Like tectonic plates breaking up under enormous pressure to form new continents, the two big American political parties are morphing right in front of us. I have argued in an earlier blog that this process began when Lyndon Johnson signed the landmark civil rights legislation of the 1960s. Prior to that moment, the Democrats had been an uneasy alliance of northern liberals and southern conservatives. The northern liberals in turn had been composed of an alliance of working-class, blue-collar workers and well-educated professionals.
The civil rights legislation, just as Johnson predicted, resulted in the southern Democrats breaking away from the party. It did not take Ronald Reagan and Richard Nixon long to welcome them into the GOP continent. At the time, the Republican continent was itself composed of several tectonic plates, including an Eastern internationalist, big business block, a small town, small business block and a Christian evangelist block. In the same way that the professionals and the blue-collar wings of the Democrats proved an uneasy alliance, the various wings of the Republican alliance proved just as uneasy. The Southern Democrats may have been welcomed into the Republican party, but the people who ran the party continued to pursue the policies that defined the middle ground among the earlier stakeholders, many of which were actually inimical to the interests and values of their new members, the former Southern Democrats. But the former Southern Democrats had nowhere else to go, so they went along with the game.
Then came globalization. In a recent blog, I catalogued the misery that globalization has left in our midst among whites, African-Americans and Hispanics, men and women, in the cities and in the country. What few understood was that this growing crowd of dispossessed were increasingly angry and alienated from both parties. Because many were minorities and blue-collar workers, all reliably in the Democratic fold, the Democrats mistakenly took them for granted. But many others in the same fix were the very Southern Democrats who had moved from the Democratic continent to the Republican continent in the years following the passage of the civil rights legislation. Just as the Democrats took the allegiance of the working class and minority Democrats for granted, the Republicans took the allegiance of the former Southern and Appalachian Democrats for granted even though the policies the Republicans pursued were almost entirely antithetical to the interests of this constituency.
In the election just past, the insurgent populists from both parties ran against the establishment, holding it to account for their long slow slide into misery. Donald Trump, the outsider who was a Republican in name only, completed a hostile takeover of the Republican Party. Bernie Sanders—not a Democrat any more than Trump was a Republican—tried but failed to conduct a hostile takeover of the Democratic Party.
The arithmetic is clear enough. The old Republicans do not have enough votes to win national elections without their populists. And the old Democrats do not have enough votes to win without their populists. In fact, if you put all the populists in one party, it might actually have a plurality of votes. So it remains to be seen whether we now have two continents or three.
It is pretty clear that leaders of both the Republicans and Democrats know their futures depend on how they appeal to those hurt most by globalization. That, in my view, could be a very good thing and long overdue, in the sense that the elites in both parties, who have benefitted so much from globalization, could have done much more to protect those who have suffered so much from it. It is time to focus on their needs and to think hard about what can be done to help them to benefit from the changing dynamics of the global economy.
I am all for that, but it is not what I see happening. The one point on which Bernie Sanders and Donald Trump agree is that rotten trade treaties and greedy elites are responsible for their troubles. That is not true. And policies that are based on this belief are bound to fail. That will be bad for all of us, but it will be catastrophic for the people who are most vulnerable, the very people for whom this story has been written.
As I have explained elsewhere, the primary forces that have left so many stranded in the United States are the forces behind outsourcing and the forces behind automation.
Outsourcing is the result of a long process that began in the Second World War with the great advances in the shipping of manufactured goods over long distances that resulted in a dramatic fall in the price of getting a ton of freight from one part of the world to another. This, combined with the great advances in communications during the war, resulted in a no less dramatic reduction in the cost of communications accompanied by a no less dramatic increase in reliability. These two developments together made it possible to locate manufacturing in the countries with the lowest cost of manufacturing labor, irrespective of the distance to the country in which the product was to be sold. Companies that failed to take advantage of the enormous difference in the sale price of the final products that resulted from these developments were put out of business by companies that did take advantage of that difference.
