At least three major fault lines underlie America’s current structural problems. The first is economic. In the decades after World War II, the United States achieved not only rapid but also broadly shared growth, with wages for most workers tracking increases in productivity at a rate of around 2% per year, on average. This growth was bolstered by labor-market institutions such as minimum wages and unions, and by technological changes that generated good (high-paying, secure) jobs for the majority of US workers.
These institutional arrangements started to come apart in the 1980s. Good jobs began to disappear, inequality began widening, median real (inflation-adjusted) wages stagnated, and real wages for low-education workers actually started to fall. A variety of factors drove this turnaround, including the erosion of the federal minimum wage, new laws and court rulings undercutting collective bargaining, changes in wage-setting norms, trade with China and offshoring, and automation.
Cheap imports and automation technologies initially reduced employment in many light industries, such as textiles, apparel, and furniture. But with the spread of robotics technologies, heavy industries soon followed. Historically, the decline of some industries had been met by the creation of new ones offering good jobs to at least some of the displaced workers. But that process began breaking down in the 1980s. Since then, and especially since around 2000, the burden of economic change has increasingly fallen on middle-class (and often white) communities.
The second fault line is political. The democratic system could have given a voice to economically disadvantaged Americans, thus providing a corrective to the aforementioned economic trends. But the system failed for a variety of reasons, not least because political power was redistributed away from middle-class voters over the past few decades.
Many attribute that shift to the increasing role of “money politics” – campaign contributions, traditional lobbying, and the elimination of constraints on corporate political spending by the Supreme Court’s notorious Citizens United decision in 2010. But an even more fundamental factor may have been the rise of “status politics,” whereby political power accrues disproportionately to well-to-do, highly educated, coastal elites. Tech entrepreneurs, Wall Street tycoons, and management consultants have become increasingly influential in Washington, DC, not just because they are rich but because they seem to represent enlightened competency.
A third fault line concerns the loss of trust in institutions. American institutions and high-status elites not only failed to avert the 2008 financial crisis and subsequent recession; they were complicit in it. When the crash came, millions of families lost their homes and livelihoods while Wall Street was bailed out.
These are the conditions that gave rise to Trump, who might still ride a wave of misinformation to win re-election in November, especially if the opposition remains fractured. But even if Trump is defeated, the task of radically reforming America’s economic and political institutions will have only just begun.
What would an effective anti-Trump reform agenda look like? For starters, it must include a plan to generate more good jobs. This objective is different from simply strengthening the social safety net (which is necessary, but insufficient), and it is worlds apart from diversionary schemes like a universal basic income.
Creating good jobs requires increased investments in technologies that raise worker productivity and lead to new employment opportunities. It also requires stronger labor-market institutions and protections for workers, including minimum wages and collective agreements that induce firms to build long-term relationships with their employees, rather than opting for labor-replacing automation or offshoring. By the same token, better regulation and stronger antitrust enforcement would reduce large corporations’ labor-market power and foster more competition and innovation, setting the stage for faster labor-demand growth.
The agenda also must include reforms to give a majority of Americans a voice in politics once again. In the 1960s, political scientist Robert A. Dahl concluded that most of the power in local politics resided not with high-status elites or political parties but with regular people who were actively engaged in local issues. That finding may have never been completely true (Dahl’s study focused on New Haven, Connecticut); but we should nonetheless aspire to citizen-driven politics.
Here, the priority should be to break the cozy relations between politicians and their CEO, consultant, and financier friends. That will take systematic changes in how access to politicians and top civil servants is regulated, as well as greater transparency at all stages of the policymaking process. Creating new agencies to represent the interests of labor and other neglected constituencies would also be helpful.
Finally, the agenda should increase the independence of America’s bureaucracy and judiciary. For example, discretionary appointments by new presidential administrations could be reduced to allow for greater continuity of expertise across agencies; and bipartisan or non-partisan committees of senior judges and legal scholars could decide judicial appointments. Bolstering bureaucratic and judicial autonomy may seem like a paradoxical response to the loss of trust in institutions. But to regain the public’s trust, America’s institutions must function properly and impartially, and that cannot happen without bureaucratic and judicial expertise.
Much is at stake in the next election. But defeating Trump isn’t enough. Americans need to address the root causes of their lost prosperity, flagging democratic participation, and dwindling trust in institutions. The way to do that is not by embracing polarization, but by working toward a broader and more inclusive social compact.