I discuss the economic processes that played a crucial role in persuading sufficient number of voters, especially in the Rust Belt, to take the dramatic step to unseat the establishment by voting for someone President Obama once called a “carnival barker”. Donald Trump’s election is probably best considered as revolutionary, reminiscent of the political developments in wake of the crash of 1929. That reminds us the extent to which financial crisis can lead to severe dislocations in the political arena in unanticipated ways.
Trump’s election was the outcome of a long-run process unleashed by policies that neglected the plight of the uneducated beginning with Reagan’s trickle-down economics that failed to trickle. Moreover, the skills of many in the labor force were not well matched to benefit from the powerful forces of hyberglobalization. Consequently, the U.S. economy is best conceptualized as a dual economy in which the unskilled are excluded from the benefits of globalization and are experiencing stagnating or even declining wages, increasing debt, the pangs of downward social mobility, and the concomitant hopelessness, while at the other end of the skill distribution the economy was booming seemingly without limit.
The final blow to this group came with the financial deregulation that culminated in the Meltdown of 2008 and exacerbated their situation. While Barack Obama’s bailout of the financial sector was successful for Wall Street and the superrich, he neglected completely the plight of Mainstreet. In short, the hollowing out of the middle class continued as did the difficulties of those Hillary flippantly referred to as “the deplorables”. In turn, the deplorables revolted and supported a “carnival barker” whose empty promises to bring back jobs, resuscitate the coal-mining industry, and “Make America Great Again” resonated with those whose hopes and dreams had been shattered by five previous administrations. The rise of Trumpism signals the beginning of the end of a half-century era characterized by the neoliberal consensus and by the Pax Americana.