Fast Food Damnation
Matthew Yglesias has an interesting post about the fast-food tycoon who has been nominated as Labor Secretary. Even aside from the fact that when did you stop beating your wife? would, in fact, be a valid question in this guys confirmation hearings, you might think that this nomination would be seen as a total betrayal of the working-class voters who went overwhelmingly Trump a month ago. Hes anti-worker, anti-higher wages, pro-immigration. Wont there be a huge backlash?
What Yglesias suggests, however, is that his connection with fast food is itself a protection because the white working class likes fast food, liberals dont, and the former feels that this shows the latters contempt for regular people.
I suspect that theres something to this, and that its part of a broader story. And I dont know what to do with it.
What I see a lot, both in general political discourse and in my own inbox, is a tremendous sense of resentment against people like Hillary Clinton or, well, me, that isnt about policy. It boils down, instead, to something along the lines of You people think youre better than us. And it has a lot to do with the way people live.
If populism were simply about income inequality, someone like Trump should be deeply resented by the working class. He has gold toilets! But he gets a pass, partly I think because his tastes seem in line with those of non-college-educated whites. That is, he lives the way they imagine they would if they had a lot of money.
Compare that with affluent liberals say, my neighbors on the Upper West Side. They arent nearly as rich as the plutocrats that will stuff the Trump cabinet. Whats more, they vote for things that will raise their taxes and cost of living, while improving the lives of the very people who disdain them. Objectively, theyre on white workers side.
But they dont eat much fast food, because they believe its unhealthy and theyre watching their weight. They dont watch much reality TV, and do listen to a lot of books on tape or even read books the old-fashioned way. if theyre rich enough to have a second home, its a shabby-chic country place, not Mar-a-Lago.
So there is a sense in which theres a bigger cultural gulf between affluent liberals and the white working class than there is between Trumpkins and the WWC. Do the liberals sneer at the Joe Sixpacks? Actually, Ive never heard it the people I hang out with do understand that living the way they do takes a lot more money and time than hard-pressed Americans have, and arent especially judgmental about lifestyles. But its easy to see how the sense that liberals look down on regular folks might arise, and be fanned by right-wing media.
The question is, what do you do? Again, objectively those liberals are very much on workers side, while the characters who play on this perceived disdain are set to betray the white working class on a massive scale. Is there no way to get this across other than eating lots of burgers with fries?
Donald Trump won the electoral college at least in part by promising to bring coal jobs back to Appalachia and manufacturing jobs back to the Rust Belt. Neither promise can be honored for the most part were talking about jobs lost, not to unfair foreign competition, but to technological change. But a funny thing happens when people like me try to point that out: we get enraged responses from economists who feel an affinity for the working people of the afflicted regions responses that assume that trying to do the numbers must reflect contempt for regional cultures, or something.
So the other day I mused about the dilemmas of dealing with regional backlash, and noted that even lavishly funded attempts to shore up declining regions dont seem to work very well. Heres what I said:
[T]he track record of regional support policies in other countries, which spend far more on such things than we are likely to, is pretty poor. For example, massive aid to the former East Germany hasnt prevented a large decline in population, much bigger than the population decline in Appalachia over the same period.
In response, I get a long, furious piece from Lyman Stone denouncing me:
Krugman and those who believe him want to believe that the fears of Appalachians (or Rust Belters, or what have you) are overblown, that life has not been so bad for them as it seems.
Wait; did I say that? I dont think so. In fact, if I thought everything was OK in Appalachia, I wouldnt have used it as a comparator for Eastern Germany. The point was precisely that Appalachia is a byword for regional decline, which makes it striking that East Germany, which has received the kind of aid Appalachia can only dream of, is suffering an even faster demographic decline.
And for what its worth, Ive spent decades writing and talking about the problems of rising inequality and stagnant wages, so characterizing me as someone telling workers that their problems exist only in their heads is pretty strange.
Now, if we want to have a discussion of regional policies an argument to the effect that my pessimism is unwarranted fine. As someone who is generally a supporter of government activism, Id actually like to be convinced that a judicious program of subsidies, relocating government departments, whatever, really can sustain communities whose traditional industry has eroded.
But what we get instead is an immediate attack on motives. Apparently even suggesting that the decline in some kinds of traditional employment cant be reversed, and that sustaining regional economies can be hard, is a demonstration of elitist contempt for regular people. You might think that people like me are potential allies for those who want to help working families, wherever they are. But if we cant say anything without facing the hair-trigger tempers of regional advocates, without being accused of insulting their culture, that pretty much forecloses useful discussion.
