Analysis: It’s Not the Economy, Stupid

5 months ago Comments Off on Analysis: It’s Not the Economy, Stupid

Those of us who do economics for a living turn to it to answer all the big social questions. To explain the rise of Donald Trump and Bernie Sanders, we reflexively blame stagnant incomes that have left voters angry and frustrated.

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Lately, though, I’ve come to question this approach. A recent Pew survey found 46% of Americans think life is worse today than in the 1960s; only 34% think it’s better. Of course, standards of living are higher today and life spans are longer.

But optimism is about where things are going, not where they are, and in the 1960s, things got better faster: real wages grew 2.4% per year compared to 0.6% for the past decade. The richest 1% of households then controlled just 10% of income, compared to 20% now.

So this confirms the connection between voter discontent, standards of living and inequality, right? Well, no.

For all the shared prosperity, the 1960s was not a period of social tranquility or political cohesion. John F. Kennedy was assassinated in 1963. A year later the Republican Party nominated its most conservative presidential candidate ever, Barry Goldwater. From 1965 to 1968, race riots hit Los Angeles and major northeastern cities. In 1968, Lyndon Johnson declined to run for re-election, Martin Luther King Jr. and Robert Kennedy were assassinated, Vietnam war protests disrupted the Democratic National Convention, and Richard Nixon became president by prying white southerners from the Democratic Party.

For many Americans, economic prosperity could not change the feeling that the world was coming apart. In her 1967 essay “Slouching Toward Bethlehem,” Joan Didion writes: “The market was steady and the G.N.P. high…and it might have been a spring of brave hopes and national promise, but it was not, and more and more people had the uneasy apprehension that it was not.”

Economics cannot really explain why rapid growth in living standards coincided with so much political upheaval, just as it cannot explain why long periods of stagnation, as Japan has endured since the 1990s, are met with relative equanimity. Economics can’t explain why Britons may leave the European Union when the preponderance of evidence is that membership has made them richer. It can’t explain why Republican voters backed insider Mitt Romney in 2012 when unemployment was 8% and an outsider, Mr. Trump, this year when unemployment is 5%. Why have Republicans warmed to Mr. Trump’s hard line against illegal immigration when the number of illegal immigrants has been dropping since 2007? Why have Democrats cheered Mr. Sanders’ promise of government-run universal health care when the number of uninsured is at an all-time low?

Clearly, explaining political upheaval must go beyond economic factors to questions of identity, security, race and culture. In the 1960s, the baby boomers came of age, African-Americans made important civil rights gains, and oral contraceptives touched off the sexual revolution. The equivalent in this period might be the retirement of those boomers, the growth in the non-white share of the electorate, and the legalization of gay marriage. None is an economic phenomenon, but all disrupt existing social and demographic norms.

Then there’s the influence of technology and media. By the 1960s almost every American household had television, which brought traumatic events, from JFK’s assassination to the Viet Cong’s Tet offensive, into people’s homes. Today, the Internet, social media and smartphones have done the same for Islamic States’s killing sprees in Paris, San Bernardino, Calif., and Brussels, and police killings of black suspects.

There is no way to predict the effect of so many different forces on the political choices that voters make. And even if there were, you would probably still not predict the rise of Mr. Trump, who got where he is by breaking every rule of conventional political and economic wisdom. Ultimately, the best explanation may be that he isn’t the product of larger economic forces: he’s the product of Donald Trump.


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Analysis: It’s Not the Economy, Stupid