But the whole world has been adjusting to these forces for decades now. Manufacturing of goods that could be made with low-skill labor has mostly migrated to the countries that offer that sort of labor at the lowest possible cost. Developing countries, like China, that developed very quickly in this environment are no longer cheap, as their citizens have grown wealthier. They are now outsourcing most of their low-skill, low wage manufacturing to countries that charge much less now than the Chinese for their labor. Because wages in places like China have been steeply rising while manufacturing wages have been stagnant or even falling in the United States, the gap between wages in our country and wages in places like China is much, much smaller than before, so the incentive to move manufacturing out of the U.S. is much weaker. This story is not over, but it is in its last chapters.
The other story, the one that now greatly overshadows the outsourcing story in importance, is the story of advancing automation. The main threat to Chinese manufacturing workers now is not workers in Myanmar. It is robots. Millions of robots are on order now that will take jobs from Chinese manufacturing workers. With each passing year, robots grow in capability and decline in price. Two British researchers reported three years ago that nearly half the jobs in the United States could be done by robots. Whether they will be done by robots depends on the economics. If the job can be done cheaper and more reliably by a robot, then it will be.
If NAFTA is responsible for American job loss, the amount of job loss, on balance, is trivial. That is because even though some Americans lost jobs, others gained them as a result of this agreement. When you line up the gains against the losses it is hard to see why this deal was not in the interest of the American people. But you might say, “well, nonetheless, a lot of Americans lost their jobs and were not able to replace them with jobs that paid as much or, in many cases, were not able to get any job at all.”
And you might, for that reason, be applauding Donald Trump for jawboning Carrier into keeping jobs in Ohio that were slated to go to Mexico. But all that does is give Carrier an added incentive to automate the work. By increasing the cost of manufacturing, the move increases the savings to the manufacturer that could be realized by having a robot, rather than a human, do the work.
But, if you are a supporter of Bernie Sanders, you would point to your support of higher minimum wages for low-skill, low-pay workers. I’m for it, but I do not see it as a solution to the problems we are dealing with here, anymore than I see jawboning Carrier as a solution. Presented with an enforced increase in the wages for restaurant workers, for example, restaurant owners will face the same incentives that Carrier executives will face. Waiters and waitresses will be replaced with iPads at each seat in the restaurant that the customers will use to place their orders and pay their bills. Waiters and waitresses will be needed only to deliver the meals, and we will be left to wonder how long it will take for the robot makers to figure out how to make robots that will do that too. Or, for that matter, make the meals.
What neither Donald Trump nor Bernie Sanders nor Hillary Clinton did in the campaign was tell the voters the truth: intelligent machines are in the early stages of wiping out a very large fraction of the jobs available in the United States to people who don’t have much more than a high school diploma.
Supporters of Bernie Sanders and Hillary Clinton will say, with some heat, that, although they might not have focused on the threat from automation, that hardly matters because they did propose to solve the problem by making the first two years of college free in public institutions.
Sorry, but that won’t do it. Most of our public community and state colleges are providing a curriculum in their colleges that is really a high school curriculum. Making college free provides the colleges with no incentive whatsoever to improve the quality or relevance of the education and training they provide. We will enable more people to get an education that is better than what they would otherwise get, but nowhere near adequate to prepare them for the world I am describing. The task is not to provide better access to a woefully inefficient and ineffective system, it is to redesign the whole system for much greater efficiency and effectiveness. That won’t happen until the political leaders of this country tell their constituents the truth about the competition, the performance of our education system, the goals we have to shoot for and the changes we are going to have to make in our education and training system to be fully competitive.
The future of the people who have been left behind depends on that kind of leadership. When that leader appears, he or she will have the guts of a vision that will galvanize this country. It will not be a message of anger, a naming of villains or a demand for vengeance. It will be a message of hope, a painting of a realizable dream, a call to action on behalf of everyone .
When that leader appears, he or she may be a Republican, a Democrat or the founder of a new party. I don’t care. I will be there, ready to help in any way I can.