I see that Tim Duy is angry at me again. The occasion is rather odd: I produced a little paper on trade and jobs, which I explicitly labeled wonkish; the point of the paper was, as I said, to reconcile what seemed to be conflicting assessments of the impacts of trade on overall manufacturing employment.
But Duy is mad, because dry statistics on trade arent working to counter Trump. Um, that wasnt the point of the exercise. This wasnt a political manifesto, and never claimed to be. Nor was it a defense of conventional views on trade. It was about what the data say about a particular question. Are we not allowed to do such things in the age of Trump?
Actually, maybe not. Part of the whole Trump phenomenon involves white working class voters rallying around a candidate who promised to bring back the coal and industrial jobs of the past, and lashing out at anyone who refuses to make similar promises. Yet the promise was and is fraudulent. If trying to get the analysis right is elitist, were in very big trouble and perhaps we are.
So what would a political manifesto aimed at winning over these voters look like? You could promise to make their lives better in ways that dont involve bringing back the old plants and mines which, you know, Obama did with health reform and Hillary would have done with family policies and more. But that apparently isnt an acceptable answer.
Can we promise new, different jobs? Job creation under Obama has been pretty good, but it hasnt offered blue-collar jobs in the same places where the old industrial jobs have eroded.
So maybe the answer is regional policies, to promote employment in declining regions? There is certainly a case in principle for doing this, since the costs of uprooting workers and families are larger than economists like to imagine. I would say, however, that the track record of regional support policies in other countries, which spend far more on such things than we are likely to, is pretty poor. For example, massive aid to the former East Germany hasnt prevented a large decline in population, much bigger than the population decline in Appalachia over the same period.
And I have to admit to a strong suspicion that proposals for regional policies that aim to induce service industries to relocate to the Rust Belt would not be well received, would in fact be attacked as elitist. People want those manufacturing jobs back, not something different. And its snooty and disrespectful to say that this cant be done, even though its the truth.
So I really dont know the answer. But back to the starting point: when I analyze the effects of trade on manufacturing employment, the goal is to understand the effects of trade on manufacturing employment not to win over voters. No, dry statistics arent good for political campaigns; but thats no reason to ban statistics.
Recent conversations indicate some confusion about what the economic analysis of trade and jobs actually says, with an impression of big disagreements when what is really happening is that different papers ask different questions. So I attempt a wonkish clarification.
Im still mulling over the Carrier deal, which I suspect will be a template for the Trump years in general again and again, well see actions that are ridiculous in themselves, but add up to a very scary picture.
Start with the ridiculous nature of the whole thing: were talking, it now turns out, about 800 jobs in a nation with 145 million workers. Around 75,000 workers lose their jobs every working day. How does something that isnt even rounding error in the overall jobs picture come to dominate a couple of news cycles?
Yet it did with overwhelmingly positive coverage, at least on TV news. And thats ominous in itself. It says that large parts of the news media, whose credulous Trump coverage and sniping at HRC helped bring us to where we are, will be even worse, even more poodle-like, now that this guy is in office.
Meanwhile, as Larry Summers says, the precedent although tiny is not good: its not just crony capitalism, its government as protection racket, where companies shape their strategies to appease politicians who will reward or punish based on how it affects their PR efforts and/or personal fortunes. That is, were looking at what may well be the beginning of a descent into banana republic governance.
This is, as Larry says, bad both for the economic and for freedom. And theres every reason to expect many stories like this in the days ahead.
My original update was right! Screwed up dates. So its back to around 5 1/2 million Trump chumps.
Gah: technical issues involving changes in survey. I now have white-alone, no bachelors declining from 27 million in 2013 to 21.5 million in 2015. So were back to a number like 3.5 million.
Update: It turns out that I can do a lot better than this, using the Census CPS table creator. Heres what I have now: in 2013, 27 million whites without a bachelors degree were uninsured. By 2015, that was down to 18.5 million. So were talking about 8.5 million working-class whites who stand to lose health insurance under Trump. If two-thirds of those losers-to-be voted Trump, were looking at 5.6 million people who basically destroyed their own lives.
As Greg Sargent points out, the choice of Tom Price for HHS probably means the death of Obamacare. Never mind the supposed replacement; it will be a bust. So heres the question: how many people just shot themselves in the face?
