"For too long, a small group in our nation's Capital has reaped the rewards of government while the people have borne the cost… Politicians prospered – but the jobs left, and the factories closed… And while they celebrated in our nation's capital, there was little to celebrate for struggling families all across our land. That all changes – starting right here, and right now.” - President Trump - Inauguration Speech
In my opinion, Donald Trump won the election because he connected with the disenfranchised or as Hillary Clinton called them; ‘a basket of deplorables’.
For years, I have highlighted that the the so called economic recovery is more of an illusion than it is a fact. A recent poll showed that 6 in 10 American adults do not have $500 in savings. The Obama administration bragged that the unemployment rate of 4.6% is at a 9 year low. However, the official unemployment rate does not take into account that 96 million working age Americans do not have a job.
“Lies, damn lies & statistics” - Disraeli
I’m sure you have been following the announcements, executive orders and other news coming fast and furious from the Trump administration and the media. On the surface, I understand why many people are feeling optimistic that President Trump is going to improve the economy. Much of what he says is true as it pertains to the problems. Jobs have been outsourced to lower wage jurisdictions, manufacturing plants have shut down, trade deals benefit multinational corporations at the detriment of the American citizenry, foreign military entanglements have taken a serious toll on the lives of military members and their families, not to mention the trillions of taxpayer dollars that have been wasted on the perpetual war machine.
However, I am of the opinion that the issues that the US and many other nations face will not be fixed anytime soon. I think James Howard Kunstler said it well in a recent blog post titled: He Is Risen…But For How Long?
“Trump was correct that the ruins of industry stand like tombstones on the landscape. The reality may be that an industrial economy is a one-shot deal. When it’s gone, it’s over. Even assuming the money exists to rebuild the factories of the 20th century, how would things be produced in them? By robotics or by brawny men paid $15-an-hour? If it’s robotics, who will the customers be? If it’s low-wage workers, how are they going to pay for the cars and washing machines? If the brawny men are paid $40 an hour, how would we sell our cars and washing machines in foreign markets that pay their workers the equivalent of $1.50 an hour. How can American industry stay afloat with no export market? If we don’t let foreign products into the US, how will Americans buy cars that are far more costly to make here than the products we’ve been getting? There’s no indication that Trump and his people have thought through any of this.”
I understand why many people are adamant that wages have to go up because the cost of living has significantly outpaced the growth in income. It’s a catch-22 situation. The majority of people require goods and services to be inexpensive so that they can afford to maintain their standard of living. Have you noticed over the past two decades the drastic emergence of dollar stores, Walmart and other discount retailers? Purchasing habits have changed out of necessity. The negative aspect of this trend is that job creation has been geared towards part-time minimum wage jobs.
Wendy’s and McDonalds have both announced plans to cut back on personnel and replace workers with self-serving kiosks and touch screen cashiers. This trend will expand throughout all areas of industry.
As I have mentioned many times in past articles; the accumulation of debt has supplemented incomes. For the past 15 to 20 years we have witnessed a drastic increase in the amount of consumer, corporate and government debt. I think we have crossed the rubicon. Chris Martenson remarked in a recent article titled: Mad As Hell
“This multi-decade burden of "running ever faster just to stay in the same place" is what led many US voters to reject Hillary Clinton, the establishment candidate, and instead roll the dice on the iconoclast promising to upend the system.”
“But if Trump's plan to “make America great again” means a return to the 1980s and 1990s when median real incomes climbed smartly, he’s not going to be able to pull that rabbit out of the hat, I’m afraid. None of the conditions in place then are with us today including cheap, abundant energy (remember, oil was $10 a barrel in 1998); not to mention that we were riding the tailwinds produced by all of the gains from the early, explosive stage of the technology and internet revolutions.”
“Instead, we're at a stage where the pie is no longer expanding -- it's now a zero-sum game where those with power are using their advantage to continue to increase the size of their slice at the expense of the rest of us. The US now routinely subjects its citizens to racketeering, charging excessive prices that are increasingly cumbersome to avoid. One example among thousands; a Viagra pill that costs less than $1 in India, costs over $38 in the US.”
I think it is futile for the masses to hang their hat on the belief that a politician or government can undo the mess that has taken many decades to come about. Globalization has created an environment where most aspects of our system are held together by a massive network of interconnected nodes that span the globe.
For example, an automobile is manufactured using parts from hundreds, if not thousands, of part suppliers located in different locales globally. A protectionist mindset will be quite disruptive to existing supply chains.
We as individuals are partially to blame for the predicament we find ourselves in. Over the past decades consumers chose to purchase lower priced goods that were manufactured in foreign countries rather than buying higher priced goods that were produced domestically. As mentioned previously, Western trade deals incentivized our domestic manufacturers to relocate to lower wage jurisdictions and we as consumers benefitted from the lower priced goods all the while our jobs were slowly disappearing.
Corporations will always go where the money is. For instance, there is a growing movement within the food industry as it pertains to ‘clean’ food. People are beginning to realize that most of our produce is void of nutrition and is farmed using methods that involve harsh chemicals that hurt our environment and our health. The emergence of organic foods, hormone & anti-biotic free meats and healthier foods in general are now garnering a bigger share of grocery store space.
My point is that trends can slowly build, but it takes the will of the people to think differently and act differently. Infinite growth in a world of finite resources is impossible. Perpetual growth in a debt based economy will eventually lead to a cataclysmic end. I think the policies being initiated by the Trump administration could be the spark that leads to major upheaval. One last point, if Hillary Clinton had become President she would have likely pushed the same brutal agenda of her predecessors (more war, more globalization, more stripping of civil rights, more income inequality…)
Jeff Fitchett: This is a good article.