It’s Still The Economy, Stupid.

One of the things that has left most pundits scrambling for explanations this election year is Donald Trump’s success in the Republican primaries.   In any previous year, he would have been considered at best a fringe candidate, and by now would have been out of the race.   Instead, Republican candidates that in previous years would have been battling it out for the top spot are now out of the race, or at best, holding on.  Trump is saying things that would have been lethal to any candidate in previous years, he has no set policies or plans beyond a catchphrase, yet it hasn’t impacted his run towards the nomination.   On the Democratic side, Bernie Sanders has been hammering away at Wall Street, proposing free college and single-payer healthcare, drawing wild enthusiasm from many youth, particularly white youth.  While his campaign speeches touch on long-standing liberal ideals, there still concern as to how he thinks he’s going to implement it, and none of that seems to impact his base support.

On the Republican side, it’s easy to write off that as due to racism, bigotry, and a frustration that the  Republican Congress hasn’t delivered on their promises.  Absolutely that is a big part of it.   On the Democratic side, it’s tempting to say it’s just the usual radicalism that youth tend to subscribe to, a frustration with the pace of change, and yes, a little racism and sense of privilege.  I’ve seen all those reasons given, and there’s a grain of truth to all of them.   But that was in evidence as well in previous years, so what made this year so different?

Back in 1992, one of the mantras used by Bill Clinton’s campaign against Bush was “It’s the economy, stupid.”  A recent report released by the Economic Innovation Group, a think tank gives a major clue.  They compiled economic data by zip code across the country, and came up with a “distressed communities” list.  They looked at 7 factors, and combined them for a score.  The higher the score, the more economically distressed a community is.  I recommend reading the entire report, it’s educational and disturbing.   In reading through the report, I realized it is still the economy.

In 2008, we went into a major recession.  Businesses failed, jobs were lost, housing crashed, and just about everyone was impacted.   The election of 2010 was in some ways a reaction to the speed of the recovery, but enough improvement meant that in 2012 and 2014 the economy wasn’t as huge an issue as it had been.  Democrats rightly point to the far and away better economy these days,  that the stock market is still up, unemployment is less than half what it was, and a lot more people have health insurance.  So why is it still the economy?  This part of the report is why:

What is more, during three years of nominal growth and recovery at the national level, the average community in these zip codes—one-fifth of all U.S. zip codes—saw employment decline by 6.7 percent and the number of businesses shrink by 8.3 percent.

and when you look at the South,

Within urban cores, levels of distress in the South are comparable to those in the Midwest and Northeast. But what differentiates the South from other regions is how quickly economic well-being fades at the metropolitan fringe.  The transition from urban and suburban to rural in the South is by far the starkest transition from prosperity to distress of any region of the country

In other words, while nationally the recession is over, and one can point to various “prosperous” states, that prosperity is unevenly distributed.  Many areas are not only still in a recession, it’s gotten worse for them. In looking through the report, two of the top ten economically distressed cities (one small and one large) are in my state.  But if you look at the data on a state level, we’re not doing badly, because we also have some very prosperous areas.  That doesn’t make the people living in those two cities feel any better, though.

This is an additional reason and explanation as to why the pundits are astonished by the Republican and Democratic primaries.   Yes, there are convenient and obvious reasons for what is happening, but there’s also a real anger that the economic improvement that both parties promised  – for different reasons – has passed them by.  They’re lashing out, and voting for “outsiders,” since they feel betrayed and left behind. While on a macro scale, the economy is growing and as a country we’re doing far better, in their experience, it isn’t.

The recovery gap stands out as particularly urgent and alarming because it suggests that well-being will continue to worsen for residents of locales that are locked in a downward spiral. The economy—measured as businesses and jobs—is slowly vanishing from the country’s worst-off rural and urban areas.  From 2010 to 2013, the most distressed 10 percent of zip codes lost 13 percent of their jobs and saw more than one in 10 business establishments close. During that same period, the most prosperous 10 percent of zip codes saw employment rise by a staggering 22 percent and the number of business establishments rise by 11 percent.

Hence Trump’s promises to “Make America Great Again,”  and Bernie’s scapegoating Wall Street resonates with them.  The real problem is that the economic recovery is non-existent for 50 million people.   It’s not just limited to inner cities, it’s in rural areas as well.   They hear things are better, they can see all the pundits on television saying it, but their reality is it’s getting worse.  They’re angry, and it’s destroying one political party.  That is where the challenge comes for the next President, to expand the recovery out of those prosperous areas and into the ones that are still in the grips of a recession.  It can get worse if we forget: “It’s the economy, stupid.”



Filed under Politics

2 responses to “It’s Still The Economy, Stupid.

  1. I read that study and totally agree with your analysis. In addition to the unemployment and business starts and/or failures, farm prices are down significantly. That is a big impactor of rural economies and adds to the sense of being left behind. In NE Minnesota aka the Iron Range 2,000 mining jobs have been lost to China dumping their excess onto US markets. Globalization is extracting a price on these communities. The urban/rural divide is getting worse and the ways that we have drawn house districts exaggerates the voice of the rural districts.

    • dbtheonly

      It strikes me that the rural house districts having an exaggerated voice would be exactly the thing to challenge foreign countries dumping their goods here.

      But we’re still at the question of what can be done.

      China can produce steel and ship it to the US at a lower price than it can be mined and produced in the US. Thus it’s cheaper to use.