My first pass answer is, between 3.5 and 4 million. But someone whos better at trawling through Census data can no doubt do better.
Heres my calculation: we start with the Census-measured decline in uninsurance among non-Hispanic whites, which was 6 million between 2013 and 2015. Essentially all of those gains will be lost if Price gets his way.
How many of those white insurance-losers voted for Trump? Whites in general gave him 57 percent of their votes. Whites without a college degree much more likely to have been uninsured pre-Obama gave him 66 percent. Apportioning the insurance-losers using these numbers gives us 3.42 million if we use the overall vote share, or 3.96 million if we use the non-college vote share.
There are various ways this calculation could be off, in either direction. Also, maybe we should add a million Latinos who, if we believe the exit polls, also voted to lose coverage. But its likely to be in the ballpark. And its pretty awesome.
Trumpists are touting the idea of a big infrastructure build, and some Democrats are making conciliatory noises about working with the new regime on that front. But remember who youre dealing with: if you invest anything with this guy, be it money or reputation, you are at great risk of being scammed. So, what do we know about the Trump infrastructure plan, such as it is?
Crucially, its not a plan to borrow $1 trillion and spend it on much-needed projects which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.
You should immediately ask three questions about all of this.
First, why involve private investors at all? Its not as if the federal government is having any trouble raising money in fact, a large part of the justification for infrastructure investment is precisely that the government can borrow so cheaply. Why do we need private equity at all?
One answer might be that this way you avoid incurring additional public debt. But thats just accounting confusion. Imagine that youre building a toll road. If the government builds it, it ends up paying interest but gets the future revenue from the tolls. If it turns the project over to private investors, it avoids the interest cost but also loses the future toll revenue. The governments future cash flow is no better than it would have been if it borrowed directly, and worse if it strikes a bad deal, say because the investors have political connections.
Second, how is this kind of scheme supposed to finance investment that doesnt produce a revenue stream? Toll roads are not the main thing we need right now; what about sewage systems, making up for deferred maintenance, and so on? You could bring in private investors by guaranteeing them future government money say, paying rent in perpetuity for the use of a water system built by a private consortium. But this, even more than having someone else collect tolls, would simply be government borrowing through the back door with much less transparency, and hence greater opportunities for giveaways to favored interests.
A lot of people in politics and the media are scrambling to normalize what just happened to us, saying that it will all be OK and we can work with Trump. No, it wont, and no, we cant. The next occupant of the White House will be a pathological liar with a loose grip on reality; he is already surrounding himself with racists, anti-Semites, and conspiracy theorists; his administration will be the most corrupt in America history.
How did this happen? There were multiple causes, but you just cant ignore the reality that key institutions and their leaders utterly failed. Every news organization that decided, for the sake of ratings, to ignore policy and barely cover Trump scandals while obsessing over Clinton emails, every reporter who, for whatever reason often sheer pettiness played up Wikileaks nonsense and talked about how various Clinton stuff raised questions and cast shadows is complicit in this disaster. And then theres the FBI: its quite reasonable to argue that James Comey, whether it was careerism, cowardice, or something worse, tipped the scales and may have doomed the world.
No, Im not giving up hope. Maybe, just maybe, the sheer awfulness of whats happening will sink in. Maybe the backlash will be big enough to constrain Trump from destroying democracy in the next few months, and/or sweep his gang from power in the next few years. But if thats going to happen, enough people will have to be true patriots, which means taking a stand.
And anyone who doesnt who plays along and plays it safe is betraying America, and mankind.
As I said in todays column, nobody who thought Trump would be a disaster should change his or her mind because he won the election. He will, in fact, be a disaster on every front. And I think he will eventually drag the Republican Party into the abyss along with his own reputation; the question is whether he drags the rest of the country, and the world, down with him.
But its important not to expect this to happen right away. Theres a temptation to predict immediate economic or foreign-policy collapse; I gave in to that temptation Tuesday night, but quickly realized that I was making the same mistake as the opponents of Brexit (which I got right). So I am retracting that call, right now. Its at least possible that bigger budget deficits will, if anything, strengthen the economy briefly. More detail in Mondays column, I suspect.
On other fronts, too, dont expect immediate vindication. America has a vast stock of reputational capital, built up over generations; even Trump will take some time to squander it.
