In 40 years, the inflation adjusted hourly wage has risen a measly 8% and is actually lower than it was 30 years ago. The long held premise, at least when I was a youngster, was that wages increased as productivity increased. But, as we can see, the link between those two broke sometime in the mid-to-late 1970s and the gap between those two indices has been growing ever since:
Now the reasons for this disconnect are multiple, but it is not unreasonable to believe that the major elements would be automation and globalization, specifically in the form of free trade. Whatever the reasons, however, the benefits of increased productivity went somewhere and that somewhere was to the economic elites in this country:
As we can see, right about the time the gap between productivity increases and wages started to show up in the mid-to-late 1970s, the income gap between the top 20% of earners and the rest of us began to grow as well and has exploded when just looking at the top 5%. And, just as in the prior productivity chart, the gap continues to expand today, even after the Great Recession.
The theory of free trade is that it is a win-win for both parties - for the US, cheaper imports and expanded export markets more than offset the reduction of exports of goods that can now be made more cheaply overseas. And that is probably true. But the fact still remains that, within the US, there will be winners and losers and the losers have primarily been lower wage workers, especially in the manufacturing sector. The number of manufacturing jobs in the US has decreased by over 35% since the late 1970s and there is no sign that the trend will not continue. The part of free-trade theory that conveniently gets ignored is that a portion of the increased benefits that accrue to the "winners" will need to be used, or redistributed, in other words, to help the "losers" adjust to the dislocation that free trade has caused.
Both parties were complicit in ignoring the redistributional element of free trade theory. For years, Democratic Party, the traditional home of these working class workers, supported these free trade deals that protect the various interests of big business while at the same time offering virtually no protections to the workers who were harmed. And, as wage stagnation and offshoring began to increase the pressure on these workers, they found the Democratic activists more focused on civil rights, equal rights, and the urban poor and the Democratic establishment focused on new found fondness for big business and its campaign contributions. Deregulation of the trucking and airline industries with no protections for the workers in those industries occurred under Jimmy Carter. The resulting competition forced many business to start offshoring or move their operations to Southern right-to-work states and started the decline of the unionized labor force. Democrats put up virtually no resistance as unions were decimated and manufacturing industries were gutted. And the rout of American manufacturing went into overdrive starting in 2001 with China's entry into the World Trade Organization. In addition, the Great Migration, the mass movement of poor, primarily African American, Southerners into the working class industrial centers had changed their communities radically - their initial immigration crisis, albeit internal. Nowadays, the immigrants are primarily Hispanic but the issues remain the same. With their wages stagnant, their jobs moving overseas, and their communities seemingly in decline, working class whites felt abandoned by the Democratic Party.
Of course, the word "redistribution" is an anathema to the Republican Party and, as the party of big business, it also overwhelmingly supported these trade deals. However, the Republicans managed to avoid the slow building anger of lower income wage stagnation by cleverly focusing that anger on "the undeserving poor". From Reagan's "welfare queens" to Mitt Romney's 47% comment, they were able to focus working voters on the idea that other people were getting a better deal than they were. And that message went hand in hand with the idea that government was the problem, because, clearly, the government was doing nothing to address the plight of these workers. Meanwhile, of course, the massive tax breaks to the 1% never managed to create the jobs that were promised - has there ever been a more appropriately named theory than the Laffer Curve, but that's for another day - and the profits from globalization also went to the very same 1%.
But, as is becoming increasingly apparent, the real game changer that allowed a candidate like Trump to emerge was the response to the economic crisis that began in 2008 and the government response to that crisis. TARP, the program that essentially saved the financial industry that had caused the disaster, was passed and signed into law by President Bush with the support of both Republican and Democratic elites. The very people that had caused the greatest collapse since the Great Depression were essentially being bailed out by the government, the very same government that had stood by and done nothing as the livelihood of working class workers was and is threatened. And, as we saw in the above graph on household income, very quickly the incomes of those very elites had returned to normal and continued to rise.
Now, voter anger was additionally directed at what Thomas Edsall calls "the undeserving rich", those beneficiaries of the bailout - (you should really read his whole article in entirety). And Trump has managed to capture both elements of this anger with the two pillars of his campaign - his attacks on free trade target the undeserving rich and the attacks on immigrants target the undeserving poor. That's why his lack of orthodoxy on conservative social values or his position on entitlements or his lack of policy specifics has not hurt him - his voters are far less concerned with those details than they are with the dual objects of their anger and Trump has become the perfect expression of their frustration.
Considering the trends for the last 35 years, the financial collapse of 2008, and the government's response to that collapse, it is not surprising to see significant support for Donald Trump. What is more surprising is that it has taken over 7 years since that collapse for a demagogue like Trump to emerge and tap into the anger that those events created in the electorate.
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