Does It Really Matter Who Wins the Election?

David Rosen

The clock is ticking down to the presidential election of November 3^rd and, sadly, it appears that the outcome seems more a toss-up than had earlier been predicted.

A Trump victory would be horrible for the country, imposing a proto-fascist regime with near-dictatorial powers on a restive nation facing a deepening social and economic crisis.

A Biden victory will likely institute a modified Hillary Clinton/Barack Obama neo-liberal regime, one offering only moderate, band-aid solutions to the structural problems facing an increasing two-tier society marked by ever-growing inequality.

Whoever wins the election, the next president will confront the Covid-19 pandemic and how the two candidates deal with it will likely be fundamentally different. Nevertheless, no one knows when it will finally be contained. One consensus suggests that a proven vaccine will likely be available and dispensed in the U.S. during 2021. Thus, American society may reach a “new normal” in 2022 or 2023.

Whatever politicians say, socio-economic recoveries take longer than initially projected. The Great Depression started in 1929 and recovery did not begin until 1933 and then dragged on the early-40s and world war. The Great Recession of 2007-2009 dragged on even with massive federal intervention bailed out the financial sector, mortgage holder and ordinary people suffered and relative full employment didn’t return until 2015 and 2017.

But what if, after the coronavirus pandemic is contained, the economy takes much longer to recover, and social stagnation drags on? What if the recovery is a not a stepping-stone forward to a promising “new normal” but a step backward? What if America’s great ideological glue – the belief in opportunity – is frozen into a postmodern system of social relations with ever-decreasing economic mobility, one that signals the end of the American Dream? It appears that neither candidate anticipates this possibility.

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Symptoms of the economic and social crisis are mounting. As of August, the unemployment rate was at 8.4 percent, while far less than the 14.7 percent in April when Covid-19 first took its toll, it is double the 4.4 percent in February. Homeless is increasing; HUD reports that as of January 2019 the national homeless level reached 567,715 people and some project that, by January 2021, could increase by 40-45 percent possibly reaching 800,000 due sustained unemployment and the coming wave of evictions.

These factors are compounded by the burden of personal or household debt. The Federal Reserve of New York estimates that total household debt for the first quarter of 2020 hit $14.3 trillion, up from $12.7 trillion in the third quarter of 2008. Personal debt includes (i) household mortgages and (ii) non-housing debt (e.g., student debt, auto loans, credit cards). Deepening despair is leading alcohol abuse, drug overdoses and increases suicides. Sadly, the lifespan of the average American is declining, and the death rate is increasing.

One key factor driving the deepening structural crisis is the outsourcing of manufacturing jobs, cutting its relative share of total employment and promoting the lower-wage service economy. Paul Krugman assesses the pivotal decline in manufacturing during the 1997-2005 period:

Does the surge in the trade deficit explain the fall in employment? Yes, to a significant extent. … But a reasonable estimate is that the deficit surge reduced the share of manufacturing in GDP by around 1.5 percentage points, or more than 10 percent, which means that it explains more than half of the roughly 20 percent decline in manufacturing employment between 1997 and 2005.

The St. Louis Federal Reserve reports that “gains from globalization have been quite large and have taken many different forms, specifically, lower prices, higher profits, and increased product variety.” One outcome had significant consequences: “The decline in manufacturing jobs had a rippling effect throughout society. It led to what a “decline in workers’ bargaining power leading to slower wage growth and rising income inequality.”

The Fed goes further, noting “the direct impact of declining wages (real and relative) and increasing healthcare costs will likely outweigh the more indirect benefits.” Compounding this development, increased debt – for a home, college, rent, medical and simply getting by – replaced wage gains so the illusion of prosperity continued.

While globalization led to a decline in wages for manufacturing and other hourly workers, it fueled an enormous increase in executive compensation. A study by researchers from the University of Colorado–Boulder and Williams College (MA) of the compensation of thousands of U.S. corporate executives between 1993 and 2013 concluded that “recent globalization trends have increased U.S. inequality by disproportionately raising top incomes.”

These findings are corroborated by other studies. For example, a 2015 study by the Economic Policy Institute found executive pay had grown by 997 percent between 1978 and 2014, while the average compensation for a private-sector production and nonsupervisory worker increased by just 10.9 percent. In 2015, the Pew Center calculated that upper-income households saw their pay rise 47 percent between 1970 and 2014. Middle-income households enjoyed a median gain of only 34 percent over that window, while lower-income households posted a 28 percent gain.

In a 2016 publication, “What We Know About Economic Inequality and Social Mobility in the United States,” the Russell Sage Foundation (RSF) identifies some of the profound changes that, over the last half-century, have eroded notions of the American Dream. It concludes on a very pessimistic note:

The rise in economic inequality over the past four decades calls into question the notion that anyone, regardless of the status of their parents, can achieve the American Dream. Recent studies imply that America is a less mobile society than in the past and confirm that the U.S. has less social mobility than comparable industrialized nations.

What if ever-deepening economic inequality comes to define the new normal?

This possibility is anticipated by Harvard’s Raj Chetty, of the Opportunities Insights group, who recently wrote, “our research shows that children’s chances of earning more than their parents have been declining. 90% of children born in 1940 grew up to earn more than their parents.” He concludes, “Today, only half of all children earn more than their parents did.”

Sadly, the two presidential candidates have comparable post-victory short-term plans. Trump and the Republic Party did not offer a new electoral platform but only readopted his 2016 agenda that led to ever-increasing upper-class wealth. Biden offers a broad neo-liberal agenda that addresses many critical issues but calls for increased military spending and opposes Medicare for All. Most troubling, in the face of the uptick in police shooting of unarmed demonstrators and others, he called for cops to “shoot ’em in the leg.”

However, if the coronavirus is contained but the economic recession stalls out, the deepening social crisis might well get more disruptive. If Trump is reelected and the Democratic regain control of the Senate, and continue as the majority in House, a bitter, drawn-out showdown could be in the works.

The New York Times reported that in the weeks following the killing of George Floyd on May 25^th, between 15 million to 26 million participated in protest demonstrations. The protests peaked on June 6^th when half a million people turned out in nearly 550 places across the country. The Armed Conflict Location and Event Data Project reports that in the three months between May 26 and Aug 22 protests took place in 7,550 places throughout the country.

The increasing bitter social environment has led to a fundamental split in the Trump administration. Trump and Attorney General William Barr are promoting a return to 1950s McCarthyism. Trump has railed against the “left,” those he identifies as Antifa, socialists, communists and anarchists; Barr has gone so far as to call upon local federal prosecutors to invoke the sedition conspiracy act.

However, testifying before the House Homeland Security Committee, FBI Director Christopher Wray identified White nationalists as a grave threat. “Of the domestic terrorism threats, we last year elevated racially motivated extremism to be a national threat priority commensurate with homegrown violent extremists,” Wray added.

Surely, if Trump wins in November, we can expect a further abridging of democratic rights. What Biden would do under increased social conflict remains to be determined.