A Lull Before The Storm?

Next week the political party conventions kick off with the GOP visiting Cleveland. The next week, the Democrats will meet in Philadelphia. Barring something out of the blue, the GOP will break its mold and nominate Donald Trump while the Democrats will pass over its mold breaker, Bernie Sanders, and nominate a traditionalist, Hillary Clinton. Is the GOP action dysfunctional and the Democrats sensible, or could it be that the GOP is ahead of the curve and the Democrats have missed a chance to keep with the mood of the country?

Globalization has changed everything. For low wage, well organized countries (like China), a domestic miracle has taken place though the fruits of export manufacturing. China has amazingly pulled forward millions of peasants raising their standard of living while propelling China’s GDP growth over the double digit range for 10+ years.

The other side of the China success coin is the rest of the world and in particular the US. The China wage rate has set the world standard making goods manufactured elsewhere uncompetitive unless much lower local wages are used. In the US, gone are the traditional high wage, middle class jobs in industries such as automotive, textiles, and associated parts. The US downward wage pressure has spilled over into public sector workers, education, and the broader entry level jobs.

Until this year, both political parties have overlooked the globalization “fairness” aspect and conducted their Presidential campaigns on other issues. During this 20+ year period, the annual renumeration of business executives have risen markedly while the average worker’s pay has stagnated.

Even more in your face has been Wall Street’s hedge fund managers and “too big to fail” bank CEOs. (In 2015, the average business CEO receive $20 million in pay, while hedge fund leaders received billions or the better part there of).

For the average American, globalization is a fog. For them what is certain is that their pay is fixed as long as their job exists. Gone is the prospect of pay increases which exceed cost of living increases. They also keenly observe that the corner office is doing much better.

This situation makes the voting population very open to nationalistic rhetoric. “Those people” are taken your jobs (regardless of the fact that the jobs are less desirable and low paying). “Those people” are freeloading off your tax dollar (while overlooking citizens who are unemployed, homeless, or deep in poverty). “Those people” are not welcome (insert your own reason why, for example, don’t look like us, don’t worship like us, don’t speak English).

Donald Trump understands this and has structured his campaign to gain these disenchanted Americans’ support. Bernie Sanders, like the blind pig who found an acorn, put out a message which inherently appealed to the economic aspects of disinfected Americans.

Hillary Clinton, on the other hand, is a candidate for everyone. Her message says she will work for everyone’s interests. Hmmm.

Many political analysts are writing that Donald Trump will change the Republican Party, in essence, save it. These analysts point to a large, disenchanted, group of voters who in the past were Republicans, Democrats, or Independents and now might unit behind a candidate who appeals to their concerns. This group is uninterested in repealing Obamacare, curtailing women’s right to choose, or even reducing the size of government. This group wants a better future for themselves and their families, however that is defined.

Given the economic fundamentals, this disenchantment is not likely to recede unless a President Trump or President Clinton were to magically return growth (and ever increasing “good” jobs) to the economy.

A question is which candidate will get the chance to be President, and a bigger question is how large will this disenchanted group be in 2020 if the 2016 winner fails to deliver.

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Explore posts in the same categories: 2016 Presidential election, Barack Obama, Bernie Sanders, congress, Democratic Party, Donald Trump, Economics, GOP, Hillary Clinton, Republican Party, Uncategorized

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