Robots, The Industrial Midwest, Trump's Lies, And Democrats

Earlier this week, I wrote about the enormous impact that robots were already having, and will have, on jobs and that Trump's focus on trade was badly misguided. Trade's impact is largely over. The effect of robotics and artificial intelligence is yet to come. But that doesn't mean Democrats are absolved from presenting their own solutions to the coming onslaught of robots and AI, with a report showing that over one-third of jobs in the country may be replaced by technology in the next 15 years. If you want to see a populist wave, imagine were that to happen.

Democrats ignore this issue at their own peril. Take a look at this map the National Bureau of Economic Research put together that looks at where those 670,000 jobs were lost that were replaced by robots:

The problems that Hillary Clinton had in Pennsylvania, Michigan, and Wisconsin seem pretty easy to understand when you look at this map. And Donald Trump had a strategy to capitalize on these disenfranchised voters. Of course, that strategy was to lie to them and say he could bring those jobs back. He can't and those jobs are gone forever. But the voters believed him because that's basically the only hope they had left.

And Trump will continue to mislead these voters with his PR stunts that get a lot of attention but don't actually improve the real job market. From his announcement with Sony during the transition to this week's announcement with Ford, Trump claims he is creating jobs when the companies and Trump are essentially engaged in a mutual public relations exercise. These announcements are good for Trump and for the individual firms. The fact that most, if not all, of these job and investment announcements are essentially re-releases of previously planned actions during the Obama administration does not show up on most voters' radar. They only hear the big announcement from Trump, not realizing that is really just fiction.

But that does not mean the strategy for Trump is not working. Take a look at this graph about people's feeling about Trump's effort to improve business conditions:

Trump is truly off the charts when compared with any other President, even going back to St. Ronnie Reagan. The facts may be that these jobs were all previously announced and Trump has done nothing to create them, but it sure looks like the people in those industrial blue states are buying Trump's PR. Yes, the effect may wear off in a couple of years when people see that none of the jobs have really returned. Until then, however, Trump and Trumpism will have the other hand.

Of course, there is a reason that no one, Democrats, Republicans, or even Trump has come up with a real plan to deal with the crisis in those industrial states is because no one has a clue how to do it. And, as a country, we really haven't even focused on how to rebuild communities devastated originally by trade and now by technology. I see that here in my state of Connecticut where cities like Waterbury and Bridgeport, which lost their manufacturing base way back in the 1970s, have yet to fully recover.

Right now, the Democrats main economic plan for these distressed areas is a large investment in new and rebuilt infrastructure. But that is merely a short-term solution. Progressives need to start the conversation about a universal basic income, just like was done with increasing Social Security. But that is a longer term solution. If the number of displaced jobs that this report out lines is anywhere near correct, then government make-work jobs like beautification and support for the arts may be necessary. As Keynes noted, when unemployment is rampant, simply paying someone to dig a whole and fill it up again will boost the economy and those government efforts would be far more useful than that. A real industrial policy that targets specific areas and industries, like building solar panels, might also help. Another strategy, again certainly impossible under this administration, would be to encourage immigration and provide extra assistance for those new immigrants to get established in distressed areas. While this may cause an initial backlash, it is at least a start on future growth. Encouraging movement within the country to these areas would also help. This means more than just business tax credits. Those are useless if you can't get people to actually move into these cities and rebuild the tax base. There are a lot of other ideas already out there that will have to wait for another post.

Whatever the answer will be, it will take an enormous investment from the federal government. Cities can't do it because they've lost their tax base already. States can't do it for similar reasons and are budget-constrained. Only the Federal government has the resources and borrowing power to attack this issue. Eventually Trump's lies will wear thin in the distressed areas of the Midwest and elsewhere. Democrats better have a plan when that happens.