The true awfulness of Trump will become apparent over time. Bad things will happen, and he will be clueless about how to respond; if you want a parallel, think about how Katrina revealed the hollowness of the Bush administration, and multiply by a hundred. And his promises to bring back the good old days will eventually be revealed as the lies they are.
But it probably wont happen in a year. So the effort to reclaim American decency is going to have to have staying power; we need to build the case, organize, create the framework. And, of course, never forget who is right.
Its going to be a long time in the wilderness, and its going to be awful. If I sound calm and philosophical, Im not like everyone who cares, Im frazzled, sleepless, depressed. But we need to be stalwart.
Anyone who claims to be philosophical and detached after yesterday is either lying or has something very wrong with him (or her, but I doubt many women are in that camp.) Its a disaster on multiple levels, and the damage will echo down the decades if not the generations. And like anyone on my side of this debate, I keep feeling waves of grief.
Its natural, only human, to engage in recriminations, some of which are surely deserved. But while a post-mortem is going to be necessary, lashing out doesnt seem helpful or good for the lashers-out themselves.
Eventually those of us on the center-left will have to talk about political strategy. For now, however, I want to share some thoughts on how we should deal with this personally.
First of all, its always important to remember that elections determine who has the power, not who has the truth. The stunning upset doesnt mean that the alt-right is correct to view nonwhites as inferior, that voodoo economics works, whatever. And you have to hold to the truth as best you see it, even if it suffers political defeat.
That said, does it make sense on a personal level to keep struggling after this kind of blow? Why not give up on trying to save the world, and just look out for yourself and those close to you? Quietism does have its appeal. Admission: I spent a lot of today listening to music, working out, reading a novel, basically taking a vacation in my head. You cant help feeling tired and frustrated after this kind of setback.
But eventually one has to go back to standing for what you believe in. Its going to be a much harder, longer road than I imagined, and maybe it ends in irreversible defeat, if nothing else from runaway climate change. But I couldnt live with myself if I just gave up. And I hope others will feel the same.
I tweeted this out earlier, but for blog readers here it is in this form.
Some morning-after thoughts: what hits me and other so hard isnt just the immense damage Trump will surely do, to climate above all. Theres also a vast disillusionment that as of now I think of as the end of the romantic vision of America (which I still love).
What I mean is the notion of US history as a sort of novel in which there may be great tragedy, but theres always a happy ending. That is, we tell a story in which at times of crisis we always find the leader Lincoln, FDR and the moral courage we need.
Its a particular kind of American exceptionalism; other countries dont tell that kind of story about themselves. But I, like others, believed it.
Now it doesnt look very good, does it? But giving up is not an option. The world needs a decent, democratic America, or were all lost. And theres still a lot of decency in the nation its just not as dominant as I imagined. Time to rethink, for sure. But not to surrender.
Binyamin Appelbaum has a nice piece about the stall in world trade growth, which I (and many others) have been tracking for a while. And I thought Id write a bit more about this, if only to serve as a much-needed distraction from the election.
If theres a problem with the Appelbaum piece, it is that on casual reading it might seem to suggest that slowing trade growth is (a) necessarily the result of protectionism and (b) necessarily a bad thing. Neither of these is right.
I found myself thinking about this some years ago, when teaching trade policy at the Woodrow Wilson School. I was very struck by a paper by Taylor et al on the interwar decline in trade, which argued that much of this decline reflected rising transport costs, not protectionism. But how could transport costs have gone up? Was there technological regress?
The answer, as the paper correctly pointed out, is that real transport costs will rise even if there is continuing technological progress, as long as that progress is slower than in the rest of the economy.
To clear that story up in my own mind, I wrote up a little toy model, contained in these class notes from sometime last decade (?). Pretty sure I wrote them before the global trade stagnation happened, but theyre a useful guide all the same.
As I see it, we had some big technological advances in transportation containerization, probably better communication making it easier to break up the value chain; plus the great move of developing countries away from import substitution toward export orientation. (Thats a decline in tau and t in my toy model.) But this was a one-time event. Now that its behind us, no presumption that trade will grow faster than GDP. This need not represent a problem; its just the end of one technological era.
It is kind of ironic that globalization seems to be plateauing just as the political backlash mounts. But were not going to talk about the election.
Both Ross Douthat and David Brooks have now weighed in on the state of conservative intellectuals; both deserve credit for taking a critical look at their team.
