports as the money they spent to get them. Consumers are the ones who made out like bandits!
But what should trouble American workers more, even highly skilled workers, is how the manufacturing/service paradigm is no long about cheap foreign labor. It is today possible to use “smart” robotics to manufacture a line of jeans for considerably less than those made by the cheapest workers in Bangladesh.
Yet when you think of how expensive “smart” automated equipment really is, when “artificial intelligence” (AI, using computer-driven processes that literally teach themselves, self-monitoring repair and replacement needs along the way) is the norm, it is pretty clear that only the rich (the big corporations) can afford that equipment… even though over the long haul, what those machines make will wind up costing so much less per unit than a process that uses the “old world” labor that is now obsolete.
So the labor that used to work to make that “stuff” doesn’t get their old jobs back. The few skilled workers needed to monitor those machines and maintain them is a small fraction of the workers who have been completely replaced. Yet the revenues generated from that manufacturing process have taken a huge component that used to be paid to workers and simply moved them over to the companies that own the machines. Income inequality on steroids, exacerbated by a Republican priority to push what’s good for business over what is good for consumers or workers. Guess who gets excluded?
Indeed, it is this notion of exclusion, supported by the rather dramatic erosion of upward mobility and the fading of the American dream for most of America’s youngest workers, that defines America more than any other feature. It is the ugliest side of income inequality and polarization infecting our nation. Add to this volatile mix the absurd cost of higher education, a new student loan burden this country has never seen before, and the prospects – without some prompt fixing – are close to dire.
The disruptions imposed by artificial intelligence include the obvious. Like replacing working Americans with robots. Or the less obvious. Like big tech-companies sophisticated data mining and analysis that makes a mockery of the last shreds of privacy left in our society. These analytics have been used to run political campaigns, pull sales out of people who really aren’t able to afford why they are buying. The September 8thGuardian (U.K.) interviewed Nobel Prizing-winning economist, Joseph Stiglitz on this and other subjects relating to AI:
“‘These new tech giants are raising very deep issues about privacy and the ability to exploit ordinary people that were never present in earlier eras of monopoly power,’ says Stiglitz. ‘Beforehand, you could raise the price. Now you can target particular individuals by exploiting their information.’
“It is the potential for datasets to be combined that most worries Stiglitz. For example, retailers can now track customers via their smartphones as they move around stores and can gather data on what catches their eye and which displays they walk straight past.
“‘In your interactions with Google, Facebook, Twitter and others, they gather an awful lot of data about you. If that data is combined with other data, then companies have a great deal of information about you as an individual – more information than you have on yourself,’ he says.
“‘They know, for example, that people who search this way are willing to pay more. They know every store you’ve visited. That means that life is going to be increasingly unpleasant, because your decision to shop in a certain store may result in you paying more money. To the extent that people are aware of this game, it distorts their behaviour. What is clear is that it introduces a level of anxiety in everything we do and it increases inequality even more.’…
“‘Artificial intelligence and robotisation have the potential to increase the productivity of the economy and, in principle, that could make everybody better off,’ he says. ‘But only if they are well managed.’”
But the “one true thing” is that our economy is not being well-managed. The ability to manipulate vast quadrants of our electorate by catering to their fears – well-monitored through those analytics – creating non-existent problems and finding “others” to blame for our purported ills, has allowed political forces to seem as if they are addressing the problems of working Americans while effectively turning our society into a plutocracy where everything is tilted in favor of the wealthiest class of Americans. They lie with statistics, make completely false statements without the slightest concern for accuracy, sowing chaos and distrust that plays completely into the hands of anti-democratic forces whose power grows every day.
I’m Peter Dekom, and if there has ever been a call to grassroots political activism to protect the “most” from the “few,” it is now!
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