But of course theres a but Id argue that they and others on the right still have huge blind spots. In fact, these blind spots are so huge as to make the critiques all but useless as a basis for reform. For if you ignore the true, deep roots of the conservative intellectual implosion, youre never going to make a real start on reconstruction.
What are these blind spots? First, belief in a golden age that never existed. Second, a simply weird refusal to acknowledge the huge role played by money and monetary incentives promoting bad ideas.
On the first point: Were supposed to think back nostalgically to the era when serious conservative intellectuals like Irving Kristol tried to understand the world, rather than treating everything as a political exercise in which ideas were just there to help their team win.
But it was never like that. Dont take my word for it; take the word of Irving Kristol himself, in his book Neoconservatism: The Autobiography of an Idea. Kristol explained his embrace of supply-side economics in the 1970s: I was not certain of its economic merits but quickly saw its political possibilities. This justified a cavalier attitude toward the budget deficit and other monetary or financial problems, because political effectiveness was the priority, not the accounting deficiencies of government.
In short, never mind whether its right, as long as its politically useful. When David complains that conservative opinion-meisters began to value politics over everything else, hes describing something that happened well before Reagan.
But shouldnt there have been some reality checks along the way, with politically convenient ideas falling out of favor because they didnt work in practice? No because being wrong in the right way has always been a financially secure activity. I see this very clearly in economics, where there are three kinds of economists: liberal professional economists, conservative professional economists, and professional conservative economist the fourth box is more or less empty, because billionaires dont lavishly support hacks on the left.
There was a time, not long ago, when deficit scolds were actively dangerous when their huffing and puffing came quite close to stampeding Washington into really bad policies like raising the Medicare age (which wouldnt even have saved money) and short-term fiscal austerity. At this point their influence doesnt reach nearly that far. But they continue to play a malign role in our national discourse because they divert and distract attention from much more deserving problems, depriving crucial issues of political oxygen.
You saw that in the debates: four, count them, four questions about debt from the CRFB, not one about climate change. And you see it again in todays Times, with Pete Peterson (of course) and Paul Volcker (sigh) lecturing us about the usual stuff.
Whats so bad about this kind of deficit scolding? Its deeply misleading on two levels: the problem it purports to lay out is far less clearly a major issue than the scolds claim, and the insistence that we need immediate action is just incoherent.
So, about that supposed debt crisis: right now we have a more or less stable ratio of debt to GDP, and no hint of a financing problem. So claims that we are facing something terrible rest on the presumption that the budget situation will worsen dramatically over time. How sure are we about that? Less than you may imagine.
Yes, the population is getting older, which means more spending on Medicare and Social Security. But its already 2016, which means that quite a few baby boomers are already drawing on those programs; by 2020 well be about halfway through the demographic transition, and current estimates dont suggest a big budget problem.
Why, then, do you see projections of a large debt increase? The answer lies not in a known factor an aging population but in assumed growth in health care costs and rising interest rates. And the truth is that we dont know that these are going to happen. In fact, health costs have grown much more slowly since 2010 than previously projected, and interest rates have been much lower. As the chart above shows, taking these favorable surprises into account has already drastically reduced long-run debt projections. These days the long-run outlook looks vastly less scary than people used to imagine.
Like Claudia Sahm, I was struck by polling results indicating that around half of Trump supporters completely distrust official data although maybe a bit less surprised, since Ive been living in that world for years. In particular, the failure of high inflation to materialize led quite a few people on the right side of the political spectrum including the likes of Niall Ferguson to insist that the numbers were being cooked, so this is neither a new phenomenon nor one restricted to Trump types.
As it happened, there was a very easy answer to the inflation truthers: quite aside from the absurdity of claiming a conspiracy at the BLS, we had independent estimates such as the Billion Prices Index that closely matched official data. And theres similar independent evidence for a lot of the things where people now claim that official numbers are skewed. For example, the Gallup Healthways index provides independent confirmation of the huge gains in insurance coverage under the Affordable Care Act.
But aside from validity, what explains this distrust of statistics? Is it because peoples own experience clashes with what theyre being told? I dont think so. In fact, when people are asked about personal outcomes, not about the economy, the story they tell is a lot like the official numbers. From that poll about Trumpian distrust of the data:
So people are feeling better, in line with what the data say, but claim that the economy is getting worse. Hard to believe that this isnt political, a case of going with the party line in the teeth of personal experience.
Here is the original post:
Paul Krugman - The Conscience of a Liberal
